AUGUSTA — After several weeks of public build-up, a Portland public housing project on Tuesday found itself in the political cross hairs at the Maine State Housing Authority’s monthly board meeting.

As the tense meeting at MaineHousing’s Water Street headquarters unfolded in front of television cameras and other media — some alerted in advance by state Treasurer Bruce Poliquin — it became clear that the scrutiny was meant more for the agency’s executive director, Dale McCormick.

McCormick, a Democrat appointed by Gov. John Baldacci, has been taking fire for several weeks following news that the Elm Terrace project on High Street in Portland was $2.4 million over original estimates. McCormick said she halted MaineHousing’s tax credits to the project once she was alerted to the overrun.

However, Poliquin, who sits on the MaineHousing board along with several other new panelists appointed by Gov. Paul LePage, questioned whether such overruns were routinely overlooked by McCormick prior to the 2010 Republican takeover of state government.

McCormick fought back Tuesday during several testy exchanges with Poliquin and new board Chairman Peter Anastos. She sat mostly silent as several audience members mobilized by conservative activist groups blasted the agency.

McCormick later said the entire exercise provided “more heat than light,” adding that Poliquin continued to spread “misinformation” when he compared affordable housing projects to single-family homes.

The developer of a $10 million project in Waterville recently leveled the same criticism at Poliquin.

McCormick said Poliquin’s frequent critiques of MaineHousing had consequences. She said a concerned investor recently called her after reading Poliquin’s blog post, worried that the agency’s bonds were vulnerable.

MaineHousing, which essentially acts as a bank, allows investors to buy a stake in its billions of dollars in bonds. McCormick questioned why Poliquin, a board member, would “undercut (MaineHousing’s) investor confidence.”

“The facts just haven’t seemed to matter,” McCormick said. “Before, (agency criticism) was just annoying … but to my mind, it crossed over from being annoying to being reckless.”

Anastos and Poliquin wondered why MaineHousing didn’t penalize projects that went over budget. He also questioned a bidding system that appeared to favor nonprofit developers over private developers, even when the latter offered lower project bids. 

The scoring system is drafted by MaineHousing staff and approved by its board. However, it’s ultimately ratified by the governor and can therefore reflect an administration’s policy initiatives, such as additional weatherization standards or a contractor’s labor benefits. 

MaineHousing has begun changing the system to reflect LePage’s policy goals.

Elm Terrace, however, was authorized under Baldacci’s scoring system. Additionally, the project was subject to the city of Portland’s regulatory system, according to the developer, Community Housing of Maine.

Community Housing Director Cullen Ryan said Tuesday that one of the project’s biggest cost drivers was a requirement to install a parking garage beneath the existing building. It was a city mandate, according to Cullen.

The project also qualified for the state’s historic preservation tax credit program, which awards credits for rehabilitating historic buildings that may otherwise be too costly for privately financed developers.

While the projects come with a higher price tag, policymakers have determined that they reduce sprawl, revitalize neighborhoods and provide affordable housing near existing infrastructure. It has also been hailed for buoying the development community during a period of tight bank lending and slow commercial growth.

The Legislature this session extended the program by 10 years after it had been set to expire in 2013. The bill, sponsored by Sen. Chris Rector, R-Thomaston, won unanimous support in the House and Senate.

A recent study of the program by Planning Decisions noted that the state will pay $6.5 million in tax credits versus the $2 million it will receive in new revenues for the 10-year extension. However, the study noted, municipal governments are expected to haul additional property tax revenue from the reuse of abandoned buildings.

Poliquin said Tuesday that the program was a failure. However, Anastos said it shouldn’t be “thrown under the bus.”

Anastos was more concerned that MaineHousing didn’t offer incentives to bring down project costs or penalties if it went over budget. He and Poliquin also wondered why McCormick didn’t inform the board about projects that could be costly.

“Sometimes I feel like more of a detective than a board member,” he said.

McCormick said she was effectively the fiduciary of a bank and involving the board in the underwriting of projects would politicize the process.

She said she welcomed the board’s mandate to lower costs, a task she says she pursued even before Republicans took over.

Nonetheless, it was evident Tuesday that McCormick will continue to face public scrutiny.

Meanwhile, the fate of Elm Terrace remains uncertain. McCormick has ordered the developer to cut more than $1 million to restore the flow of tax credits.

While Poliquin indicated Tuesday that he’d prefer to halt the project altogether, it’s unclear whether MaineHousing can legally do so because the developer is adhering to the rules adopted in 2010.

Community Housing already has sunk $700,000 into Elm Terrace. Ryan, with the agency, said spiking the project seemed “arbitrary” given its widespread support. He added that Community Housing was close to meeting McCormick’s target after reducing the size of the housing units.

smistler@sunjournal.com

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