As the debate about the cost of taxpayer-funded affordable housing in Maine continues, it’s important to remember three key points:
First, on any given night, nearly 800 of our fellow Mainers sleep at emergency shelters across the state. Thousands more greatly disadvantaged families wait for safe, warm affordable apartments to call home.
Second, during the past several years, the Maine State Housing Authority has funneled taxpayer dollars to finance the construction of 1,100-square-foot apartments costing up to $292,000 each; 16 of the 28 Maine Hall units in Bangor are 400-square-foot studio apartments costing $215,000 each.
Third, taxpayer dollars are shrinking, not growing.
MSHA plays a central role in addressing the shortage and high cost of affordable housing in Maine. It is a quasi-independent “instrumentality” of state government with 140 employees, a $14 million operating budget and $1.6 billion in outstanding bonds that it has sold to investors to fund some of its programs. Four of the nine voting board members have been recently appointed by Gov. Paul LePage to join me in more closely scrutinizing its operations.
Some advocates defend the unacceptably high cost to taxpayers of the once-proposed $314,000 Elm Terrace apartments by citing the expensive downtown Portland location. The new MSHA board believes that building a small number of expensive units anywhere is unfair to our most vulnerable families hoping for a safe place to live, and unfair to the taxpayers footing the bill.
Others downplay the high cost to build affordable housing by arguing that new construction today is more expensive than the market values of comparable existing structures. OK, then why not explore the possibility of modifying the less-costly current housing stock to provide safe apartments for those families in need, instead of building more expensive units from scratch?
Some criticize the comparison of nearly $300,000 “affordable” apartments to the $159,000 median single-family home price in Maine. Why shouldn’t Maine taxpayers know that they are paying for expensive low-income apartments which greatly exceed the falling values of their own homes? It’s their money.
On the Maine state Senate website, Sen. Elizabeth Schneider, D-Orono, supports urban development of low-income housing for convenience to employment opportunities, public transportation and public services. Two months ago I asked the MSHA staff to provide the board with the data showing where Maine families in need are located.
Maybe there are opportunities to build less costly apartments along bus lines just outside urban centers that are convenient to malls and other services. The board has yet to receive this information.
Sen. Schneider suggests that concerns about wasteful spending at MSHA be discussed with the Legislature. She has a point. The MSHA executive director is not accountable to any person or governing body for spending hard-earned taxpayer dollars in a cost-efficient way. The individual is appointed by the governor for a four-year term. During that period, the executive director does not report to or serve at the pleasure of the MSHA board. As a result, board members can ask questions and push for transparency but cannot provide taxpayers with the same oversight extended to every other quasi-independent authority.
MSHA plays an important role in addressing the shortage of truly affordable housing in Maine. Stretching every taxpayer dollar will enable state government to help more of our most vulnerable families move off waiting lists and into safe apartments, while being fair to the taxpayers who foot the bills.
To that end, I suggest that MSHA create financial incentives for developers to lower the cost per apartment, continue the board-initiated elimination of expensive and unnecessary building standards such as solar hot water heaters, explore less costly nontraditional housing to help the greatest number of disadvantaged families and require the executive director to report to its board, as at every other quasi-independent authority in Maine.
Let’s all work together to get this done for the deserving people of Maine. It’s long overdue.
Bruce Poliquin in Maine’s state treasurer.
Poliquin makes a series of valid points:
1. The lack of accountability that the Director of the MSHA enjoys is ludicrous. This makes no sense at all from the perspective of good governance. This is an issue that should be remedied by the legislature.
2. Transparency with regard to the criteria MSHA utilizes to determine locations for affordable just makes good sense. Why should the agency require two months to make this kind of information available or is the agency stonewalling the Board?
3. We are all winners to the extent that we as a state can reduce the costs of affordable housing units and serve a greater number of families in need.
A little common sense could go a long way in this debate.
That, and the letter of resignation from the totally inept administrator, Dale McCormick, would go a REALLY long way.
Kudos to State Tresurer Bruce Poliquin for uncovering this egregious use of taxpayer money. He and Governor LePage are on the right track in trying to curb state spending of our money, but the D’s who had free reign for too long are not in agreement, and unfortunately, they have their wimpy R’s they can turn to, also.
Poliquin continues to state that MSHA requires the installation for solar water heaters, even though he knows that this is false.
To be blunt, Poliquin is lying.
And, they are called “water heaters” – hot water does not need to be heated.
