When Redbank Village Apartments started raising rents as much as 35% last spring, South Portland city councilors scrambled to enact a six-month emergency rent cap to keep increases at no more than 10%.

A California company had purchased the 500-unit, World War II-era complex and was pushing massive rent hikes on its low- to moderate-income tenants. City officials also passed an eviction moratorium through November, hoping it would give them time to develop a rent stabilization ordinance.

Councilors worried that tenants would be made homeless in southern Maine’s red-hot real estate market, especially with hundreds of indigent individuals and asylum seekers already filling rooms in local hotels. They also feared that other landlords would attempt similar rent increases and add more fuel to the housing crisis.

They were absolutely right.

One week after the rent cap went into effect in early June, Mat Yerkes got an email from the managers of Latitude at South Portland, a new apartment complex at 350 Clarks Pond Parkway, near the Maine Mall, built and owned by local and out-of-state investors. The monthly rent on his one-bedroom apartment, they informed him, would increase 31% – from $1,605 to $2,105, without utilities – when his lease came up for renewal in September.

“They’re basically putting the screws to me,” Yerkes said at the time. “I feel like they’re treating me like an ATM machine. I don’t know what I’m going to do.”

Just eight months after moving in, Yerkes found himself flung into a housing crisis that has consumed much of southern Maine, on the heels of a global pandemic that fueled a real estate boom, in the midst of rising inflation that’s threatening a recession. The crisis is impacting people at all income levels, from families that become homeless because they can’t find affordable apartments to business owners who can’t fill jobs because workers can’t find places to live.

Some communities are attacking the problem head on, actively seeking ways to increase construction of affordable housing, only to wind up gridlocked in NIMBY (“not in my backyard”) battles and watching proposals fail because people who say they support affordable housing don’t necessarily want to live near it.

A new state law has opened long-protected single-family zones to multifamily development, and it promises to ignite heated debate in cities and towns across Maine as they struggle to comply. Amid the controversy is a growing sense that some landlords, especially those based outside Maine, are willing to profit from the distress of people who are just trying to keep a roof over their heads.

MARKET OUT OF CONTROL

South Portland is battling all aspects of the crisis.

In addition to tamping down huge rent increases imposed by real estate investment companies, the city is cracking down on several hotels that have seen drastic increases in police and fire calls while serving as emergency shelters during the pandemic. At the same time, city officials are revamping zoning and taking other steps to promote housing development of all kinds, especially for low- to moderate-income residents.

Their efforts often end up at cross-purposes.

Mat Yerkes, it seems, is just another casualty.

The new rate for his apartment at Latitude “was set by market conditions” and “the market is in an unprecedented time,” a property manager informed him via email. He would be charged for the full $500 increase starting in September but would be expected to pay only 10 % more while the city’s rent cap was in place, the manager said. What would happen after November was unclear.

Yerkes had one month to decide whether he would stay and potentially pay a budget-busting increase, or decline Latitude’s renewal “offer” and hope he could quickly find another place to live. His experience at the complex hadn’t been great so far. Move-in had been delayed a month because his apartment wasn’t finished. He found the construction shoddy. And communication with the management company, First Communities of Atlanta, Georgia, had grown increasingly strained.

He decided to leave shortly after the company blocked his emails.

“I would rather take my chances than stay in a place where I feel taken advantage of,” said Yerkes, 35. “An increase in this market isn’t surprising, but 31% is just insane. It’s just another corporation punching down.”

Latitude could be considered a case of “careful what you wish for,” especially in southern Maine, where out-of-state companies have shown increased interest in the rental market, building and managing properties from a distance.

City councilors in 2017 changed zoning regulations near the Maine Mall that made the market-rate project possible, but they stopped short of allowing taller buildings that would have included subsidized units.

Latitude initially was developed and owned by Vincent Maietta, a South Portland developer and business owner, and Daniel Greenstein, a partner and broker with The Boulos Co. in Portland, who bought the 7.5 acre site for $1.6 million in 2018, city tax records show.

In 2019, they sold a 50% controlling interest in the project for $8 million to URS Capital Partners, a multifamily real estate investment company in Huntington, New York, according to state tax records. Today, the complex consists of four six-story buildings with a total of 256 units, and the city values the property at $54 million for tax purposes.

The Portland Press Herald/Maine Sunday Telegram’s questions about Latitude’s rent increases were referred to First Communities, the apartment management company in Atlanta.

