Often-overlooked housing programs and models can help working poor Maine families build the equity they need to weather financial storms.
BY TAE CHONG SPECIAL TO THE PRESS HERALD
Imagine that your family has no assets. Imagine that your family has had generations of little to no savings or other assets. Or perhaps imagine that you are a refugee or an asylum seeker who has arrived with just the clothes on your back. How do you save enough money to put 20 percent down to buy a $280,000 fixer-upper home in southern Maine? How do you save $60,000 when you are one car mishap or one minor medical emergency away from losing your life’s savings?
Let’s do some simple math with an imaginary family of two working parents with two children. Each parent is making $15 an hour, and each parent is working a full-time job with no medical benefits. $15 x (40-hour) jobs x 2 parents = $60,000.
The take-home pay after taxes, Medicare and Social Security is roughly $46,800. The rate for a joint tax return is 22 percent. Fair market rent for a three-bedroom apartment in Portland in 2020 is $1,982. $1,982 x 12 = $23,784 in rent. $46,800 – $23,784 = $23,016 left over.
The family now has $23,016 or $442 a week to spend on groceries, child care, health care, heat, clothing, cellphone, internet, utilities, car payments, insurance, gas, repairs and more. (Remember, each parent is working a 40-hour-a-week job. Now think, how is a single parent going to solve this problem with half the resources and more barriers?)
Many programs exist to help lift families out of poverty. Two need more attention and support: Family Self Sufficiency and Housing, which builds equity for its residents, and cooperative and land trust housing are two housing models that build equity for its tenants.
Family Self Sufficiency is a federal employment savings program for employed residents living in public or Section 8 housing. The guidelines are simple: If you work with your FSS case manager, receive Temporary Assistance for Needy Families and work to increase your income, you can begin to save.
Public housing residents and Section 8 recipients pay 30 percent of monthly adjusted income in rent. If their income increases, their rent increases. This is still true for FSS participants, but the difference in rent is put in your savings account, and if you complete your goals, after a year there are no restrictions on how it is used. You can use it for life emergencies, pay for college or keep saving and perhaps purchase a house.
Using simple math without adjusted monthly incomes, let’s say that the family with two working parents making $15 an hour lives in public or Section 8 housing and got new jobs because of an adult ed or a workforce program. Let’s say the parents are now making $18 an hour. Their rent at $15 was $1,560 a month, or $18,720 a year.
Now their rent is $1,872 a month, or $22,464 a year. $22,464 – $18,720 is $3,744 after one year. The $3,744 is theirs. Without FSS, that increase in rent would have gone to the landlord; instead, it is saved for the FSS participant.
Why is building assets important for families in poverty? Even in subsidized housing, families in poverty are in jeopardy of being food insecure, in health neglect and in financial instability. When families in poverty do not have assets, they resort to high-interest loans and/or same-day lending – or they may simply fail to pay their bills, thus affecting their credit scores, which could affect their employment options and limit their access to lower-interest-rate loans.
Other overlooked programs that help households in poverty build assets are cooperative housing and land trust housing. Participants in coops and land trusts are part owners of their developments. A portion of their rent over time builds equity and monetary value. In cooperatives, residents can borrow against their equity for emergency funds, college, purchasing a car and more.
Housing is not the end goal – self-sufficiency and a personal safety net are. If we want to tackle poverty and racial income and asset disparities, the math is simple: The poor need more assets to weather financial storms. Otherwise, they are stuck in a cycle of poverty and potentially lifelong renters. The cards are stacked against them, but these programs help to increase their odds of climbing out of poverty. Housing the poor needs to be more intentional, strategic and holistic.
ABOUT THE AUTHOR Tae Chong is a member of the Portland City Council, representing District 3.
Maine’s cooperatives, which connect people and communities to common interests, industries and goals, model a positive response to COVID’s impact.
By David Libby, CEO of Town & Country Federal Credit Union
For nearly two-thirds of my adult life, I have been involved with cooperatives. While I have always been filled with passion about the spirit of cooperatives, the events of the pandemic have caused me to not only have a deeper appreciation of cooperatives but of the meaning of cooperation.
Since March, many of us have seen or experienced challenges, losses and disappointments. We’ve watched local businesses we love struggle to survive and individuals face financial obstacles and burdens that many would consider overwhelming. Admittedly, COVID has had a profound impact on our psyche and spirit. However, rather than let it fill us with hopelessness and despair, I’d like to focus on the many ways it has brought us together in cooperative support of the communities we love, albeit socially distanced.
