By Dan Neumann
Originally published in The Beacon
Housing advocates hope that a plan approved this week in Portland will serve as a model for how other towns in Maine can build tenant power, control real estate speculation and create permanent affordable housing.
On Monday, the Portland City Council voted 5-4 to approve a plan by Maine Cooperative Development Partners and Szanton Company to build “Douglass Commons,” a limited-equity cooperative housing development, on Douglass Street in the city’s Libbytown neighborhood.
The plan calls for the construction of 56 rental units and 52 limited-equity cooperative units, which will be owned collectively by its residents.
The plan beat a competing bid by Avesta Housing and developer Jack Soley to create “Douglass Yards,” which proposed 40 apartments, 30 condos and 10 single-family homes.
Avesta’s proposal was supported by the council’s Economic Development Committee, but lost after Councilor Belinda Ray submitted an amendment giving the full council the chance to consider the Douglass Commons proposal, which she argued better addressed the city’s urgent need for middle-income housing.
Mayor Kate Snyder and Councilors Nick Mavodones, Justin Costa and Spencer Thibodeau opposed Ray’s amendment.
Douglass Commons will become Maine’s second multi-unit limited-equity co-op in an urban area.
“We couldn’t be more thrilled,” said Brian Eng, a developer with Maine Cooperative Development Partners. “We’re hoping what we put on the table here will get additional governmental support at the state and local level and be something we’ll be able to replicate throughout the state.”
A path to permanent affordable housing
Cooperative housing is not new. In the early 20th century, many housing co-ops were sponsored by unions to secure housing for their workers. In cities like Washington, D.C. in the post-war era, low-income Black residents were being displaced because of rising housing costs. Housing organizers there rehabilitated old buildings and converted them to resident ownership.
Julian Rowand — a specialist with the Cooperative Development Institute and a partner on Douglass Commons — grew up in one of the limited-equity co-ops created in D.C. in the 1970s. “The residents are the exclusive owners of the property. There’s no landlord,” Rowand explained.
Members purchase shares in the cooperative, which entitles them to a vote in the governance and management of the building. They pay monthly fees to cover the co-op’s expenses, such as mortgage payments, property taxes and maintenance.
They limit equity by placing resale restrictions on the units. This allows residents to build some equity while preventing them from flipping the residence for a profit windfall if the market is hot.
“The premise is that housing is a right, not a speculative investment. So, in that way, it’s a decommodification of housing,” Rowand said.
Cutting out the landlord and their motive to extract a profit means the co-op operates at cost. Residents are not subject to rent hikes when the landlord wants to match the rising rents of other properties in the area.
“The benefits can be pretty substantial. The most important one being that it empowers tenants to have more control over their own economic future,” said Craig Saddlemire, a founder of the Raise-Op Housing Cooperative, a collective of 50 residents including Indigenous people and immigrants who own fifteen housing units in Lewiston.
“Being able to participate in making decisions about your housing can provide a lot of stability,” said Saddlemire, who started the co-op in 2008 as a community organizer while a student at Bates College. “Learning how to use the cooperative organization to address your housing situation can also serve as a potential vehicle for even greater social change in the community.”
Raise-Op was the first multi-unit limited equity co-op to take off in an urban area in Maine. The co-op model has also grown in rural Maine by converting several mobile-home parks to resident ownership.
Saddlemire says the benefits of living in limited-equity co-ops grows over time. While housing may be built today that qualifies as affordable, there is no guarantee that same housing will still be affordable a few years down the road. Limited-equity co-ops, along with public housing, are paths to permanent affordable housing, he says.
“From 2014 to 2017, average market rents were going up between 10 to 35 percent,” he said, explaining that three- and four-bedroom apartments likely saw the largest percent increases as those are particularly scarce and sought after by working families. “For us, our operating costs went up five percent over the same time period, which is consistent with what inflation was for that time period.”
Housing for the ‘missing middle’
The residents of Sunset Terrace Mobile Home Park in Rockland and of Sunset Acres Mobile Home Park in Thomaston became the seventh and eighth resident-owned communities in Maine in 2016. | Courtesy Raise-Op
Portland’s Douglass Commons proposal seeks to fill the dearth of three- and four- bedroom apartments that larger families require, whereas the Avesta proposal sought to create mostly one-bedroom and studio apartments.
It also targets middle-income tenants, who until now have been neglected in the city’s affordable housing planning.
Douglass Commons set eligibility for incomes between 60 and 100 percent of Portland’s Area Median Income (AMI) — $90,810 for a family of three. Avesta’s eligibility for its proposed units was 100-120 percent AMI.
During the bidding process, Maine Cooperative Development Partners learned that none of the nearly 2,000 affordable housing units that the city has approved targets incomes between 60 and 100 percent AMI. Most are under 60 percent with a few in the 100-120 percent range.
“That 60 to 100 range is the missing middle. It’s the bulk of working people — teachers, city workers, for example — who want to stay in Portland but really can’t afford it,” Rowand said. “You have this very ironic situation where the people who work for the City of Portland can’t really afford to live in the City of Portland.”
Councilor Ray cited this “missing middle” on Monday in her statement of support for the Douglass Commons proposal. Councilor Tae Chong echoed Ray, saying that the fact that 57.1 percent of Portland voters supported the recent rent control ballot initiative indicates a deep concern about the lack of affordable housing in the city.
“You buy into the co-op and your rent doesn’t really change. It’s going to be more stable overtime,” Chong was quoted by the Portland Press Herald. “It creates more permanence for more families we’re hoping to attract. We don’t want to lose more kids.”
In the past, limited-equity co-ops have been able to grow in other cities as organized tenants pressured local politicians to pass laws such as D.C.’s Tenant Opportunity to Purchase Act in 1980. TOPA gave tenants the right of first refusal on their building if their landlords want to sell.
Some cities, like Boston, are currently considering similar tenant-purchasing laws. Maine Cooperative Development Partners say they have been contacted by local housing authories in Westbrook, Biddeford and Mount Desert Island interested in co-ops.
“I think we are seeing a resurgence of ideas like cooperative housing and TOPA,” Rowand said. “Certainly, in this time of the pandemic, but even before too, issues of displacement, gentrification and affordability have come to the forefront. I think these recent ballot initiatives in Portland prove that there is appetite for this kind of thing with the general public.”
Rowand believes local officials must look to what cities like Boston are presently doing, and what other cities like D.C. did decades ago, if limited-equity co-ops are to flourish in Maine.
“In many cities, the model has turned into just trying to figure out how to incentivize developers with tax credits to build affordable housing. That has come in the place of working with grassroots housing organizations and supporting them from the ground up,” he said. “Communities in Maine should consider tenant-purchasing laws.”
In planning for permanent affordable housing, Saddlemire says that state and local officials must also consider leveling the playing field for self-organized tenants who are forced to compete with large commercial and nonprofit developers for capital and credit.
“We need to start creating funding mechanisms that are more friendly towards housing co-ops,” he said. “We’re structuring the programs in a very narrow way that only results in very large rental properties offering a period of affordability which will expire.”
Still, with the Portland City Council vote this week, the resident-owners at Raise-Op are glad to welcome new allies in to the cooperative housing movement.
“A lot of groups that have been interested in trying to start something but we haven’t seen anyone else get there,” Saddlemire said. “We really want to see the cooperative economy grow.”
Top photo: Portland’s Libbytown neighborhood | Corey Templeton, Creative Commons via Flickr