'A fundamental mismatch to the supply of housing'

It’s been a busy summer for Avesta Housing, a nonprofit affordable housing developer that currently has eight projects underway from Portland to Kennebunk.

The Portland Daily Sun

By Casey Conley

PORTLAND - It’s been a busy summer for Avesta Housing, a nonprofit affordable housing developer that currently has eight projects underway from Portland to Kennebunk.

For Avesta, which already owns or manages nearly 1,600 units across Southern Maine, the projects will create 247 new affordable apartments targeting artists, low-income residents and the elderly. Major projects include Oak Street Lofts, the Adams School redevelopment, and the construction of a second phase at Pearl Place, among others.

Since he became president 11 years ago, Dana Totman says Avesta has never had so many projects in development in one time.

Totman said demand for affordable housing has never been higher. And while the new units will help, Totman says it's unlikely there will ever be enough affordable units to meet the need, especially for elderly housing developments, where wait lists can stretch for decades.

In a recent interview, Totman described how changing demographics has created a “fundamental mismatch” between the housing supply and demand, Avesta’s smart-growth philosophy and his predictions for how the city’s housing landscape will change in the coming decades.

(The interview was edited and condensed).

The Portland Daily Sun: Is Avesta public housing?

Dana Totman: We are a private, nonprofit organization. We act very much like a private developer in making sure that we are financially viable and responsible and we will develop things that are going to work financially in the short run and the long run. … What separates us and a private, for profit developer, is that proceeds or excess revenues we get is plowed back into our mission, which is to provide safe decent affordable housing, and that is not always the case with a private developer.

PDS: Can you remember a time when Avesta has had so many projects going on at once?

DT: Not since I came here. We have this sort of concentration of activity going on right now for a variety of reasons. One is that we have expanded our development staff a little bit. … Two is that several of these were funded with stimulus funds that provide either direct stimulus monies ... or other kinds of resources that made their development possible. And the third reason, there was an affordable housing bond that was package that was passed by the state legislature two years ago, and that created some financial resources. The fourth reason … is there is as much of a need for affordable housing as ever.

PDS: How many jobs have been created through these current projects?

DT: I am guessing 400 to 500 jobs will be involved in the construction of the eight projects underway.

PDS: You mentioned demand for affordable housing. Aside from obvious economic reasons, what factors are driving this?

DT: What I think we see today more than ever is there is just a fundamental mismatch to the supply of housing ... in Portland and in Maine. In Portland, the average family size is 1.6 people, so that means there is a huge demand for one bedrooms and smaller apartments, but the supply of housing, most of which is very old, was built when families were larger. The other mismatch is our population is older so people need more accessibility and many of the older units simply aren’t as accessible as we would like. … The housing is old, and it’s hard to heat, and so the energy efficiency of our housing stock to what we need with today’s energy prices is a mismatch, and then the obvious mismatch, is the cost. That is perhaps the most important part of the mismatch.

PDS: What you described sounds like the standard smart growth model, where you want people to live and work in the same general vicinity. Is that how you approach development of new projects?

DT: Yes we do. We want to do things that are smart growth and that save energy. It’s responsible development that will help us in the long run.

PDS: What is the wait list for an Avesta unit in Portland?

DT: We have a lot of different types of housing for different groups, so the wait list varies, but for fully subsidized elderly developments, we have waiting lists of several hundred that could be 20 years long. Waiting lists for the affordable tax credit developments like Pearl Place, generally we have the number of people on the waiting list that is similar to the size of the development. So if it's a 60-unit development, we probably have about 60 on the waiting list. Typically, anywhere between 10 and 25 percent of the units will turn over each year.

PDS: How do you determine who is eligible for Avesta units?

DT: It’s all based upon their income (and federal income guidelines for the particular development) and we look at the family members’ total income and if somebody’s (household income) is 60 percent of median income or less, they usually qualify. Some programs go slightly higher, some go lower.

PDS: Do you think there is a gap between those whose incomes disqualify them for affordable housing and what these people can afford. For example, young people who earn a decent salary but have a lot of student debt. Are there any programs out there for them?

DT: Everybody has some affordability challenge. … But in terms of the monies available to develop new housing, it mostly is targeted to folks of lower income. But the market is the market, and if everybody wants to charge $2,000 a month for an apartment and your income can only support $1,000, then there is going to be a lot of empty units, so eventually the market has got to respond to the middle. … There is essentially a fixed amount of cost it takes to operate an apartment, absent debt, and that includes taxes, repairs, maintenance, insurance, health and safety improvements, and that by itself if $500 or so (so rents will almost never go lower than that per unit).

PDS: Do you ever hear people say of an Avesta unit, ‘Those are nicer than my (unsubsidized) apartment’?

DT: We want all our housing to be the best housing possible. It's not frivolous by any means. The apartments aren’t huge, but they are new, they are really nice and they are well managed. I guess we would like to see the quality of all housing improve.

PDS: Even though Avesta is not public housing, do you ever have people who say during the development stage that they don't want an Avesta project in their neighborhood?

DT: Yes. I serve on the planning board in Brunswick, so I understand how neighborhoods react to new development, whether it’s a gas station, a new restaurant or affordable housing or a medical office building or train station or whatever. When we go to a planning board, we want to work with the neighbor and with the community to demonstrate to them that what we present is going to be an asset to that community.

PDS: What’s the funding like these days for affordable housing? Is the spigot coming back on after funding dried up in 2008?

DT: For what we do, there are seven or eight core funding sources that we follow, one is tax credits, one is the federal HOME block grant, another is the state real estate transfer tax, we monitor all those very carefully. This past 12 months, essentially all those resources have been pretty good. But that’s not always the case.

PDS: Maine is a rural state, it's an older state. Do you see people moving at a quicker rate than previously into the state’s urban areas? Is that where things are headed?

DT: I think it is. Whether it's living in a condominiums downtown or renting downtown, I think the beauty of home ownership and living in suburbia, the beauty is losing a bit of its luster. An alternative is, let me come downtown, where I can walk to restaurants, or walk to the park, either with a condo association or with a landlord that takes care of the maintenance. They are not going there expecting to make a bundle, but to go there to not lose money and live affordably. There is a real shift where people are moving from suburbia back to downtowns.

PDS: Portland’s population has been stuck at about 65,000 for some time. Do you think that’s the upper limit for how many people the city can support?

DT: I have been in some discussion with planners in the city and city council and there has been a discussion for some time about how many people Portland would like to have living here. Would it prefer 60,000 and kind of act like suburbia where everybody needs to have a parking place or two in their apartment or house or does it want to be a little more urban and shoot for 70,000 to 75,000? It's a wonderful question for the planners of the city. I think generally the feeling I get from the city is they want more people living downtown because people create that vibrancy and there is nothing perhaps more damaging than having empty buildings, empty offices, empty anything.

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Check out Avesta's blog, The Porch Light, for more news, updates and stories.

Contact Development and Communications Manager Sara Olson at 207-553-7780 x3352 or by email.