Mitchell touts $200 million plan for affordable housing

Susan M. Cover

Mar. 19, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- AUGUSTA -- Senate President Elizabeth Mitchell wants the state to borrow $200 million over 10 years to help pay for affordable housing for low-income workers and senior citizens.

Mitchell, D-Vassalboro, sponsored the bill on behalf of the Maine Affordable Housing Coalition, 35 organizations that include Associated Builders and Contractors, Maine Council of Senior Citizens and Mattson Development.

The coalition released a study Wednesday that shows more than 86,000 households in Maine have "severe housing-affordability problems."

That means their incomes are low -- less than 80 percent of the median household income -- and they spend more than 50 percent of their incomes on housing costs, according to the Housing Affordability Project at the MIT Center for Real Estate.

Those 86,000 households make up 15 percent of all households in Maine, evenly divided between owners and renters, according to the study.

Coalition members -- who paid for the study -- knew from anecdotal evidence that there was a "mismatch" in housing for the elderly, said John Anton, chairman of the coalition and member of the Portland City Council.

Many people who are elderly live in three-bedroom homes they can't afford and don't have any cheaper alternatives, he said.

"Many of those people, many of whom are older, would move to a smaller unit if the opportunity presented itself," he said.

Mitchell's bill, LD 774, proposes to use revenue bonds to pay for the project. Unlike general obligation bonds, which give voters the final say, revenue bonds are approved by the Legislature.

In this case, Mitchell's bill would take $7.5 million in real estate transfer tax money out of the General Fund and put it into the new Maine Energy, Housing and Economic Recovery Program. That would leave the Appropriations Committee with another hole to fill as it prepares the budget that begins July 1.

Republicans are worried.

"The General Fund is under heavy pressure resulting from the slowing economy, and we are struggling now to develop a two-year budget plan to fund basic government services," said Sen. Richard Rosen, R-Bucksport, a member of the Appropriations Committee.

Rosen and others are working on a $6.1 billion, two-year budget that's already $200 million less than what was spent in the previous cycle. He and others are waiting for an April report from state revenue forecasters that could force them to make more cuts.

"I am not at all ready to embrace any idea that proposes to direct funds to create a whole new program when we are in the middle of this process to craft a basic budget," he said.

Mitchell, a former head of the Maine State Housing Authority, said the bill would do three things: create affordable housing, put construction workers back on the job and provide housing that is energy efficient.

Although the plan stretches over 10 years, it proposes to infuse $30 million into the state economy starting July 1 and an additional $30 million the following fiscal year.

"This has to be one of our prime steps to recovery, getting people into affordable housing," Mitchell said.

Anton said housing is considered "affordable" if a household is paying no more than 30 percent of income for housing costs.

The bill comes at a time when the lawmakers are juggling many competing interests, which include the state budget, a $306 million bond package from Gov. John Baldacci, and a host of bills that seek to spend money that's not already allocated in the budget.

Mitchell's bill, because it is slated to take effect July 1, is categorized as an emergency, which means it will need support from two-thirds of lawmakers if it gets committee approval.

The House Chairwoman of the Appropriations Committee, Rep. Emily Cain, D-Orono, said she supports the concept of providing more affordable housing.

But she said as the committee considers all borrowing proposals, she will be weighing short-term vs. long-term benefits, and whether the expenditure will produce results.

"The question is whether this is the best way to do it," she said.

Her Republican colleague on the committee, Rep. Sawin Millett, R-Waterford, said he doesn't object to the idea of the state helping to provide funding for affordable housing.

He's just not sure how it will work this budget year.

"If revenues decline further, our work down here becomes more difficult," he said. "It's a concept that makes sense on its face, but it's hard to see it fitting in."

Newstex ID: KRTB-0103-33278835