AUGUSTA — Recent changes to building standards and the way low-income housing projects are ranked by the Maine State Housing Authority for federal tax credits appear to be driving down development costs, state Treasurer Bruce Poliquin said.

Poliquin, who sits on MaineHousing’s board of commissioners, said the changes mean the price for low-income housing will drop by a whopping $47,000 per unit, from $197,000 to $150,000.

Prior MaineHousing standards placed a heavy emphasis on adding green energy and energy conservation, but those standards included social programing, such as requiring subcontractors on any publicly funded project to have health insurance.

Poliquin, MaineHousing board Chairman Peter Anastos and a spokeswoman for the agency said Thursday the changes were the result of a yearlong effort to refine the standards and a ranking method that’s used to award about $2.9 million of federal tax credits each year.

Those tax credits help leverage about $25 million in private investment each year that goes toward creating housing for low- and moderate-income individuals and families.

“We met the past year with developers and had them tell us how to lower the cost per unit so we can get more families in these apartments,” Poliquin said. “This is our first run at it and in one year, a 25 percent reduction, a $47,000 savings in one year.”

Poliquin is basing his numbers on the latest round of 19 projects being proposed for development around Maine. Those projects will compete for available tax credits and only a portion will move forward in 2013, MaineHousing spokeswoman Deborah Turcotte said.

Poliquin said the new numbers are encouraging and mean the authority will be able to stretch its funds further and put more people in safe and affordable housing. “This is about helping people,” he said.

“Maine State Housing forever had picked the projects that were awarded the low-income housing tax credits, which makes this all work,” Anastos said. “They picked them on a system that rewarded expensive developments.”

Anastos said the new standards encourage developers to bring forward lower-cost projects. 

“You had to add in, sometimes, solar power,” he said. “You had to have special training programs for women or other certain groups and some of those things are fine. But the big thing was there wasn’t a single point awarded for having the best cost, so you could bring a project in for half the price of someone else and not get the award.”

Anastos said it meant fewer units were being built. “Our money wasn’t going as far.”

Turcotte said the scoring for development projects is based on a 64-page document known as a Quality Allocation Plan that is used to rank the projects and award points. Those with the highest scores win the federal tax credits for that year. Those credits are often a necessary part of the financing for the projects.

The projects, once built, are required to make housing available for families and individuals earning less than 30 percent, 50 percent and 60 percent of the median income for the area in which they are built, Turcotte said. Some projects, like the recently opened The Lofts at Bates Mill, are allowed to offer some units at market rate.

David Lloyd, an architect with the Portland-based firm Archetype, was involved in revamping the standards. He said Thursday that the process was much like one a person designing and building a house would go through to select materials and components based on cost, building codes, quality and performance.

Lloyd said the effort was a collaborative one with developers, architects, engineers and the staff at MaineHousing. “We all put our heads together on how to make a better product for less money,” he said.

He said green-energy components were not necessarily bad things and that there is always a “learning curve” that occurs whenever one tries to incorporate new technologies into building designs.  

“Some things are well-intentioned, but when you go through the learning curve you realize that maybe there isn’t a good payback,” Lloyd said.

He said solar components were a good example of that.

“You put them up there and you spend the money and you see what the actual savings is,” he said. “The savings weren’t enough to justify the cost, but at the same time it’s a good thing because of green energy and saving the environment. You are doing the right thing, but at the same time that item is raising the cost of housing. So, from strictly a financial viewpoint, not looking at the environmental aspects of it or anything, it was not a good investment.”

The final tax credit awards won’t be determined until mid-December, but the per-unit costs are not likely to change much, Turcotte said.

She said that while some decrease in the per-unit costs is based on a change in the standards, other factors in the economy are driving down development costs.

“What we’re noticing is developers are reducing their soft costs, and they are wanting to develop properties that they can afford to do, thanks to lower acquisition costs,” Turcotte wrote in an email. “Construction costs per square foot are down slightly, and even a minimal decrease is worth noting. All of this means that we’ll be able to assist in the development or rehabilitation of more housing units to help more low-income Maine families, and that’s the intended purpose of this entire process.”

sthistle@sunjournal.com

Copy the Story Link