Kate Sykes in her neighborhood in Portland in October 2021. Brianna Soukup/Staff Photographer, file

Kate Sykes has been talking about social housing as a solution to the affordable housing crisis since before she was elected to the Portland City Council last fall.

Under the concept, the city would build middle-income housing, which it would then own, operate and manage using housing bonds – a type of loan Sykes believes is a much better alternative to the housing trust fund and the tax credits that the city currently uses to pay for affordable housing projects run by developers and the city housing authority.

Since she became the District 5 representative, Sykes even has gone so far as to vote against funding a housing development proposed by the Portland Housing Authority, doing so on principle because the organization wasn’t using bonds to fund its project.

At the council’s Housing and Economic Development Committee meeting last week, Sykes made her formal pitch to try this model.

“We are in this crisis moment where we are behind so many units. … We’re not going to catch up or meet our needs if we don’t do something in addition to what we’re already doing,” she said.

Sykes explained that to start a social housing program, the city would put out bonds to build large housing developments on city land and then manage those properties, renting out units at prices below market rate.

“We use the land that we own, we act as at the developer, we use our bonds to fund it. And all of that added together means we can build really high-quality housing for a lot less money,” she said.

But some question whether social housing would really make a difference in Portland and say it would likely require a change in state law.

Brian Frost, executive director of Portland Housing Authority, said that the only difference between the existing housing authority and a social housing program would be funding.

“If you drew a Venn diagram and put what Councilor Sykes is trying to build in one circle and what we already do in another, I think there’d be about a 90% overlap,” Frost said.

‘ONLY GOVERNMENT CAN DO THAT’

Sykes argues the new program would put the responsibility of building mixed-income housing on the city, instead of on private developers, which might mean the city could do away with its inclusionary zoning laws that require developers to build affordable housing as part of every residential development, or pay a fee to the city’s housing trust fund. Eliminating that, she said, would make it easier for developers to build market-rate units.

Jonathan Culley, a managing partner at Redfern Properties, which has built several affordable and market-rate housing projects in the city, said he’d be interested in exploring a social housing program for this reason.

Jonathan Culley at his new development, an apartment building in downtown Portland called The Casco, in March. Brianna Soukup/Staff Photographer

“I do believe that safe, healthy, affordable housing is a human right and we owe it to everybody to deliver that as a minimum standard,” he said. “But only government can do that, there has to be a huge subsidy.”

Culley emphasized that developers are in business to make money and if a municipal social housing program gave them the opportunity to build the kind of lucrative housing they want without the “tax” of inclusionary zoning, it would draw more developers to the city.

“As a private developer, we will never be able to address the bottom-end of the market for our low-income citizens. We have to make a financial return and we can’t make a financial return from people who can barely afford to pay,” he said.

However, the financial feasibility of the city bonding for housing is murky. Mayor Mark Dion said it would require changing state law.

As it stands, MaineHousing, the state’s housing authority, is the only group allowed to put up housing bonds. In order for Portland to issue a housing bond, state legislators would have to alter that statute, or MaineHousing would have to agree to give Portland some of its bonds.

“Generally speaking, over a cup of coffee, social housing sounds like it’s a good idea, but the devil is in the details,” Dion said.

Frost said MaineHousing has declined requests to use state bonds for projects in the past, and doesn’t see the state agreeing to that kind of arrangement with the city.

A spokesperson for MaineHousing said the agency has offered to meet with the city “to discuss more and see if we can provide any technical assistance as they explore bonds.”

While Sykes concedes that some details of financing the project still need to be worked out, she feels confident that the funding model would allow the city to build high-quality, middle-income housing quickly, something she said is imperative.

“We are in a housing crisis and we can’t just can’t stop at one thing, what we’re doing now isn’t cutting it,” said Sykes. “We have to throw the book at it.”

‘A NEW CONCEPT’

Dion also is concerned about what creating a municipal housing development might cost taxpayers.

“If you have to have new staff and a department, if you become a landlord, you can’t do that cost-free. I’ve never seen a government idea not cost money somewhere,” Dion said.

He also doesn’t believe that the city should operate as a landlord.

City staff declined to weigh in on the mechanics of how a social housing program might work in Portland.

“Social housing would be a new concept for the city of Portland, and how it would be financed will require significant research,” Jessica Grondin, a city spokesperson, wrote in an email. “We look forward to reviewing any policy proposal considered by the council or its committees.”

By the end of last week’s committee meeting, the other councilors present – Roberto Rodriguez, Regina Philips and Pious Ali – said they would be interested in creating a task force comprised of developers, community members and city staff to study the idea.

“The markets are not going to fix the housing crisis on their own. I don’t see any leverage out there to fast-track the amount of production necessary just to meet the need,” said Rodriguez, emphasizing that social housing might fill that gap in production.

The committee voted to send the proposal to the full council, though a date for that discussion has not been set. Sykes said she hopes to get a social housing program off the ground within a couple of months, though she acknowledged it could take more time than that.

This story was updated at 9:20 a.m. Sept. 26 to include a statement from MaineHousing.