AUGUSTA — State Treasurer Bruce Poliquin's latest broadside against the Maine State Housing Authority has elicited a strong response from an affordable housing developer.
Poliquin has gone on the offensive about the high cost of affordable housing projects for several weeks. He's also made critical comments about MaineHousing head Dale McCormick after a project in Portland exceeded original estimates by $2.3 million.
Some believe Poliquin's criticism, along with the Republicans' initiation of a MaineHousing probe by the Legislature's watchdog agency, is politically motivated.
On Thursday, Poliquin took aim at a recently completed project on Waterville's Gilman Street.
The post drew an eight-page response from Kevin Bunker of Developers Collaborative, the firm that worked on the $10.4 million project. Although Bunker said he supported Poliquin's quest for reforms at MaineHousing, he took issue with what he believes is the treasurer's inaccurate rhetoric and throwing Gilman Street "under the bus."
Gov. Paul LePage, the former mayor of Waterville, touted the Gilman Street project earlier this year at its groundbreaking. Nonetheless, Poliquin has folded Gilman Street and the Elm Terrace project in Portland into a broad critique of MaineHousing. The treasurer, who sits on the MaineHousing board of directors, said the costs of those projects are emblematic of institutional problems at the Maine State Housing Authority.
Poliquin reiterated concerns that the cost of affordable housing prevented MaineHousing, a quasi-state agency, from doing more projects.
In his post, Poliquin wrote that the cost of affordable housing was more than most single-family homes.
"How can Maine taxpayers be expected to help pay for $314,000 'low-income' apartments when the median single-family home sells for $159,000?" Poliquin wrote.
Poliquin described the Gilman project in similar terms, saying the project's $292,000 cost per apartment was higher than a $285,000, 3-bedroom, 3-bath home in nearby Winslow.
But Bunker said the comparison doesn't take into account the reality of the state and federal policies and "belies a lack of understanding of tax-credit projects and historic tax-credit projects, in particular."
The Gilman and Elm Terrace projects are historic tax-credit developments.
Bunker noted that in projects like those, housing costs make up only a percentage of the total price tag. He said that because of the tax-credit structure, the actual housing at Gilman was 62 percent of the project cost. That means, Bunker wrote, that the per-unit cost at Gilman was $178,735, about $110,000 less than the figure Poliquin quoted.
The source of the other cost drivers have to do with the type of projects targeted for development, Bunker wrote. That often means rehabbing old buildings that might need updates such as sprinklers or elevators and that often require environmental remediation.
Rehabbing old buildings is a policy decision by federal and state agencies, which often see a value in locating affordable housing projects to preserve historic structures near existing infrastructure, such as schools, hospitals and public transportation.
Such projects are designed to limit sprawl and expand municipal services.
Bunker also noted that affordable housing projects are funded primarily by federal dollars. While taxpayers ultimately foot the bill, Bunker said, the projects have provided a steady flow of work for the developers and their contractors.
Bunker said Poliquin’s rhetoric about government spending ignored the causes and benefits of affordable housing.
The exchange highlights an emerging wrinkle in the debate over MaineHousing and McCormick. Some have questioned whether Poliquin's scrutiny of the agency is motivated by the LePage administration's desire to see a change in leadership at MaineHousing.
While members of the development community have privately expressed frustration with McCormick, Bunker's letter illustrates that the development community may not be entirely comfortable with Poliquin's public critique of the entire industry.
The exchange also sets up next week's meeting of the MaineHousing board of directors. The meeting will be the first gathering with four new board members appointed by LePage. One, Peter Anastos, has echoed Poliquin's critique of the Portland and Waterville projects.
McCormick has already told the developer of the Portland project to cut costs or risk losing MaineHousing tax credits. Nonetheless, Anastos and Poliquin have wondered whether similar overruns were overlooked prior to their arrival at MaineHousing.