Driven by concerns about increasing housing costs, Maine lawmakers passed several new laws this session to streamline construction. These included measures that cut the red tape on new housing construction, create a fund for affordable housing and bar municipalities from imposing restrictions on where and how much new housing can be built.
According to a new report by the National Low Income Housing Coalition, the fair market rent for a two-bedroom apartment — an estimate of the amount that would cover rent and utility expenses on 40 percent of the rental housing units in an area — across Maine is $1,478. In order to afford that without paying more than 30 percent of income on housing, a household must earn at least $4,927 a month or $59,120 annually.
That means someone who makes the state minimum wage of $14.65 an hour would have to work almost two full-time jobs to be able to afford a two-bedroom rental home at the fair market rent. Most units in Maine’s population centers are also generally above the fair market value.
“This report confirms what we hear every day — working folks simply cannot keep a roof over their heads without multiple full-time jobs,” said Laura Mitchell, executive director of the Maine Affordable Housing Coalition.
“These numbers reinforce the urgent need for bold policy solutions that cut the red tape so housing is easier to build, and the dire need for funding to build homes that are affordable statewide,” Mitchell added.
Some of those initiatives were successful this legislative session, Mitchell said. Most of the progress was with bills that cut some of the red tape, easing zoning restrictions and making it easier and more efficient to build affordable housing.
Studies conducted by MaineHousing, an independent state agency that bridges public and private housing finance, have shown the state needs 80,000 new units of housing, which means we need to increase the number of permits to build by 77 percent, Mitchell said.
“We’re not there yet at all, but we made some big strides this session. We need to just keep the momentum going,” she added.
Mitchell and other housing experts highlighted six bills, all of which passed in some form, whether through the Legislature or included in the budget signed by Gov. Janet Mills. All received bipartisan support, said Maine House of Representatives Speaker Ryan Fecteau, D-Biddeford, who introduced and co-sponsored several successful bills that will simplify housing construction and generate more funding for affordable housing.
“We are in a moment where Republicans and Democrats are seeing the issue of housing as one that requires immediate action and is impacting not just southern Maine, but really every corner,” he said.
“Maine has made some of the most substantial progress to tackle the housing crisis in the last five or six years than any other state.”
Increasing funding through real estate transfer tax
A bill Fecteau introduced — LD 1082, which eventually got wrapped into the budget — will increase the real estate transfer tax on properties that sell for more than a million dollars. That increased revenue, which only applies to the portion of the sale that exceeds one million dollars, will then be allocated to a dedicated fund for affordable housing.
Maine has never before had a consistent dedicated funding source for affordable housing, Mitchell said.
BJ McCollister, policy director for the affordable housing coalition, called the proposal one of the most transformational pieces of policy related to housing to pass the Legislature in recent years, “because it creates a steady, predictable stream of revenue dedicated to the development of affordable housing.”
“And that’s important, because what developers need in order to move forward on building affordable housing is predictability,” he added.
Over the past few years, affordable housing construction had been enabled by federal American Rescue Plan Act funds, which for the most part have been expended without replenishment, Fecteau said.
“So this was critical that we established the source of funding that we dedicate future dollars to the production of housing, because we were on the precipice of losing the momentum that was created a few years ago with the use of federal funds,” he said.
Removing regulatory barriers
LD 1829, another bill Fecteau sponsored, which was ultimately signed into law, makes comprehensive zoning changes to make it easier to build more units on the same lot, and removes some restrictions on the height, density and location of where housing can be built.
“We want to make sure that housing is being built in close proximity to services, where there are grocery stores, pharmacies, doctors,” he said. “We don’t want to see Maine become California where there’s more and more sprawl.”
The goal of the newly signed law is to increase smaller developments of two to four units on a lot, or make it easier to build that type of development in order to spur housing production close to existing public infrastructure such as sewer and water systems, for example, so that developers and municipalities don’t have to spend millions of dollars to extend those lines out to more rural areas.
A more recent development in construction that has added to the increase in housing prices is minimum requirements for lot sizes. These rules have forced new homes to be built on one- or two-acre lots, which drives up the cost of each unit, Mitchell said. By reducing that requirement, the new law will increase housing density and decrease costs for new homes, she said.
“The best way to achieve affordable housing is to increase supply,” McCollister said. “We have a supply and demand issue, and any bill that increases supply, regardless of what type of supply that is, is going to help the whole market.”
Making it easier to build homes
Fecteau, McCollister and Mitchell also pointed to several other bills that passed this session that will help increase the supply by easing some restrictions on developers.
One such example is LD 146, sponsored by Sen. Peggy Rotundo, D-Androscoggin. The legislation streamlines the Historic Property Rehabilitation Tax Credit, which encourages private sector investment in the rehabilitation and re-use of historic buildings, by removing timeline barriers that have previously slowed down development projects.
Previously, a developer could receive a tax credit of up to $5 million in one year, though if a developer was doing a project in a large complex, the annual cap pertains to each building, rather than the entire complex. The new law doubles the tax credit to $10 million over a period of two years.
Under the old system, projects were often artificially divided, McCollister said, with developers sometimes literally building walls to divide one project into separate construction phases to be able to utilize the credits..
Fecteau highlighted a new law introduced by Rep. Amy Roeder, D-Bangor, LD 427, that reduces the minimum parking requirements to one space per dwelling unit. Until now, some communities required a parking spot for every bedroom in a unit.
“That’s not only unrealistic, it’s costly, and it likely leads to more space being utilized for parking than is actually being utilized to build homes for people to live in,” Fecteau said.
Two successful measures from Rep. Marc Malon also create more opportunities for housing: LD 997, which allows residential construction in commercial zones, and LD 970, which opens up existing structures to be rehabilitated for housing.
Fecteau used the example of a half-vacant strip mall to explain the benefit of both bills, where businesses and housing could coexist and create walkable areas that benefit each other.
“As we think about the future of development in our state, and what we want our communities to look like, I think more and more people would say, we want to be a mix of residential and commercial together,” he said.“It’s about bringing new life to, in many cases, existing developments that have, over time, kind of withered on the vine.”