Article by Ramona du Houx
February 11th, 2009
In January, 2005, Dale McCormick became director of the Maine State Housing Authority, Maine’s housing finance agency and one of the state’s leading mortgage lenders. MSHA provides safe and affordable housing for low- and moderate-income Maine residents through a variety of programs, which it funds primarily through the sale of its mortgage revenue bonds or through federal funds it acquires for Maine.
“Demand for our services has gone up. Our program cost has gone up 18 percent, and our budget has gone up 3 percent. We are struggling. We are at the breaking point. Personnel helping with the Low Income Heating Assistance Program (LIHEAP), energy, housing, weatherizing homes, and fuel assistance have been working straight out. Some have been working weekends. I have an incredibly dedicated staff, but it’s a strain on them,” said McCormick.
MSHA is anticipating that they we will serve about 70,000 households under the LIHEAP program, 20,000 more than last heating season. Under the higher income limits approved by Congress, 2,615 households were eligible this year that were not eligible last heating season.
Through November ’08, MSHA had provided $136.6 million in loans to help 1,063 people buy their first homes. That’s about 35 percent over last year at the same time.
“We are at 20 million a month in loans. We are also a bank that puts $1.2 million a day into the Maine economy. Ever since the subprime brokers have gone away, our market share has increased. We are at record-breaking levels, doing financing and buying mortgages. We have a good, fair fixed rate that is solid,” said McCormick.
When bonds could not be sold in New York because of the subprime fallout, Maine State Housing bonds sold extremely well to Maine residents.
“We sold $38 million of retail bonds to Mainers, which was our highest ever. It showed great confidence people have in Maine State Housing. That was wonderful because it allowed us to continue our first-time homeowner program, which is the backbone of homeownership in Maine. Without being able to sell the bonds we couldn’t sell the loans,” said McCormick. “The bond market nationally was nonexistent; if Mainers hadn’t stepped forward, we would have had to stop that program. At 5 to 6 percent, we kept our corner of the economy going, and when you consider the investment in Maine is tax exempt, that makes it more like 7 1/2 percent. It was a good, safe investment.”
To save money McCormick has introduced energy saving measures to MSHA.
“We have 800 affordable apartment buildings; most of them are in the black, some are in the red because the operating expenses are exceeding the revenues. The one thing that we have targeted that we can really control there is the energy costs,” said the director. “We have a little reprieve, but we have witnessed what Maine looks like at $5 a gallon of oil. It’s a scary picture, we now have a window of time, and we aren’t squandering it. We are making plans: our single-family and multifamily buildings will be insulated; they will have had energy efficient audits, and will use less oil. It helps the Maine economy, lowers our carbon emissions, helps the property owner lower costs, and keeps them in the black.”
Maine State Housing Authority in Augusta, Maine. Photo by Ramona du Houx
MSHA also has an energy loan program with a low interest rate to help moderate-income homeowners make their homes more energy efficient. McCormick has MSHA leading the way.
The governor has had state agencies send plans to Obama’s transition team, for projects that could be used as models for the nation and that need funding.
“Before the recession started, we needed 22,000 units more of affordable housing. We are participating with other departments on projects that need funding. Projects that are shovel ready, can begin within 180 days. We have many that are ready to go now. We are seeing a shrinking subsidy from the real-estate transfer tax. The real-estate transfer tax is what we couple with the revenue we get from bonds in order to build affordably priced apartments or homeless shelters, which account for a third of our funds,” said McCormick.
In 2007 there were 776 homeless people in the state and shelters provided 230,140 bednights for them. MSHA expects they will provide more than that by the time they finalize 2008 numbers.
“There are 42 shelters funded through our general fund. On top of that we fund the building of transitional and permanent housing. We also administer for the federal government for rental assistance, fuel assistance, weatherization, and we have created our own rental assistance program,” said McCormick. “There in a huge unaffordability problem with people who work but can’t make enough to meet a rent. There are four people for every one person that has one. That’s a huge deficit. Hopefully federal rental vouchers will be quadrupled.”
On top of the lack of rent vouchers, hospitals and the prisons used to discharge people to the homeless shelters.
“We have been helping with that issue. We help people who are homeless with counseling to get them into stable housing and a stable life. It’s a really a cost-effective program. It was growing incredibly fast,” said McCormick. “This year we have some special Veterans vouchers. We are thinking we can make a difference. We partner with Veterans groups who want to build transitional or permanent housing. In ANHI, we are working on that and need that subsidy.”
Providing permanent supportive housing for people who are homeless improves their quality of life, reduces the burden on social, medical, and police services, and saves money, according to a MSHA study of nearly 100 formerly homeless residents of Portland.
“Whether you are looking at it from a moral, social, or cost viewpoint, providing permanent supportive housing to people who are homeless is a winning strategy,” said McCormick. “Supportive housing gives people an opportunity for a new and better life.”
Housing people who are homeless cuts the average costs of services they consume in half. The study compared costs during a year that previously homeless people had permanent housing with the annual cost without permanent housing.
The people who participated in the study were living in housing properties that serve people who are homeless and have disabilities; 94 percent of the participants in the study had severe mental illness.
The greatest dollar savings came from the reduced cost of health care. Annual healthcare costs totaled $837,000 before people moved into supportive housing, and $340,000 after moving into permanent housing. Another significant savings came from reduced need for police and incarceration, reduced from $84,000 to $31,000.
