Second of four stories

Rents in Portland just keep going up. And so do home prices. And interest rates.

Affordable housing was already becoming increasingly scarce in the city when the pandemic exacerbated the shortage, bringing remote workers from big cities like Boston and New York to the peninsula, driving up prices and further restricting inventory.

Since 2013, the market-rate rent for a two-bedroom apartment in Portland has gone up by 84%, according to the Maine State Housing Authority. Meanwhile, evictions are on the rise and more than half of Maine renters say they can’t find housing they can afford.

Homebuyers are similarly challenged. The interest rate on a 30-year fixed mortgage has climbed above 7% and the average home price is well above what most Portlanders can afford. The average of the median monthly sales price for a home in the city over the last nine months was $559,500, according to Redfin, a national online real estate brokerage.

Each of Portland’s five mayoral hopefuls has personal experience with how difficult it is to afford housing here. Two of them – Pious Ali and Justin Costa – are renters. Three – Mark Dion, Dylan Pugh and Andrew Zarro – own homes.

They all say they want to make Portland a place where people of varied income levels can thrive. Where they differ is in how they see city’s role in mitigating the affordable housing crisis, which in some ways is a nationwide issue. Interest rates, after all, are set by the Federal Reserve and the city has no control over inflation.

All of the candidates say they want to lobby the state to spend more money to build affordable housing in Maine, and they’d all like to see more housing on the market. But they have different ideas about how to get there.

CHANGING THE MARKET

Pugh believes the city can have a big impact on the way the national affordable housing crisis is felt locally. But he thinks it will take more than just building.

“I really think it’s a fallacy to say that if we just build more we’ll be OK. What we have right now is an artificial scarcity driven by financial decisions,” he said.

He wants to change the ownership structure of the housing market.

“People don’t just need rent to come down a little bit, they need to have control of their housing,” he said, arguing that any new housing needs to put equity in the hands of Portlanders rather than big developers through programs like housing cooperatives in which tenants have ownership shares and manage their buildings, rather than landlords.

He would like the city to provide support to renters who want to buy out their landlords and create co-ops. A limited equity co-op is often more affordable than a market rate co-op and there are caps on how much profit residents can make from selling their shares, but proponents say the model can help create permanent affordable housing for people who don’t make enough to afford market rates.

Pugh says the city could act as a facilitator, offering renters the legal help to buy their buildings and convert them to this model. He’d also like to start up a local homebuyer assistance program and a fund to help homeowners pay for some home repairs.

Ali also supports the co-op housing model over traditional renting.

“Then when you rent, you are building towards something, so you can take that money and go buy a house after,” he said.

Ali wants to secure a $50 million housing bond focused on creating more co-op housing. The bond would likely come from the state government and it is effectively a low-interest loan to the city. He would use the money to pay developers and nonprofits to build affordable housing in the city. He says there is plenty of space to build, especially vertically.

HOUSING POLICY

Ali also would continue Portland’s inclusionary zoning policy to funnel more money into the Jill Duson Housing Trust Fund, a city-operated account with money earmarked specifically for affordable housing.

As it stands, developers must fill at least 25% of their buildings with affordable units or pay a fee that goes to the trust.

Pugh would like to require developers to make 50% of units affordable. He also would push to raise the fees if they don’t. The current opt-out fee is $172,485 per unit.

“For how much those developers can make, the current fee is nothing and it doesn’t give the city enough to really build housing,” he said.

If elected mayor, Pugh says he would try to implement a temporary moratorium on new hotels and luxury housing until more affordable units are available. He says he would only work with developers committed to making significant affordable housing investments.

In the long term, he has a lofty goal: to create a municipally owned construction company invested in building more affordable units, not paying to avoid doing so.

“I think it would foster a real sense of pride in the community,” he said. “It’s us taking control, not waiting for someone to come in, and feeling like maybe we can get something out of it,” Pugh said.

Ali said he would try to tamp down on Airbnbs and other short-term rentals.

“I don’t want any non-owner-occupied Airbnbs in my city,” Ali said. He’d like to see the 400 or so licensed short-term rentals in Portland turned into long-term rentals.

“It’s an extremely small percentage of the housing stock,” he said. “But when you bring it back, you still bring back some housing.”