Never trust any person who plays fast and loose with numbers. It was such folks who brought America into this economic downturn in the first place. Now Mr. LePage and Bruce want us all to turn on the poorest among us (Like they were the ones who screwed up the country???) simply to cut cost for people like themselves who caused the problem in the first place. America, what a country!
Many people call them “hot water heaters” Gerald. We all know that hot water does not need to be heated, so what is your point for making the comment, that you are very smart or very pompous?
Good thing they’re not putting them in. The solar heaters McCormick and her cohorts at MSHA installed were less than useless.
http://bangor-launch.newspackstaging.com/2010/12/21/news/stateinstalled-energy-systems-fail-to-pay-way/
“In half of the households, energy use increased while the panels were in use.”
We’d have been better off if that political hack Dale McCormick had hired someone to put in wood stoves and burned the $1.1 million in tax money. At least we’d have gotten SOME energy out of the money. Maine is poorer in every sense of the word for employing McCormick.
First of all: Why not modify the current housing stock to affordable housing?
Maine has one of the oldest housing stocks in the nation. If it is the intention of the State Treasurer to abate all lead paint, asbestos, rock foundations, inadequate sewers and outdated wiring, all to benefit whom?, the poor people or the landlord? What the Treasurer is suggesting is to provide incomes for homeowners who own distressed and unsafe property’s. It is my opinion, that this is the exact spot where TIF’s can best be utilized, upgrading the housing stock. Also, in order for federal housing subsidy’s to come into play, they must meet, not the state’s, but HUD’s guidelines. If you want to follow these federal regulations, then that means getting lead paint inspections/abatement, radon testing and abatement, asbestos compliance (floor and ceiling tiles are notorious ) full compliance with HUD’s Housing Quality Standards. HUD has it’s own programs for landlords to do exactly this.
Secondly, MSHA is quasi government for a specific reason. That reason is so that there is only one entity who monitor’s compliance of the state’s and HUD’s standards. Federal Housing standards are specific and to the point. If I remember correctly, each and every rehabilitation program must submit budgets, monthly. I would not and cannot accept that politics needs to play a role when it involves federal monies and state regulation accountability, MSHA is charged to do both, somewhat as that as the PUC, which deals with regulated expenditures. For instance, it demands that licenses for lead inspectors are on file prior to any inspection. It saves lawsuits.
Finally, the State Treasurer should say exactly what it is that he wants to say and stop clouding it with conjecture. The Governor doesn’t want an independent quasi-governmental entity administering the federal LIHEAP and Weatherization funding formulas, the fact of the matter is, he wants to determine what is the best. That involves politics, bureaucrats (such as the Treasurer) and doesn’t involve public imput.
What the Governor, hence, the State Treasurer is after is the federal dollars that are administered by MSHA. I’m not saying that MSHA is doing a great job, that’s debatable, but there is no way I want this, or any Executive determining where and where the most eligible people are or what they are eligible for. Typically those standards are done by the federal government. This isn’t about state’s rights, it’s about setting at least a nation wide standard.
The idea of upgrading current housing is noble, but flawed. In my opinion you would be spending approximate amounts, giving those subsidy’s to private landlords who are accountable to no one. It it a slippery slope. Succinctly, that is where a TIFF would be beneficial, because it would be a property tax rebate on property’s that will contribute to the property tax debt, and continue to house family’s.
The current Director of the Maine State Housing Authority is appointed by the Governor, for a certain tenure. Wouldn’t it be just as easy to have the Legislature appoint one, such as they do the Attorney General, Sec of State, and Treasurer? Every two years, and keep the executive out of it? The State’s policy propositions are controlled by the Legislature, not the Governor. The Governor’s job is to propose a budget, and administer the policy’s as they exist.
Should the “state” really be in the business of housing construction to begin with? I always thought at best MSHA provided low interest loans? Although, MSHA does serve to help people attain and own their own homes. That’s the mission they should stay focused on. Providing the guidance and resources to help first time home buyers with low incomes. Closing costs, inspections, building codes, the nuts and bolts of finding an affordable home that is manageable to own as it is to upkeep.