McCormick considers the work MSHA is doing with weatherization, so homes are more energy efficient, as one of the most important areas she has introduced.
“We are committed to reducing energy costs for Maine people, making housing more affordable for more people. In Winter Harbor we installed a windmill at an elderly housing project. They are proud of their windmill; its working. We were the first housing project in the nation to do that,” said McCormick.
The wind-generating project was financed by a federal Residential Energy Assistance Challenge (REACH) grant. Overall, the grant will test alternate energy systems in approximately 200 homes and apartments.
Residents benefit from the installation of a cold-climate heat pump that is manufactured by NyleTherm of Bangor. The system maintains efficiency down to zero degrees Fahrenheit and provides electric heat. MaineHousing also installed solar water heating on 16 homes, and is monitoring how effective that system is in reducing energy costs.
“We participated in the Governor’s Carbon Challenge and reduced our carbon footprint by 16 percent, including putting photovoltaics on the roof and doing lots of recycling,” said McCormick. “Leading us into energy efficiency by helping people understand the huge connection in housing is something we are leading the nation in. We are ahead of the whole country. We are the first finance agency to require building standards that save 30 percent in energy. When oil was $5 a gallon everybody, deep into the middle class, were terrified — imagine what low-income people were going through. They have been in crisis for several years.”
With all the homes that the state hopes to make more energy efficient, a smaller carbon footprint will be created. McCormick is working on a new program that could be a national blueprint. The program of taping carbon markets to benefit low-income people will measure how much of that energy is saved, so those who save it will be credited with carbon credits.
“Our carbon project taps carbon markets to benefit low-income people. We are creating a cookbook methodology for finance and housing agencies to measure and monitor and sell the emission reductions that are saved by all the ways we save carbon. If it is identified and unique and has a number and is third-party verified, then it can be sold. Then proceeds can be put back into benefiting the people that sold it,” said McCormick.
The program could be adopted by the federal government.
“Nationally, President-elect Obama wants to securitize the carbon. So if he does a Marshal Plan on weatherization, as it has been talked about, it could produce savings over 20 to 30 years. As long as the carbon reduction can be measured, it can be sold. That projected carbon revenue can be brought forward, be securitized — meaning a bond could be issued backed by the revenues — and that’s how you would get ongoing funds to weatherize homes. The more we weatherize homes, the less money goes to Saudi Arabia, the sooner we lower our climate risk. That’s the policy. He will need what we are doing to implement the policy. You can’t just sell carbon savings; you have to prove they exist, verify them as being measurable, and they have to be monitored.”
Measuring carbon reduction is a challenge.
The Maine Capitol. Photo by Ramona du Houx
“We have been doing that for nine months, working with a carbon market consultant, a climate consultant and an international energy consultant. It’s an art of creating the document that describes to an exact degree how we are going to measure and monitor it. Investors have to trust that the carbon is real. If you purchase carbon, you will need to see its pedigree. We are gearing this to the highest level of scrutiny, so we can sell this carbon on any carbon market,” said McCormick. “It’s an exciting project. The sooner we start on a Marshall plan to weatherize every home in Maine, the sooner we will be have a stronger economy, lower our carbon footprint, and our citizens will have more money in their pockets. Weatherization projects mean huge job creation.”
Because of the overwhelming need to save energy in Maine’s Governor Baldacci started a Maine weatherization program.
“Some energy audits have been done, which is the first step in the process, but no homes have been completed. We expect to do 427 homes by April under this program. There are 477,000 houses in Maine, and I’d be surprised if 50,000 of them were weatherized. We need to help everyone in Maine,” said McCormick.
McCormick, the first woman to hold the office of Maine State Treasure, heralded awareness and action about the climate when she co-convened the first Institutional Investor Summit on Climate Risk at the United Nations in November 2003.
“The idea was to get investors to realize that they should manage climate risk. There was a room filled with investors and Kofi Annon, and we were talking about how the climate has to be taken into consideration,” said McCormick. “Lee Raymond, CEO of Exxon Mobil, doubted all the climate predictions, doubted all the science and even hired people to oppose the reality about global warming. He was at the meeting, and I asked if Exxon Mobile was reviewing the risks that the climate posed. He made fun of me, but not to be undone I said, ‘Sir, I don’t think it’s a laughing matter when the treasure of a state representing three thousand shares of your stock asks an important question like this.’
He had a stock response, focused on the FCC rules.”
Before becoming treasurer McCormick served three terms in the Maine Senate. In 1988, Dale founded Women Unlimited, a program that successfully trains women on welfare to compete for high-paying jobs in trade and technical occupations. In 1975 Dale became the first woman to complete a carpentry apprenticeship with the carpenter’s union. Dale founded her own construction and design firm and wrote two books about her experiences.
“I am more qualified for this job than other’s that I’ve held. I’ve been a carpenter for 35 years, so I know how to build houses. I‘ve been state treasure, so I understand bond financing. Put the two together, and I know what its all is about,” she said.
McCormick is someone who stands up to her convictions always putting the people of Maine and their needs first. She works tirelessly to make sure people have housing so that they may be able to succeed. She is also excited that with President-elect Obama the nation will be able to move forward with plans that work in sync with Maine.
“With some of the plans at Brunswick Naval Air Station to become an energy incubator, what we are doing at the University of Maine in composites, and with green energies, we could be a leader in the low-carbon, green revolution. We are well placed to do it,” said McCormick.
For more information see: www.mainehousing.org.