SOUTH PORTLAND – The South Portland Housing Authority plans to sell seven buildings it owns throughout the city to fund construction of a 20-unit senior housing complex on Landry Circle.

The proposal comes as the city is dealing with high demand for senior housing, and for subsidized housing in general.

“We believe it is better to have larger developments that are managed, as opposed to single homes and duplexes scattered throughout the city,” the authority’s executive director, Michael Hulsey, said at Monday’s City Council meeting.

Hulsey was on hand to pitch the project, in part, he said, because the housing authority needs a letter of support from the City Council for its application to the federal Department of Housing and Urban Development, which sets the rules for the sale and replacement of subsidized housing.

Hulsey said he could envision the seven buildings going on the private market “one day,” though the initial plan is to fund the new project by selling the unwanted sites “at fair market value” to the housing authority’s own nonprofit offshoot, the South Portland Housing Development Corp.

The buildings to be transferred include duplexes at 375 Preble St., 268 Preble St., 832-834 Broadway and 576-578 Main St., as well as four-unit apartment buildings at 55 Hill St., 8 Free St., and 70 Grandview Ave. The buildings have a combined assessed value of $1.95 million.

Hulsey said tenants of the 20 units contained in those buildings will not have to move. Instead, they will get vouchers to cover any difference between new “full rents” and the current subsidized amounts.

“We don’t want to just immediately pull away from them,” said the housing authority’s facilities director, John Gerken. “We do maintain those buildings in very good shape.”

The seven buildings chosen for sale, Gerken said, were picked primarily because “they were off the beaten path of our maintenance route.”

In 2011, the housing authority left its former office building at 51 Landry Circle, where it had been since 1977, for space on the first floor of 100 Waterman Drive. The organization’s development branch reportedly bought the space for $895,000 and leases it back to the group for $70,000 per year.

Using money from the sale of the seven buildings, as well as other grants and tax credits, the housing authority wants to put five senior housing units in its former office, while rehabilitating the community room there. It will then build 15 new senior housing apartments on the 11.7-acre property in three buildings containing five units each.

“I cannot tell you what a need there is for the elderly to have an option for housing in South Portland,” said Kevin Glynn, chairman of housing authority’s board of directors. “There are so many people in desperate situations and the housing authority, for many of them, is the only place to turn.”

“This only makes sense, taking scattered units and trying to bring them into one area that’s managed and maintained,” said Councilor Gerard Jalbert. “It will make the housing authority much more efficient and serve the people better as well, as they will be in much newer units.”

Councilor Linda Cohen, speaking of the time she spent as a tenant in subsidized housing, said she also favored the proposal.

“I definitely have a soft spot for the South Portland Housing Authority,” she said.

The housing authority owns 346 units for elderly, disabled and low-income residents, including 100 at 425 Broadway, 100 on East Broadway at St. Cyr Court, 50 in Landry Village and 96 in smaller sites, including the seven to be sold, scattered throughout the city. The separate development corporation has 123 units at the Betsy Ross House, 82 in Mill Cove, 80 at Ridgeland Estates and 10 for the disabled at Adam Court.

The housing authority also has one other senior housing project in the works, although that one currently hit a snag. In July 2011, the City Council approved zoning changes needed for the housing authority to turn a 186,589-square-foot vacant lot off Huntress Avenue into a companion facility to its Ridgeland Estates property, which sits adjacent to the site. The plan was to build 44 subsidized units for senior citizens.

At the time, Mayor Tom Blake, then a councilor, questioned if South Portland was doing more than its fair share. The city’s comprehensive plan, he said, calls on maintaining 10 percent of the local building stock as “affordable housing.”

“I think we may be beyond 10 percent,” said Blake. “The housing authority is at 8 percent, but remember, they are only one entity that provides affordable housing.”

Blake pointed out that on the 641 units owned by the South Portland Housing Authority and the South Portland Housing Development Corp., the two organizations pay annual property taxes of $168,000.

“That is the equivalent of $263 per unit per year,” said Blake. “That is a tremendous deal.”

Still, the housing authority is using that break to try and meet a need, working from an annual operating budget of about $6.7 million. According to Hulsey, it has 385 households on a waiting list just for Section 8 housing for families at 50 percent of the area’s median income and has not accepted any new applications since April 2010. Adding in the elderly and disabled tops the waiting list out at more than 500.

Hulsey said Monday that the Huntress Avenue project missed out on the latest funding round of the Maine State Housing Authority.

“We almost got funded last year,” said Hulsey. “We missed it by just two points. We’ll be sending out our application again Sept. 27 and we’re confident we’ll get funded and start on that sometime soon, too.”

Hulsey said it could take up to three months to hear back from the federal housing department on the Landry Circle project and another seven to workout stormwater plans with the Maine Department of Environmental Protection. After the South Portland Planning Board weighs in, work could begin as soon as next spring.

One senior housing project that is now under way, and did get funding, including $648,026, is the 48-unit senior housing project being built on the newly named Osprey Circle, just off Brickhill Avenue in the Redbank section of the city.

Built by Benchmark Construction for Portland-based Developers Collaborative, the project includes two, three-story buildings of 24 units each, at a development cost of $148,748 per unit.

Crews work Tuesday on a new senior housing project, located on 5.83 acres off Brickhill Avenue in South Portland. The plans include 48 subsidized units in two, three-story buildings. Construction comes as the city and its housing authority discuss how to best deal with the increasing demand for senior housing.

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