Munjoy Hill, affordable housing up for council vote Monday

The Portland City Council will vote Monday night on whether to spend a total of $1.3 million over 30 years in tax increment financing to help finance a $13 million housing development on Munjoy Hill.

The project will cost the city about $45,000 a year in tax revenue.

Tax increment financing is a common source of financing for affordable housing projects. Tax revenue from new developments in certain parts of the city can be redirected to developers or placed in special municipal development accounts to pay for projects outside the city’s regular budget. This type of financing serves as an operating grant, offsetting expenses once the building is in operation, rather than financing the construction of the development.

“This is very much related to the goals the city has with creating housing of all kinds and especially affordable housing,” said Greg Watson, the city’s director of housing and economic development.

The proposed development at 42 Atlantic Ave. was presented by LB Atlantic LLC, led by Daniel Black. This is Black’s first time serving as lead developer on an affordable housing project. The proposed project would require the demolition of the former American Legion building to make way for a four-story, 30-unit building for low-income households.

The new development would include 14 studios, eight two-bedroom units and eight three-bedroom units. Twelve of those units would be reserved for households earning at or below 60 percent of the area median income — $61,200 for a two-person household. Eighteen units would be reserved for those earning at or below 50 percent of the area median income — $51,000. Three units would be reserved for those emerging from homelessness and three would be reserved for people who have recently escaped domestic violence.

The project would also be partially funded through Section 8 project-based vouchers through MaineHousing. Although MaineHousing recently stopped issuing Section 8 vouchers, it does not extend to large-scale projects like this one.

“My interest in affordable housing is because I see Portland changing, especially Munjoy Hill,” said Black, the developer. “I live three blocks away from the development. It’s important to me to have a mixed-income neighborhood where I hope to raise my family.”

Black said the project was only made possible by the passage of LD 2003 last fall, specifically the affordable housing density bonus, which increased the number of rental units that could be built on a property. He explained that allowing multiple units on one lot enabled him to access state funding assistance – developments must meet a minimum size requirement to qualify.

The project was approved last month by the council’s housing and economic development committee, which is chaired by Councilor Pious Ali. He plans to vote in favor of the bill on Monday.

“We are in the midst of a housing crisis, which makes it crucial to explore a variety of housing types, especially those that serve the working class in our community,” Ali wrote in an email Friday.

Councilwoman Kate Sykes said that while she plans to vote in favor of the project, she believes the city is relying too much on TIF funding to build more housing. She would prefer to see the city invest in a public housing program.

“We’re in a housing crisis right now, but we’re doubling down on a system that produced the housing crisis. The answer is to start building social housing or we’re going to have more of the same problem,” Sykes said.

Sykes said that in her view, the TIF “is giving way to future generations of Portland taxpayers and undermining the tax base.”

The development is being promoted as an emergency order, meaning a quorum of seven votes will be needed to pass.

Another affordable housing bill will also go to a vote Monday night.

The Portland Housing Development Corporation, the development arm of the city’s housing authority, plans to raze several old public housing buildings in the East Bayside neighborhood to make way for a new nonprofit development with a mix of housing types.

The project will demolish four existing 40-unit buildings on the lot between Cumberland Avenue, Oxford Street, Boyd Street and Mayo Street. A building on that lot was filled with black mold this winter, creating dangerous living conditions for its residents.

At the July council meeting, Sykes voted against the project because he said the housing authority should use housing bonds instead of TIFs to fund new projects.

The project will be subject to a final vote on Monday.

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