The Section 8 plan should be utilized to offset cost in areas where low wage earners can become a more intricate part of the work force instead of remaining trapped in a low income complex such as the $300,000 units mentioned. Low interest loans, or high risk loans are one aspect, but contracting and building homes in the same or similar manner as road construction is probably more costly than building and maintaining a road. Again, why is the state in the business of building low income homes or renovating old homes to become state run low income family homes? Furthermore, these “state controlled” homes or apartments, are always occupied by low income earners. So that, as stated a $300,000 or a $180,000 per unit expenditure against a limited monthly subsidized rental income of $600 only adds to the cost of owning the units to begin with. That’s why the program fails as it does now. That’s the portfolio of debt that if it unwinds becomes very costly. The real concern is the exponential loss of building more $10M projects that are funded through bond programs and the free cash flow doesn’t even come close to the real cost! And, that’s ongoing. The exposure now is perhaps $1B or more (?) and at that a given percent is floated variable rate vs. fixed rate for the term of the bond. Considering the overall housing market what is the real value of the housing projects the state owns? Is it possible to liquidate those holdings and get out of “state controlled” housing? Clean up the debt and redefine the purpose of MSHA?
So, now we want to subsidize landords? And where is that going to get us, we spend a pile of money fixing up this place and make it comply with HUD standards……so ONE person can benefit as it regards comparing a benefit to cash?
Section 8 Housing comes in two manners: Property based, and tenant based. The tenant based is obviously, the tenant choosing a place to live in a commercial market; the property based is an owner based program. Meaning that the owner will only rent to eligible applicant’s throughout the period of the loan. In other words, the government is making sure that the owner’s make money, comply with federal housing standards and make sure that they pay their loan, all the while making crazy amounts of money? Thank god that program is gone. (which by the way, was devised under Reagan).
Low cost housing once meant low cost to build. The rent was inline with the total cost of the unit. The subsidy was paid back because the housing unit could eventually be paid for.
Today, $600 rent never pays down a $300,000 per unit cost loan. That amount hardly covers property tax, utilities and insurance.
A landlord could instead allow for short term subsidized returns in hopes the value of the property appreciates and then pay a capital gains tax. Or, mix the units between subsidized, fair market value, or sell units outright.
The “state controlled” plan is dormant. It never matters what happens in the free marketplace. It always defeats its own purpose of what the marketplace otherwise pays as taxes, depreciation, and appreciation.
Low cost housing and low income house are not typically the same.
I have been involved at points over the past 30 years in developing model low cost/low energy house plans that any of us could build…and more are becoming conscious of the advantages thereof.
None of them would be appropariate for Section 8 or other housing intended for older elders or those with handicapping conditions…
The decisions that led us to the MHA as a quasi-governmental agency were Maine by members of both parties in the Blaine House and the legislators, and should not be overthown in haste because one Govenor disagrees…
I have seen some of these “low income” apartments and I gotta say….where is THAT kind of money going ? Certainly not on materials or “expert” labor. I have a 5 bedroom/2 bath home that I could completely renovate for 215k, let alone 292k..?? So I gotta ask…where is that money going ? Considering that these apts are “grouped ” to save costs…ie….sharing the same drainage branchs and wetwalls…how can they cost more than a single family home ?
http://bangor-launch.newspackstaging.com/2011/11/14/politics/maine-treasurer-questions-public-housing-costs/
http://www.onlinesentinel.com/news/Gov-LePage-attends-opening-of-affordable-housing-complex_2011-05-11.html
I accept that new construction generally speaking will cost more than market value (particularly in this economy), cost will vary according to geographic location, that public housing will cost more than private housing due to certain safety requirements and that for those same reasons renovation of existing housing may not be cost effective. BUT, I also think MSHA should provide the details of those costs so that the legislature (and Maine’s taxpayers) know that our money is being spent in the best possible way. Until then I reserve judgement on whether MSHA is wasting money or not as I’d prefer not to assume….
Did the lying Poliquin from an election committee yet?
Just prior to Gov. LePage’s inauguration , I attended a luncheon reception for Gov. LePage, and was seated with Mr. Poliquin. It was very obvious that he was still a bit shocked to have been trounced in the GOP primary by someone he considered his intellectual and social inferior.
This attack seems to be part of his next campaign for a post worthy of him.
Certainly we citizens deserve transparency in terms of the operations of quasi-governmental agencies, but there are valid reason such bodies are established to work with, but not be part of, state government. One of those reasons is to try and buffer them a bit from the ups & downs of party politics. As it is, this is a process agreed to by members of both parties in the past…and the Governor gets to appoint new members of the MSHA board, and every 4-5 years appoint his choice as the managing director.