Housing Workshop Recap & Reflections

Housing Workshop Recap & Reflections

By Cory Fellows, Town Council

On June 4^th the Town Council and Scarborough Housing Alliance conducted a joint workshop on housing. The discussion was held in furtherance of the Council’s goal of identifying housing needs and formulating an appropriate policy.

The Housing Alliance is a volunteer group of Scarborough residents that advises on housing issues on behalf of the Town Council. They also review specific housing proposals and administer the Housing Trust Fund – which is funded through payments from developers in connection with certain types of projects (not from taxpayer money).

The objectives of the session were as follows:

• Establish a common language
• Establish a baseline of communication
• Define affordability
• Review the cost of housing

As with any specialized field, the world of affordable housing is riddled with jargon that can sometimes seem mystifying. Much of this vocabulary comes from the public funding sources on which most affordable and mixed-income housing developments rely. A few key examples explained during the workshop:

Area Median Income (AMI) – As determined by the U.S. Department of Housing and Urban Development (HUD), this is the income in a given area where half of the households make less than the median income and half make more than the median. In Scarborough the “area” that is used for this calculation is the Portland census area. Scarborough’s AMI for a 4-person household is $129,800,

Income Limits – Housing programs limit occupancy to households who earn less than a certain amount of income per year, usually expressed as a percentage of AMI. The most commonly referenced income limit is 60% of AMI, which is the standard affordability benchmark for the Federal Low Income Housing Tax Credit (LIHTC or “lie-tek”).

Affordable Housing – Usually refers to developments that are income-restricted to people/households earning a designated percentage of the AMI. As noted above, the threshold for LIHTC eligibility is 60% of AMI. Programs like LIHTC, subsidized state loans, local tax incentives and direct financial support, and Section 8 rental assistance are designed to produce and sustain affordable housing.

Workforce Housing – This term has been invoked in a variety of ways in the popular discourse, but the most commonly accepted definition is housing that is limited to people who make between 80% and 120% of AMI. This is sometimes called the “missing middle” since it is often unattainable for may but is not LIHTC-eligible – making it hard to finance. In Scarborough the workforce housing income range is $103,840 - $155,760 for a 4-person household.

Rent Burdened – A household is said to be rent burdened if it is paying more than 30% of its gross income toward rent and utilities (or principal interest, taxes and insurance in the case of homeownership).

Housing Alliance members provided a review of Scarborough’s housing demographics and the state of the market, showing that homeownership is increasingly out of reach for many. One example was a hypothetical dual-income household consisting of a firefighter and a middle-school teacher with a combined annual income of approximately $136,000 – meaning they could afford a $490,000 home in a market where most houses sell for well over $500,000 and many in excess of $1 million. In fact, the data show that only 11% of Scarborough’s housing stock is affordable to residents making the median income. One Housing Alliance member, who is a realtor, described an ownership market in which high-net-worth people from out of state commonly snap up houses with all-cash payments. All of this points to a need for not only less expensive homeownership options but a range of rental options for people who cannot afford to buy.

Another key finding was that 69% of Scarborough’s Public Safety employees live outside of Scarborough. Even accounting for the fact that some choose to do so for non-economic reasons, I view that as a red flag. While it is certainly not the Town’s role to guarantee local housing for these critical professionals, I think it’s reasonable to assert that we should do what we can to help support more affordable options.

There was agreement that Scarborough has generally done a good job of supporting affordable housing development; Jocelyn Place, Firehouse Village, and a number of approved developments in Scarborough Downs are just a few recent examples. Given that, it is reasonable ask whether we really need to do more. Haven’t we already done our fair share when compared with surrounding communities, and are we now talking about shouldering an undue burden? I look at this in a couple ways. First, as previously mentioned, many of those who work for Scarborough employers live elsewhere – meaning that other towns are providing housing to Scarborough’s economic benefit. Second, I believe it is in our interest to have a diversified housing stock that provides a range of housing types and price points so we do not become an exclusive enclave of the wealthy or a commuter community; in other words, I view affordable housing as a net positive rather than a box to be checked so we can say we did the bare minimum.

One of the recurring refrains during the workshop was that affordable housing is hard; high costs, financing challenges, and local opposition are common hurdles. We generally give government the most difficult jobs – the ones that the private sector is either uninterested in or unable to tackle. I believe it is therefore appropriate for the Town to play a supportive role in facilitating the diversification of our housing stock through land use policy and financial assistance, judiciously and within the framework of our growth management controls.

As I stated during the workshop, I also believe it is important to recognize that the historical prevalence of costly single-family homes – which are increasingly expensive due to high land costs, construction-cost escalation and other factors such as wealthy buyers flooding the market – is not due to some immutable law of nature. We got here through intentional governmental interventions, including large-lot single-family zoning and the mortgage interest tax deduction. So there is nothing inherently wrong with utilizing public policy levers to move the needle on affordable housing, as long as it’s done thoughtfully.

I look forward to continuing this discussion. A Council Corner Live on housing will be held on Tuesday, July 15^th at 6:00 at the Public Safety Building.  

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the Scarborough Town Council.