Dion also wants to convert more short-term rentals to long-term housing, but is acutely aware of the limitations the city faces in tackling affordable housing on a larger scale.

“This is really a president’s problem – interest rates are set by the Federal Reserve – so what do we do in Portland? I think a mayor and a City Council can work in the margins,” he said.

He’d like to reform the permitting and inspection processes to make it easier for developers and nonprofits to build and ensure that all residential buildings are safe and up to code.

Costa also would like to simplify the permitting and inspections process. He likes Portland’s inclusionary zoning policy and thinks it’s a good way to subsidize affordable housing even when big developers opt out.

“The city is not in the business of being a landlord. We’re creating incentives for developers big and small,” he said.

Zarro supports a simpler permitting and inspections process, too. And wants to create more incentives to build.

At the state level, Zarro would like to advocate for another emergency rental assistance program. He’d also like the council to implement vacancy fees in order to discourage short-term rentals – but said that he would not include the island communities. He thinks Airbnb licensing requirements need to be enforced more strictly and that Portland should use its own area median income statistics to land on more accurate market rates. As it stands, he said, the area median income Portland uses includes affluent suburbs like Cape Elizabeth and Scarborough.

“No stone should be left unturned on this one. We need to be talking about every option,” Zarro said.

BUILDING BIG

Zarro says he isn’t interested in going the small and uncontroversial route; he wants to go big.

“I want to build 10,000 to 12,000 affordable units in the next 10 years. That’s the only path forward for me,” he said. He believes land use is the best place to start.

“We have a zoning policy that makes it very challenging to prioritize affordable housing,” Zarro said. “Rezoning our city is really a once-in-a-generation opportunity.”

Zarro said there are plenty of good affordable housing developers who want to build in Portland, but arduous requirements and zoning laws make it difficult for them. He wants to eliminate those barriers and then offer developers ample city funding to build.

He knows there’s concern about how more housing might change the character of the city, but he thinks the city’s character already has shifted markedly.

“The character of our neighborhoods are changing because people who have lived there for a long time can’t afford to stay,” he said.

He sees the Franklin Street redesign project as a good opportunity to get more affordable housing into a neighborhood that was once vibrant and reasonably priced. He also sees vacant parking lots and largely empty office buildings in desirable neighborhoods as opportunities for housing.

Costa said he understands that big plans can ruffle feathers, that when communities object to big affordable housing developments or small landlords take issue with rent control ordinances or tenants want increased protections, they are looking out for themselves.

He thinks the city should focus less on large-scale proposals and more on getting the ball rolling with small, uncontroversial action.

“These big, sweeping plans engender opposition from all different groups – and when that happens, it tends to lead to no action being taken,” he said. “Right now we need to get policy structures in place to accelerate the development of housing that is as affordable as it can be.”

He thinks small, three- or four-unit buildings are a more sensible first step.

“Let’s focus efforts on Forest Avenue, on Brighton Avenue, on the corner down by the old McDonald’s going on to Allen. If you focus on some of those areas, you don’t get opposition,” Costa said. “There is not a constituency that’s going to rise up and object to having a three- or four-unit building next to Susan’s Fish and Chips.”

Ultimately, Dion is less concerned about building and more concerned about protecting the people who already live in Portland.

“If I have a choice, I’d rather take care of what we have than speculate about whether or not I’m going to get something put together,” he said of building more housing.

If elected mayor, Dion said he would try to start a municipal rental assistance program that focuses on helping renters with the initial cost of getting into an apartment.

“If you do find an apartment, the application fee is a killer. It’s usually nonrefundable. The security deposit is a killer, and then you’re going to have a month’s rent,” he said. He said he’d like to use the housing trust fund to help tenants rather than developers.

“If we’re funding developers with gap funding, why can’t I provide gap funding for tenants?” he said.

Dion also would like to create a forum to bring renters and tenants together to figure out a long-term way to keep rents affordable while allowing small, local landlords to stay afloat financially and keep improving their buildings. He believes that landlords and tenants can have more positive, mutually beneficial relationships.

“I don’t see any monsters in this movie,” said Dion.

Tomorrow: Asylum seekers

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