Latitude’s increases comply with the city’s emergency rent cap, First Communities said in a written statement.

“Increases are always market driven and are in large part a consequence of expense pressures,” the statement said. “The current hyperinflation and our expense side is not immune to the same.”

How the market will influence future rent hikes at Latitude remains to be seen. The complex is already far ahead of some measures. Fair market rent for a one-bedroom apartment in Cumberland and York counties is $1,330, including utilities, according to the U.S. Department of Housing and Urban Development.

“We don’t have a crystal ball on what the future holds for the market,” the statement from First Communities said.

TIME TO STEP UP

South Portland leaders know they have to try to stem the tide of rising rents – which is why city councilors in June enacted the 180-day moratorium on rent hikes above 10%. They hope to use that time to come up with a rent stabilization ordinance.

As they work to keep existing affordable housing from disappearing, they know they want people to build more of it. The median home price in Greater Portland is now $472,790 and the annual income needed to buy that home is $130,000, according to a recent report from the Joint Center for Housing Studies of Harvard University. That’s more than double what the U.S Census Bureau reports as the area’s median household income of $61,695.

So, they’re working on revamping zoning regulations to promote housing construction of all types, and they’re collaborating with affordable-housing developers to further their efforts. They’ve also joined other cities and towns in pushing for regional and statewide initiatives.

They’re aware some residents will resist new projects that they see as threats to their neighborhoods and may not like a new state law that allows accessory dwelling units and duplexes to be built in areas with single-family zoning. But increasingly, city leaders recognize that the housing crisis affects both buyers and renters, and that it is a driving force in the growing homeless population, impacting both the housed and the unhoused.

“We’re tackling this problem from every angle,” said Mayor Deqa Dhalac, the lead councilor. “It’s time for South Portland to step up and do everything we can. We want to make sure people can stay in their homes and make it possible to build housing of all kinds.”

South Portland recently commissioned a housing needs assessment that anticipates demand for at least 540 additional housing units of various types by 2030, including 288 renter units and 252 owner units. It identified a gaping need for housing stock in the “missing middle” – now nearly nonexistent homes priced at $150,000 to $350,000 that would be affordable to households earning 60% to 120% of area median income.

The study found opportunity to develop additional housing in existing single-family neighborhoods by reducing residential lot sizes, allowing duplexes and triplexes in single-family zones, removing off-street parking requirements, allowing in-law apartments and other accessory dwelling units by right, and rewriting the entire zoning code, which hasn’t had a comprehensive review since 1975.

But the Latitude apartment complex shows that the results of zoning changes can be a mixed bag. And other communities have seen what happens when residents feel growth and development are happening too fast.

In Kittery last month, town councilors blocked a proposed 900-unit, mixed-use project and enacted a 180-day moratorium to figure out how the area should be developed. And in Brunswick, town councilors passed a 180-day moratorium on the review and approval of residential developments greater than 29 units unless at least 15% are priced as affordable housing. They intend to draw up new policies to address the housing crisis.

RETHINKING SINGLE-FAMILY ZONING

In South Portland, where minimum required lot sizes range from 6,000 to 10,500 square feet, the average single-family house lot had reached 13,000 square feet by the 1990s, Planning Director Milan Nevajda said. That’s about one-third of an acre.

The housing needs assessment recommends allowing 5,000-square-foot lots – similar to those in South Portland’s older, denser neighborhoods, such as Knightville and Ferry Village. Planning staff also have been working for over a year on a proposed new ordinance for ADUs, which the council is set to review this month.

All of which puts South Portland ahead in complying with the new state law – passed with bipartisan support last spring – which allows Maine property owners to build accessory dwelling units in residential areas and allows up to two dwelling units on lots zoned for single-family housing.

In larger communities with designated “growth areas,” up to four dwelling units could be allowed per lot, though projects would still have to meet local rules for building setbacks, height limits and density requirements. The law also requires the state to provide municipalities with grants and technical assistance as they revise zoning regulations.

The law went into effect this month and gives municipalities one year to comply. South Portland officials are trying to figure out what changes will be required before the council holds a workshop on the law in October. Some lot size requirements, housing development goals and state funding implications are unclear, Nevajda said.

Still, L.D. 2003 is one of the most advanced statewide housing policy initiatives in the country, said Jeff Levine, former planning director in Portland who is now a consultant, instructor at the Massachusetts Institute of Technology and board member of the Maine Affordable Housing Coalition.

