Bayside Village apartments on Marginal Way in Portland. The apartment building is being sold to a property management company that plans to renovate and turn the building into market-rate apartments. Brianna Soukup/Staff Photographer

A plan by one of Portland’s largest landowners to buy and renovate a 400-unit apartment building has sparked protests about the loss of additional affordable housing in a city already struggling with rising rents, low vacancies and homelessness.

Housing activists are calling on the City Council to override a recent Planning Board decision allowing the company to convert Bayside Village from a lodging house for students and low-income families into a more traditional apartment building with market-rate rents.

Jess Falero leads a People’s Housing Coalition march Saturday down Congress Street calling for affordable housing for all. Brianna Soukup/Staff Photographer

The project also helped fuel a protest Saturday by a new group organized to advocate for Portland’s homeless and low-income residents.

“I’m here because I’m appalled,” Kelly Merrill, a co-founder of the People’s Housing Coalition, told councilors on Wednesday. “We demand a seat at the table. We demand a voice. We ask that you override the sale.”

Tom Watson, the founder of Port Property Management, said he does not plan to evict any current tenants for the $8 million to $10 million renovation project, which will be done over the next 2 1/2 years. He said the building has a 50 percent annual turnover rate and he plans to hire a housing coordinator to help tenants find new places to live.

“We will help them find good and adequate housing,” Watson said. “We’re going to work with other landlords and nonprofit agencies. It’s really a very open process.”

The proposal comes at a time when at least three developers are looking to build lodging houses, saying demand exists for low-cost room rentals with shared kitchens, bathrooms and other common areas.

Watson currently has Bayside Village under contract to purchase from Blue Atlantic Portland LCC, which according to city tax records is based in Texas.

The city does not have control over the private property sale. But City Manager Jon Jennings said he will look into the approvals and report back to the council’s Housing Committee on Wednesday.

“I have asked our Planning and Housing staff for a full briefing on what has transpired with Bayside Village,” Jennings said in an email Thursday. “While this appears to be a private transaction involving a buyer and seller, the City does need to look at any and all agreements we may have in place.”

Neither Danielle West-Chuhta, the city’s top attorney, nor Jessica Grondin, the city’s communications director, responded to an email about whether the council has any authority to override a Planning Board decision. But usually, planning decisions have been challenged in court.

Bayside Village was built in 2008 and features a so-called quad design. The 100 apartments each have four bedrooms, two bathrooms, a living room and kitchen. The bedrooms are leased individually and the landlord, not tenants, assign tenants to an apartment.

The city helped fund the construction of Bayside Village by providing the developer with an 11-year Tax Increment Financing agreement that returned over $790,000 in property taxes to help with construction costs. That agreement required the building to be used as student housing, but it expired in 2018.

The Miami-based Federated Cos. bought the property in a foreclosure sale for $9.2 million in 2010. Two years later, they sold it for $18.2 million to the current owner.

Watson would not disclose the pending sales price.

In August, the Planning Board approved a change of use and a new site plan for the property, allowing Watson to convert the five-story building from a lodging house to more traditional market-rate apartments. In the end, he plans on building out 90 efficiencies, 51 one-bedroom units, 42 two-bedroom units and 10 four-bedroom units.

Rents are currently starting $699 a month for a bedroom, according to the Bayside Village website.

Watson said the new rents would range from $1,350 for a one-bedroom apartment to $2,800 for a four-bedroom unit. Utilities would be included in the rents.

Watson said the projected rents fall within the city’s guidelines for workforce housing, which are considered affordable to households earning up to 100 percent of the Area Median Income, which currently is $65,100 a year for a single person to $93,000 for a four-person household. And 20 of those renovated units will be deed-restricted to remain workforce housing.

Housing activists fear that the change could lead to more people becoming homeless. On Wednesday, they urged the council to override the Planning Board’s approval, saying the project will lead to a loss of affordable housing for low-income and immigrant families.

Kate Sykes, who co-chairs the Southern Maine Democratic Socialists of America and is a founding member of the People’s Housing Coalition, said Bayside Village is one of the last low-barrier housing options for families with low incomes.

“It serves an important function in our city for people who are marginally housed, folks who would not be able to get housing otherwise,” Sykes said, urging the council to overturn the approval. “These people, a lot of them would be homeless without Bayside.”

Sykes said the apartment complex does not conduct background checks or charge an application fee, but that does not appear to be the case. A woman who answered the phone at Bayside Village said tenants must pay a $125 application fee, which also helps pay for background and credit checks.

Merrill, who described herself as a single, disabled mother, told councilors that she has struggled to find safe, affordable housing in Portland. She and her high school son have had health issues due to moldy apartments.

“Because of the housing crisis there is no safe place for us or anyone to go,” Merrill said, adding that she spends 62 percent of her income on housing. “Bayside is where people like my son and myself might go if our conditions don’t continue to improve.”

Bayside Village resident Peter McDonald, who also works on housing issues with the DSA, said he will be taking part in a meeting at Bayside Village on Wednesday to try to organize residents. He’s skeptical of Watson’s claims that he does not plan to evict anyone and that the units will turn over naturally.

“If people don’t want to leave, eventually they will get kicked out,” said McDonald, who works as a line cook in the Old Port. “At the very least, the city needs a plan to comfortably resettle people so they can stay in Portland.”

Bayside Village is also used to house people who have stayed at the city’s homeless shelter as well as asylum seekers for short periods of time, according to the city. But the Portland Housing Authority says it doesn’t have anyone using a Section 8 voucher to pay rent at the complex.

Aaron Geyer, the city’s social services director, said in an email that the city’s General Assistance program covered 60 rents in the building for the month of August. Geyer said he could not provide data on the lengths of stay, but a review of 30 random cases showed that majority stay for less than a year.

But Watson said he is open to continuing to work with the city to house GA tenants at the complex.

However, Watson’s projected rents are higher than the current maximum rents allowed by General Assistance in Portland. Beginning Oct. 1, GA rent maximums for heated apartments will range from $1,127 for a one bedroom and $2,309 for a four bedroom.

Watson said he is currently in discussions with the University of Southern Maine about providing student housing at 132 Marginal Way, which would return the building to its originally intended use.

Bob Stein, USM’s executive director for public affairs, said the university has been in talks with Watson about possibly leasing 100 units as an interim measure to meet the demand for student housing until its new dorm is constructed three years from now. But no final decisions have been made.

“Bayside Village is a potentially attractive option for our students in the short term, but we are also open to other options that might present themselves,” Stein said.

Clarification: This story was updated at 10:15 a.m. Monday Sept. 9, 2019, to clarify General Assistance rent amounts.

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