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September 21, 2021 at 7:00 am

Stabilizing Long-Term Housing Costs and Creating Permanent Workforce Housing

On June 17, 2021, MEREDA presented a virtual presentation  titled, “Creating New Affordable Housing through Limited Equity Housing Cooperatives”.  Below is an article focusing on this same topic.  

By Harry Zehner, National Co-op Coordinator, Urban Homesteading Assistance Board (UHAB)

Availability and affordability of workforce housing is becoming a serious problem across Maine – particularly in coastal communities, not just cities, affecting communities of all sizes. Working people who keep the restaurants and shops running are being priced out by folks moving to Maine and vacationers’ second homes. Meanwhile, businesses and local institutions are having trouble recruiting employees. “I have spoken with senior executives at MaineHealth who universally cite housing shortages as their primary housing challenge. MaineHealth has over 2,000 job openings currently statewide. Nurses from outside of Maine have accepted job offers only to later rescind those offers when they cannot find housing.”

Luckily, some here in Maine have looked around and found a solution to this budding problem. One solution which has been successful in stabilizing long-term housing costs and creating permanent workforce housing is limited-equity cooperative housing. These affordable co-ops are collectively owned and operated by their residents. Instead of rent, limited-equity co-op members pay a monthly maintenance fee. Members democratically elect a board of directors and use the monthly fees to operate and maintain the building they live in. By removing profit and speculation on housing, and by giving residents full democratic control of their buildings, affordable co-ops can form an important, community-centered bulwark against rising housing costs.

In places like New York City, limited-equity cooperatives have been one of the most successful models of affordable, workforce housing for nearly a century. However, affordable co-ops are not reserved for the largest cities — from Portland to Spokane to Kansas City and many places in between, limited equity housing cooperatives are being looked to as a permanent solution to the now often heard refrain: “Nobody can afford to live here anymore.” The national spread of interest in limited-equity co-ops would be extremely helpful to investment in cooperatives here in Maine. Organizations like the Urban Homesteading Assistance Board (UHAB) — which has worked to fund, organize and manage affordable housing cooperatives across New York City for decades — have a wealth of knowledge and technical know-how to share.

Of course, funding will always be a primary concern with any new project like this. But we should also consider the benefits of investing in affordable, community-controlled workforce housing. Investing in cooperatives will help keep our small cities thriving, by both supporting the working people that make them tick and ensuring that our communities are dynamic and socio-economically diverse. The people are what make our towns and cities, and we would be remiss to prioritize second vacation homes over affordable housing for the people who live, breathe, eat (and spend) year-round.

Funding is still an important issue. Luckily, we can look to the burgeoning cooperative movement in Portland for direction. Over the past two years in Portland, multiple co-op housing developers have worked with the city to fund new construction using tax increment financing, Community Development Block Grants and Brownfield funds. Although critics have pointed out that cooperative housing projects are sometimes marginally more expensive to support than traditional housing development, unlike traditional market-rate housing, they guarantee a source of permanently affordable housing far into the future.

Maine is relatively new to cooperative housing, but the homes which do exist are already bearing fruit. For example, the Raise-Op housing cooperative in Lewiston successfully kept its tenants housed and debt-free during the COVID-19 pandemic, even as the economic downturn affected residents. In addition, as rents skyrocketed up by 35% in the Lewiston area from 2014-2017, Raise-Op only experienced a 5% increase in costs, saving residents thousands of dollars a year.

“Portland’s elected officials and city staff have worked hard to make city-owned land and tools like tax-increment financing available to address the housing shortage. At the state level, elected officials and staff are also engaging the issue head on. The Department of Economic Development has identified workforce housing as a strategic priority. The Legislature has formed a commission to study zoning and land use restrictions. The Governor has created and filled a new senior advisor role for housing policy” – Brian Eng

Working people are what make or break our communities. As they slowly get priced out of Maine’s cities, we need to take proactive steps to create more affordable workforce housing. One part of our plan should be investing in building democratic limited equity co-ops.

Categories: Maine Real Estate Insider