Nearly $30 million in federal Low Income Housing Tax Credits will finance the construction of 184 new privately owned apartments in six Maine cities.
“This provides some badly needed affordable rental housing in several Maine communities, and gives Maine’s economy a boost,” said MaineHousing Director Dale McCormick. “We expect the housing will generate several hundred jobs just in construction alone.”
The six housing developments slated for funding and the tax credit amounts are:
* 29 units for seniors in Ellsworth, $5.8 million;
* 24 units for seniors in Biddeford, $4.8 million;
* 48 units for families in Lewiston, $5.2 million
* 34 units for families in Berwick, $3.31 million;
* 25 units for seniors in Freeport, $5.5 million;
* 24 units for families in Portland, $5.28 million.
McCormick noted that apartments affordable to working families are essential to attracting and retaining good jobs, and therefore a key component to economic development.
MaineHousing uses criteria such as need for affordable housing, location close to downtown and transportation, leveraging of other funding sources, and several others in determining which proposed developments to finance. The developments in Biddeford and Berwick, for example, involve adaptive re-use of historic school buildings, while the Lewiston development involves converting a portion of the historic Bates Mill into housing.
The federal Low Income Housing Tax Credit program is a way to raise private capital to finance affordable housing. The tax credits are used to attract private investors, such as banks, insurance companies and other large corporations, to participate in the ownership of the housing developments. As part of the ownership, they receive the credits and use them to offset federal taxes.
Capital raised from the tax credit is used as an equity contribution to reduce the cost of the housing and make apartments affordable to lower income seniors and families.
Most of the new apartments will be restricted to households earning 50 percent of the median income or less. The tax credit funds are meant to replace the direct federal rental assistance that once was used to subsidize affordable housing.
Congress establishes an annual tax credit ceiling for each state to limit the amount that can be allocated.
“The tax credits are a public-private partnership to raise private capital to invest in housing with a public purpose,” McCormick noted.“Many of our housing programs operate on that same public -private model.”
MaineHousing received applications for funding for 11 eligible developments, and selected the top scoring six projects for funding.
Those not selected are placed on a waiting list. If any of the initially selected developments do not continue through for a final financing commitment, some of those on the waiting list may be financed.