CAPE ELIZABETH — Opposition to the first affordable housing proposal here in 50 years has receded as the Town Council considers significant changes in the $13.5 million project and the local property tax break that would subsidize it.

In June, residents appeared to be strongly divided over the prospect of Dunham Court being built in the town center, next to the historic Town Hall and the new Village Green on Ocean House Road (Route 77). But opposition leaders who launched a website at that time say they are no longer involved in the Save Our Center group and declined to comment on the revised proposal.

Town officials say they don’t know exactly who’s leading the opposition now, although the council received an unsigned email from the Save Our Center group last week. Meanwhile, the council has heeded some criticism of the proposal and is focused on trying to make the project meet a gaping need for affordable housing in one of Maine’s most affluent towns.

The overall size of the four-story project would remain the same, but the number and size of apartments would change, as well as the amount of tax dollars the town would contribute to the project, which calls for some market-rate units.

“Support seems to be building across the council,” said Jamie Garvin, chairman of the seven-member council. “Certainly there’s a recognition of the need for affordable housing within the community and across the region.”

In addition to a Tax Increment Financing agreement, the project needs four zoning amendments that will be the subject of a council hearing Monday night. Recommended by the Planning Board, the amendments are heading for a council vote on Oct. 13, the same night that a public hearing on the TIF proposal likely will be held.

The Szanton Co. has proposed building Dunham Court, a four-story affordable housing project next door to Cape Elizabeth’s Town Hall, at left, and overlooking the new Village Green, at right. Architect’s rendering courtesy of The Szanton Co.

The Szanton Co. of Portland initially pitched Dunham Court as a 49-unit project, with 41 one-bedroom and eight two-bedroom apartments. Under that scenario, the town would help to subsidize the project with a 15- or 30-year TIF agreement that would return as much as $530,000 in property taxes to the developer over 30 years.

Now, the council is considering an alternative proposal for 46 units, with 35 one-bedroom, eight two-bedroom and three three-bedroom apartments. And the TIF agreement currently favored by a majority of councilors would return $795,000 in property taxes to the developer over 15 years.

While the 15-year tax break would be greater with a reduction in rental units, it would be less than the $1 million that the developer would receive under a 30-year TIF agreement for 46 units. A 15-year agreement is allowed within the existing TIF district that encompasses the town center.

“I don’t like giving away a lot of money,” Councilor Penny Jordan said last week, voicing support for the 15-year option to subsidize 46 units.

“I personally am very excited about the way this project is shaping up,” said Councilor Jeremy Gabrielson. “I think it’s going to answer a lot of the needs of our community.”

No councilors spoke against the project at last week’s meeting.

The Szanton Co. has proposed building Dunham Court, a four-story affordable housing project that would be next door to Cape Elizabeth’s Town Hall and overlook the new Village Green. Architect’s rendering courtesy of The Szanton Co.

Nathan Szanton said he’ll be happy if the council approves any of the project and financing options offered by his company. Szanton’s business partners include Bobby Monks, a prominent Cape Elizabeth resident who is a widely known entrepreneur, financier, real estate developer and politically active Democrat.

“In fact, we really like being able to serve a more diverse group of potential tenants by having 1-, 2- and 3-bedroom options in the building,” Szanton said in an email last week.

Dunham Court is the first affordable housing project to come before town officials in 50 years, at a time when already precious housing stock has grown even more scarce and costly amid a pandemic-driven home-buying boom. The median home price in this seaside town of 9,300 people is $625,000 and rising, according to the Maine State Housing Authority.

Szanton is seeking four zoning amendments that would make financing and construction possible. If the changes are approved, the building could be 10 feet taller than the 35-foot height limit in the town center. Other amendments would halve the amount of land needed per unit, more than double the building footprint limit, and eliminate a requirement for commercial uses on the first floor.

Supporters say the town center is exactly where an affordable housing project should be built, within walking distance of the Pond Cove IGA Foodliner and a CVS pharmacy, along with the public schools, community center, police and fire station and Thomas Memorial Library. They say building it in the town center also would avoid costly infrastructure expansion and preserve prized farmland and open space.

The project would be ideal for younger people who work in town but can’t afford to live here, as well as older residents who want to downsize from in-demand single-family homes but stay in town, supporters say. And they note the lack of other available or feasible building sites in town, which has hampered significant affordable housing development so far.

Adding three three-bedroom apartments would help to address criticism leveled by some residents who question whether families would want to live in one- or two-bedroom apartments. Other opponents don’t like the project’s location, size and financing. Some also say it’s happening too fast, although there have been more than a dozen public meetings since the proposal was introduced in February.

In June, opponents asked the council to reject the Dunham Court proposal and form a town committee to develop a long-range strategic plan for affordable housing. They also threatened to gather signatures for a town referendum on the project if the council doesn’t scuttle it. That threat apparently still exists.

In its unsigned letter last week, Save Our Center asked the council to add a voter ratification requirement to the proposed zoning amendments so they couldn’t take effect without a majority of citizens’ support after the fact.

“If the Town Council does not (add the voter ratification requirement), citizens will collect the necessary signatures from 10 percent of the registered voters in Cape Elizabeth, which will require the amendments go to a municipal election,” the letter said. “We ask that out of respect for your community, you relieve your community of this task and add the voter ratification language yourselves.”

