A nonprofit is taking over a few dozen rental units in Thomaston under a first-of-its kind model for preserving affordable housing properties that long received federal subsidies.
Maine has about 7,700 rental units at more than 300 properties that are part of a U.S. Agriculture Department Rural Development program, which made low-interest mortgage loans available to owners looking to develop affordable housing several decades ago.
But the mortgages for many of those properties are beginning to mature, and some of their owners are looking to sell. That means these units could become out of reach for tenants.
The timing is especially poor, because Maine is already short at least 20,000 affordable housing units for low-income households, and the state can't afford to lose any existing properties that were financed by USDA.
"Many of these projects are coming up at the end of their 50-year, 1% mortgages," Dan Brennan, MaineHousing's executive director, told state lawmakers last week at the first meeting of the new joint standing committee housing. "These are really at risk."
A 28-unit rental property in Thomaston was among those at risk, said Liza Fleming-Ives, the executive director of the Genesis Community Loan Fund.
"We learned several years ago that the owners of this property were interested in finding a buyer, and that the USDA mortgages were going to be maturing, and so we were concerned about what would happen in terms of the ongoing affordability," she said.
In stepped a nonprofit, the Volunteers of America Northern New England, which wanted to buy the property and continue operating it as affordable housing.
The Genesis Fund helped secure the resources to make the transfer happen. The sale price was based on the new appraised value of the property and will include the small, remaining amount of the original USDA mortgage, Fleming Ives said.
The funds to buy the property came from federal and state resources, including — for the first time — the Maine Affordable Housing Tax Credit, which state lawmakers approved back in 2020.
That tax credit program sets aside $1 million a year to help transfer properties like the one in Thomaston to new owners. Greg Payne, the governor's senior housing policy adviser, said the new tax credit program also helps pay for any renovations that might be needed.
"If you're a willing buyer, you're like my gosh this thing needs a new roof, it needs new windows, it needs new all sorts of things," he told state lawmakers last week. "The cost of that is the reason that it's more difficult to make that transition to a new owner, who would then keep it affordable for another 20 years or whatever."
Payne said Maine's program to preserve rental units at risk of being sold is the first of its kind in the country, and it could be used as a model to protect other affordable housing properties around the state.
The Genesis Fund said plans to transfer and preserve other rental properties in the USDA program are in the works.
"We're planning to use these resources again in other communities where there are similar properties that are at risk of losing their affordability," Fleming-Ives said.
As for the property in Thomaston, Fleming-Ives said it will be maintained as affordable housing for the next 45 years.