“Maine is one of the top states that are being proactive in updating statewide housing policy,” Levine said, along with California, Oregon and Massachusetts. “But there’s no one solution. It’s going to take a layered approach. It took us a while to get here. It’s going to take more than a couple years to catch up.”

To that end, Gov. Janet Mills, a Democrat, has funded more than $130 million in affordable and workforce housing initiatives. Housing projects have been started and completed recently in numerous communities, including South Portland, Scarborough, Biddeford, Old Orchard Beach, Westbrook, Yarmouth, Auburn and Lewiston.

But progress seems fleeting or impossible in other communities – like Cape Elizabeth, where opposition killed a 46-unit affordable housing proposal last year. A condominium project is now being considered for that site, but it’s only 18 mostly market rate units. The town is conducting a housing diversity study that some hope will promote affordable housing development, and last week the Town Council appropriated $50,000 to the Safe in Maine Fund, an effort to create transitional housing for asylum seekers through the Greater Portland Council of Governments.

PROGRESS IS HARD WON

South Portland has seen similar backsliding. Habitat for Humanity of Greater Portland broke ground in June for an eight-unit, single-family home project off Sunset Avenue. But that wasn’t the original plan for the site.

The South Portland Housing Authority had hoped to build 28 affordable apartments, until it became clear that residents of the single-family neighborhood would fight the project. Eventually, Habitat worked out a deal to buy the land and build the houses with funding from the city’s Community Development Block Grant program, MaineHousing and Cumberland County’s American Recovery Plan Act program.

It’s not 28 affordable apartments, but it’s still significant.

“If we just build apartments for lower-income families, then we’re limiting them to rental housing in this market,” said Tara Hill, Habitat’s executive director. “Cities and towns need to step up and make sure regulations are in place to ensure everyone has a place to live.”

The houses off Sunset Avenue will be sold to families earning 65% of area median income, or about $40,000 annually. Habitat is completing three similar homes off Old Brunswick Road in Freeport.

One of the Freeport homes is earmarked for Nick and Ashlee Strout, both 30, and their children, Maddie, 8, and Aiden, 5. Ashlee Strout is a pharmacy assistant. Nick Strout is attending community college.

They’ve been living in the basement of his parents’ house in Poland for nearly three years, cooking on a hot plate, eating at a folding table, storing food in a refrigerator in the laundry area. Occasional COVID-19 quarantines made it especially challenging.

It was supposed to be a temporary thing. But when finding an affordable apartment or buying a house proved impossible, the Strouts attended a Habitat information session. Their mortgage payment will equal one-third of their monthly income. The average mortgage on a Habitat home is $120,000, with the rest covered by the agency’s fundraising.

“We couldn’t do this without Habitat,” Ashlee Strout said. “There was nothing out there for us.”

STRIKING AT GROWING DEMAND

Housing advocates say Maine needs about 20,000 housing units to make up for several decades of single-family zoning that was meant to “make sure nothing happens around me,” as Levine put it. But so many projects that could make a dent get watered down or blocked entirely.

Developers sometimes get rebuffed or scared off by strict rules or regulations – density limits that restrict the size of a project, green building standards that can be more costly or rent control measures that cap profits. Efforts to develop transitional housing for Greater Portland’s growing homeless population have faced similar challenges. Housing advocates say some compromises must be made.

“We’re going to have to allow more housing and more different types of housing to be built,” Levine said.

South Portland’s housing needs assessment recommends against rent control, but blatant increases like those imposed at Redbank and Latitude warrant some sort of stabilization, Nevajda said.

Mat Yerkes, who has to leave Latitude by September, has already found another place to live, with a friend who needed a roommate. But he worries about other tenants who can’t afford the rent hikes and have fewer housing options. He sees people moving out of Latitude every day.

He’d also like to stop renting and buy a house soon, something he feels he should be able to afford on his salary at Idexx. But he scans the real estate listings and watches the rising interest rates and figures he’ll have to wait for the market to shift, however long that might take.

He doesn’t put much stock in any zoning amendments or other changes that South Portland officials have in mind, especially given the results of the zoning change that made Latitude possible.

“Do I have any hope that they’ll figure it all out? Honestly, not very much,” Yerkes said. “I really don’t see it getting better.”

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CORRECTION: This story was updated on Aug. 22 at 12:40 p.m. to correct the median household income for the Portland area and the source of that information. 

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