The letter noted that gathering 865 voter signatures during a COVID-19 surge would be difficult. The council hasn’t acted on the group’s request.

Sara Lennon, a former town councilor, and Suzanne McGinn, a board member of the Cape Elizabeth Land Trust, were leaders in organizing Save Our Center. However, they are no longer involved in the group and had no comment on the project, Lennon said in an email this month.

The proposed affordable housing site, located to the rear of Cape Elizabeth Town Hall. Derek Davis/Staff Photographer

“I think others have stepped (into leadership roles) but don’t know,” said Lennon, whose home has an estimated market value of about $1.2 million across real estate websites. An email to the group’s website seeking comment from its leaders went unanswered.

Before Lennon and McGinn dropped their public opposition to Dunham Court, articles in the Portland Press Herald and Boston Globe drew hundreds of critical reader comments, some accusing project opponents of being NIMBYs (Not In My Back Yard) and more.

“These NIMBYs give zero back, while placing (Black Lives Matter) signs on their lawns, and beam with pride as they picked up their children in their Range Rovers and BMWs after they blocked traffic for a while in front of the IGA during the BLM protest. Yup, Black Lives Matter, as long as they’re on the other side of the Casco Bay Bridge,” one Press Herald reader wrote in June. Similar comments appeared on the Boston Globe story in July.

In the Globe article, Lennon and McGinn disputed that Dunham Court opponents were motivated by racial or class bias, but said they were prepared to seek a referendum to block the project. McGinn’s waterfront home has an estimated market value of about $3.5 million across real estate websites.

The estimated market values for homes of councilors included in this article range from about $504,000 (Garvin) to about $846,000 (Gabrielson), according to real estate websites.

These days, tenants need a yearly household income of $92,000 to lease a median-priced, two-bedroom apartment in Cape Elizabeth, which runs about $2,300 per month, including utilities, according to MaineHousing. Prospective homeowners need a yearly household income of $174,000 to buy a median-priced home of $625,000.

Median household income in Cape Elizabeth is $123,116 – more than double the statewide median of $57,918, according to the U.S. Census. However, the average renter in Cape earns 41 percent less than the median household income, MaineHousing reports.

A rural suburb of Portland, Cape Elizabeth has 535 rental units, including Colonial Village, a 22-unit subsidized senior housing complex on Starboard Drive that was built in the 1970s. A 1992 town ordinance requires major housing developments to include 5 percent low-income units or 10 percent moderate-income units, but that has produced only 15 condos or houses so far.

The Szanton Co. has proposed building Dunham Court, a four-story affordable housing project that would be next door to Cape Elizabeth’s Town Hall and overlook the new Village Green along Route 77. Architect’s rendering courtesy of The Szanton Co.

If approved, Dunham Court would be an energy-efficient building with a fitness center, community room for residents, free Wi-Fi, heat, hot water, parking, indoor bike storage and a coin-operated laundry.

Thirty-seven apartments would be reserved for households below 60 percent of the area median income, which is $42,000 for one person, $48,000 for two people and $54,000 for three people. Nine apartments would be leased at market rate. Subsidized rents would be $1,080 for one bedroom, $1,299 for two bedrooms and $1,495 for three bedrooms; market rents would be $1,495 for one bedroom and $1,695 for two bedrooms.

Dunham Court’s financing would include $9.6 million borrowed through MaineHousing and $3.6 million in equity raised through the sale of federal low-income housing tax credits. Under a 15-year TIF agreement for 46 units, the town would contribute 75 percent of an estimated $70,653 in new property tax revenue generated by the project, or about $52,990 annually. The Szanton Co. would use the tax rebate to pay the debt on Dunham Court.

Only two residents spoke against the project during last week’s council workshop on the TIF proposal.

“Cape Elizabeth does not have a housing crisis,” said Cynthia Dill, a prominent Democrat who is a lawyer and former state senator. Dill lives in the town center neighborhood, just around the corner from the project site. Her home has an estimated market value of about $882,000 across real estate websites.

“We’re a high-income town and should not be subsidizing a for-profit, low-income housing project because it doesn’t address our affordable housing needs,” Dill said.

The project would only “maximize profits” for the developers and requires “special rules” that would discriminate against other property owners in the town center zone, Dill said.

Elisa Tarlow, who lives next to the project site, also spoke in opposition.

Dunham Court isn’t the type of housing that is supported by “most people who are pro-affordable housing,” Tarlow said. “This is not the way for Cape Elizabeth to do its part on this issue.”

Tarlow urged the council to form a committee to analyze the town’s housing challenges and determine “how we can help low-income people.” Her waterfront home was purchased for $4.5 million in 2015, according to town tax records.

Two residents spoke in favor of the project and TIF proposal at last week’s council workshop.

“It’s a very flexible way that allows you to finance only what’s actually built,” said John Voltz, who lives near the town center. “As a result, it’s always going to be to the benefit of the town.” Voltz’s home has an estimated market value of about $413,000 across real estate websites.

David Glaser, whose home is valued at about $465,000 across real estate websites, countered the idea that affordable housing developers shouldn’t make a profit or that Cape Elizabeth doesn’t have a housing crisis.

“Nobody goes into business without the intent of making a profit,” Glaser said. “The community and the entire country has a housing problem that needs to be addressed. This project will make a minor dent into helping solve the housing problem for less affluent individuals.”