During the past six months, it has been gratifying to watch communities come together in cooperation to support local restaurants and businesses or place signs recognizing high school seniors on our lawns in a spirit of cooperation, whether we had a child graduating or not. We’ve pooled our resources to support frontline workers with meals and other gifts, and have seen countless other random acts of cooperation and kindness.
Reflecting on my own workplace, I am prouder than ever to work for and be a part of a not-for-profit financial cooperative. Our cooperative structure enabled us to create the first Crisis Assistance Relief Loan just days after the pandemic started and offer loan deferments and other forms of assistance to our member owners. Without hesitation, our volunteer board of directors, another benefit of the cooperative structure, supported our efforts to help members and the communities we serve in any way we could because it is our community, too. Cooperatives are not just in a community but also part of a community because they are owned by the people who live and work there.
The concept of cooperation is more powerful and more needed today than in any time in my recent memory. Cooperatives provide a significant positive economic benefit to and impact on their communities. For example, our cooperative structure saved 40,000 member-owners nearly $10 million last year through better rates and lower and fewer fees. Many re-invested those savings back into the community by shopping locally, building locally and giving locally. Overall, the financial benefit provided to the more than 750,000 Mainers who are part of a cooperative add up to hundreds of millions of dollars. The need for co-ops and the support they provide to the Maine economy should be embraced now more than ever.
In today’s world, people often complain about being disconnected. Cooperatives are the antidote to that because they help to connect people and communities to common interests, industries and goals. According to the Cooperative Development Institute, which supports and helps form and build cooperatives in the Northeast region, there are a variety of co-ops in Maine including financial, food, farming, electrical, dairy, fishing, housing, employee-owned businesses and others. The cooperative economy in Maine is not only alive and well but also growing, which means cooperation is growing, too. That’s a good thing.
This October will once again mark National Co-op Month in Maine and throughout the country. Let’s celebrate and highlight the important role that cooperatives and cooperation play in our communities. It represents what can be accomplished when we cooperate. Whether it’s joining a co-op that aligns with your values and interests, ordering takeout a little more frequently from local restaurants to show your support, arranging a socially distanced drive-by birthday celebration for a neighbor or friend, having someone who will listen to your financial challenges and offers ways to help, just to name a few.
While the past six months have, indeed, been trying, challenging and, at times, discouraging, let’s be energized in the spirit of cooperation. Cooperation is about coming together, most likely virtually these days, to make a difference, show support or to lend a hand. Get creative, get engaged, get cooperating! When we do, our community and our lives thrive!
ABOUT THE AUTHOR
David Libby is president and CEO of Scarborough-based Town & Country Federal Credit Union, a not-for-profit financial cooperative with 40,000 member-owners.
Published 10/1/2020 in the Portland Press Herald
Published in the Portland Press Herald, Sept 17, 2020. By Julian Rowand.
As soon as next week, the Portland City Council will take a consequential vote on whether to move forward with its first housing cooperatives, on two pieces of land the city is selling for housing development. Selecting both of these cooperatives is an important step toward addressing housing insecurity and the shortage of suitable housing supply by diversifying the affordable housing options in Maine’s largest city.
Both cooperative proposals, Lambert Street and Douglass Street (Douglass Commons), have strong support from the City Council’s Housing Committee. The limited-equity housing cooperative model ensures permanent affordability and the stability of homeownership. This is particularly important in cities like Portland, where incomes do not grow proportionally with housing market prices and renewed investment favors more affluent demographics.
Housing cooperatives create the possibility for those born and raised in Portland to be able to remain in Portland, for those working in Portland to afford to own here, for those arriving in Maine seeking safe homes to find homes they can afford here and for our elderly to retire in the communities they have come to depend on.
The City Council has before them a crucial opportunity to support the stability of resident ownership and to pursue their goals of diversifying affordable-housing options for current residents of all ages, income levels and demographics by voting in favor of the Lambert Street Cooperative and Douglass Commons, the Douglass Street cooperative housing proposal. I strongly encourage them to take this important step.
cooperative development specialist, Cooperative Development Institute
See original letter in Press Herald.
Proposed Portland co-op development addresses housing ‘missing middle’
by Maureen Milliken
A proposal for up to 46 single-family homes on 13 long-neglected acres in Portland may at first glance seem like another needed "affordable housing" development, but it's actually something more.
The project, which would be the city's first housing co-op, addresses the missing middle—those who don't make enough money to buy a house in Portland, but make too much money to qualify for low-income housing. All of the homes would be for those making between 60% and 100% of the area median income. In Portland, $70,630 is the AMI for a one-person household, and it rises up to $117,044 for a six-person household.
Members of a co-op own the development as a whole and pay shares, or leases, on their property that covers the overall mortgage, maintenance and other expenses.
