Gov. Janet Mills launched a new state program Wednesday that offers $10 million in forgivable home construction loans to help address Maine’s mounting housing crisis, which has grown more severe during the COVID-19 pandemic.

The loan program is part of $50 million that’s earmarked for housing in the governor’s Maine Jobs & Recovery Plan, which is funded through the federal American Rescue Plan Act and was approved by the Legislature last year. An additional $40 million for affordable housing programs will become available later this year, when a second round of ARPA funding is released.

Loans issued through the Affordable Homeownership Program won’t have to be repaid if developers fulfill the terms of their agreements. Offered through MaineHousing, the program is expected to support construction of at least 150 affordable single-family homes.

A real estate boom triggered by the pandemic has worsened a housing shortage that already existed in many Maine communities. In December, the median single-family home sale price in Maine was $299,000 – up 38 percent from the median price of $216,900 in February 2020, based on data from Maine Listings, a subsidiary of the Maine Association of Realtors.

The shortage has greatly lessened the affordability of houses and apartments across Maine, hampering the efforts of employers and communities to attract and retain workers and families, Mills said in a written statement.

“The pandemic has put the price of homes, and the dream of home ownership, out of reach for too many hard-working families,” Mills said. “By building more housing across Maine, more families will be able to realize the dream of having a safe, affordable place to live in the communities that they love.”

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The new program is designed to promote construction of “moderately priced” single-family homes by providing zero-interest, forgivable loans to offset rising costs for land acquisition, labor and materials, according to MaineHousing. It’s similar to a previous affordable subdivision loan program that was funded with $1 million in real estate transfer taxes. However, the new program significantly increases loan amounts offered to developers and maximum income levels of eligible home buyers and it requires more sustainable construction methods.

Developers who receive funding through the program must designate at least five homes per subdivision to be “affordable homeownership units.” These new, owner-occupied, single-family homes will be sold to home buyers who earn up to 120 percent of area median income, among other criteria. Maine’s median household income is about $59,000. What would be considered an “affordable” home price would vary across the state.

Developers must borrow $300,000 to $1.4 million per subdivision to qualify. The maximum forgivable loan per affordable home is $70,000 in York, Cumberland and Sagadahoc counties, where the maximum home price will be $325,000; and $60,000 in the remaining 13 counties, where the maximum home price will be $275,000. The sale price of each home would have to remain “affordable” for 15 years under MaineHousing criteria.

“MaineHousing greatly appreciates the focus and financial backing the Mills administration and the Legislature have placed on developing a range of solutions for some of Maine’s most challenging housing problems,” said MaineHousing Director Daniel Brennan. “This program will help create desperately needed new, affordable single-family houses, improving the lives and financial stability of Maine families.”

Developers participating in this program may not access other subsidies through MaineHousing, but buyers of the homes may receive subsidies from other programs for mortgage down payments and closing costs.

“Through this funding, Maine workers will be hired to build more safe, affordable housing, which is critical to the well-being of our communities,” said House Speaker Ryan Fecteau, D-Biddeford. “The American Rescue Plan ensures states can use economic recovery funds to meet our greatest challenges, and the supply of housing is one of Maine’s biggest issues right now.”

Biddeford City Manager James Bennett, who is president of the Maine Municipal Association, said the program not only will “help address the housing shortage, but (also) tend to the needs of moderate-income families, who are often ineligible for federal and state assistance.”

Mills noted two other housing initiatives that are part of the Maine Jobs & Recovery Plan: $1.5 million for housing navigator services to assist people in housing crises, based on a proposal from Rep. Victoria Morales, D-South Portland; and $10 million to support homeless shelters, based on a proposal from Rep. Kristen Cloutier, D-Lewiston.


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