"That's the beauty of this project," said developer Brian Eng, of Maine Cooperative Development Partners, a group that has proposed the project for Portland's North Deering neighborhood. "We're talking about new Americans, teachers, firefighters, people who can't afford to buy a house in Portland."
The project was approved by the Portland Economic Development Committee, and staff is negotiating a purchase and sale agreement for approval by the city council. The project also needs a rezoning or contract zone to accommodate the cluster-style layout. The city-owned land near the Falmouth line became available, along with lots on Randall and Douglass streets, earlier this year, when the city put out a request for proposals to sell the property to developers who would build more housing, part of the city's plan to add 2,257 housing units by 2027.
A neighborhood for everyone
Maine Cooperative Development Partners seek to acquire the site for Lambert Village from the city at no cost, to balance the cost of construction and make the homes affordable. Much of the $7.42 million cost to development the project would be through a HUD 2013 program loan.
"The number one motivation is the housing crisis we're feeling in Portland right now," said Eng. Eng is probably better known for larger commercial developments, like the $90 million Pearl Street Riverfront District on the former Maine Energy Recovery Co. site in Bidderford with Jim Brady, of Fathom Cos.
The co-op housing concept isn't new, but it's relatively rare in Maine. Residents who are part of a co-op share ownership of the housing, which can be anything from apartments to single-family homes. The co-op model is made possible through the state's Maine Cooperative Affordable Housing Act, which allows limited equity housing ownership and the federal Department of Housing and Urban Development 213 Program, which insures cooperative housing mortgages.
Some notable projects are the ten manufactured home communities in the state that are now resident-owned with help from ROC USA, which works with CDI, and Raise-Op, in Lewiston, where residents of three apartment buildings own 13 units.
Eng said he doesn't see the project as departure from his other work—he's developed a variety of housing units and is also on the board of board of UHAB, which manages 20,000 units of cooperative housing in New York. He grew up in New York City in market-rate co-op housing and after a conversation with Doug Clopp, director of development and communications at at CDI, he started thinking about developing co-op housing in Portland.
"When I get excited about something, I start reaching out to people," Eng said.
A development group soon was formed, that now includes principals Eng, Matt Peters and Liz Trice; CDI, including staff Julian Rowand, Arthur Sabiti and Jonah Fertig-Burd; Andy Reicher, of UHAB; BrightBuilt Homes, an affiliate of Kaplan Thompson Architects; Mike White, of Island Carpentry; Aceto Landscape Architects; and Acorn Engineering.
Brian Eng, right, with Jim Brady, at the site of their Biddeford mixed use project. Eng is a principal in a cooperative housing development proposed for Lambert Street in Portland. (Photo by Tim Greenway)
A community for everybody
The proposal calls for a pedestrian-friendly, closely knit “pocket neighborhood” of energy efficient factory-built, single-family homes on two lots that total 13.39 acres. The 1,250-square foot houses will have three bedrooms and two bathrooms. The first phase would include 20 homes, and a second phase that could add as many as 26. Depending on the rezoning, some of the units may be duplexes. The timetable, if all goes as planned, would allow for occupancy in fall 2022.
Developers say the co-op model means there will be a variety of income levels among residents, and the size of the homes will appeal to a variety of age groups — young couples, families and empty-nesters.
A group of more than 20 households of prospective residents has been meeting for more than a year, including established immigrant families "that share a vision of mixed-income ownership housing with shared community facilities and outdoor space," the proposal said. "The development team will continue to work with these residents to crystalize their vision and recruit more households."
The co-op model helps forge community relationships, the development group said in its proposal to the city. The layout of the neighborhood, too, will have a community feel, with the houses facing each other across a green, with walking paths.
The development would preserve wetlands and open space at the site, and also create green space and pathways connecting transit, trails and sidewalks "that are welcoming to existing neighbors, bikers, pedestrians and children."
Offering housing hope
Maine Cooperative Development Partners and Szanton Co. also proposed a 108-unit project for 43 and 91 Douglass St., another city parcel, that would have included a 52-unit apartment building and 56 cooperative housing units. The Economic Development Committee, however, recommended a project for a 40-unit apartment building, 30 condominiums and 10 single-family homes proposed by a group that includes Avesta Housing, Hebert Development and Jack Soley. That project also has yet to be approved by the city council.
Eng said the Lambert Village model is something he definitely sees being successful anywhere in the state."There's a need for this type of affordable housing in Maine," he said, particularly in quickly growing areas like Biddeford. He said this type of development offers hope to those who've been priced out of the housing market.
See the original article in Mainebiz magazine here