Jeff Packard is one of many employers who have been helped by Portland’s appeal as a livable city. That reputation has served as a powerful recruiting tool to lure talent from away.

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eff Packard’s business is helping other businesses lower their heating costs, but he has developed an unwelcome sideline in real estate.

His small company, Alodyne, now has two employees, and he needed to help both line up housing in Portland.

Packard said he found an apartment for his engineer, who is from Germany, but it took him months. He nailed down the housing just two weeks before the engineer was due to start. His operations manager, who moved from coastal California, found her own apartment, but while she looked, she stayed at the lake house of Packard’s parents.

It wasn’t easy, especially since both the employees and Packard were determined to find apartments in the downtown area.

“In a perfect world, employees could walk to work, which is what I do,” said Packard, who lives on Congress and Oak streets and has offices on Fore Street. Living close to work, he said, “was a given,” both for him and his employees.

Packard is one of many local employers who have been helped by Portland’s appeal as a livable city with great restaurants and a beautiful setting. That reputation has served as a powerful recruiting tool to lure talent from away.

But some in the business community fear that the increasing difficulty and cost of finding housing downtown might tarnish that perception, and that the city’s popularity could end up being a liability.

“If you’re twenty-something years old, Portland is very attractive,” said Christopher Claudio, chief executive officer of Winxnet, an IT outsourcing and consulting firm with its headquarters on Marginal Way. “But for people who want to come work for us, it’s a challenge to find housing in Portland. It’s often expensive and in poor condition.”

Like others in the business community, Claudio worries that the housing crunch will hurt the city’s and region’s long-term economic prospects.

“Having smart, talented people coming to an area is what spurs economic development and growth – if we can get the people to come here,” he said. “If they don’t have a place to live, they’re not going to come.”

Apartment vacancy rates have been near zero this year in Portland, the result of years of a stagnant supply of rental housing and a rising demand. A Maine Sunday Telegram/Portland Press Herald analysis found that asking rents for a two-bedroom in Portland have jumped 40 percent in the past five years, even as renters’ median incomes have dropped, creating a wide affordability gap that is pushing much of the market out of reach for many workers.

Packard said he knows that first-hand, three times over.

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hen he moved here from Los Angeles four years ago, Packard said he pored over online listings to find an apartment, but still had to stay in a motel initially. Then he found a short-term rental unit, which bought him a little more time to find a more permanent apartment. That took another five weeks. And Packard said his search was probably easier because he’s single and could take either a studio apartment or a one-bedroom unit.

Then, this year, he looked for an affordable apartment for his engineer, hoping to line up something well ahead of his Aug. 1 start date.

“We spent a few months trying to find housing,” Packard said. It’s very challenging. You find something and then it disappears very quickly.”

Another new employee up stayed at his parents’ lake house – in Bridgton – as she searched for an apartment on the peninsula.

Packard said downtown living allows workers to get to the office even when the snow flies. It also lessens the need for a car and parking. And walking is healthier, he said. Packard also believes downtown living contributes to the vibrancy of a city’s core and helps businesses and the local economy by providing customers beyond 5 p.m. on weekdays, when suburban dwellers depart.

“I would love to see more people intown and not just walking to their car to leave town,” he said.

But it’s hard to afford.

A study released in the spring by the Greater Portland Council of Governments found that it will only become more difficult for middle-income earners to find a place to live in Portland.

By 2030, the report found, the gap between the demand for housing that’s affordable to working families and the supply in Portland will range from 24 percent to 33 percent, meaning that as many as one in three working families looking for downtown housing won’t be able to find a place they can afford.

The recession helped increase the affordability of housing in the city, by slowing down or eliminating increases in rents and home prices for a couple of years. But once economic growth returned, development had shifted to the upper end of the market – fewer developers had the wherewithal to pursue projects, so they focused on the higher return offered by more expensive apartments and condos.

Joe Malone, a commercial real estate broker, said he thinks only a few apartments that median-wage workers can afford have been built in downtown Portland in the past five or six years. The law of supply and demand suggests that rents for those units will be pushed up by the increasing demand for downtown housing, he said.

Portland, he said, needs housing that’s affordable for its firefighters, police officers and teachers, along with cooks for popular downtown restaurants or workers at high-tech firms.

Portland’s police officers, teachers and firefighters start at $34,000 to $40,000 a year, which means an affordable rent payment would be as low as $850 to $1,000 a month.

Malone has recently been critical of the growing use of apartments and condos for short-term rentals by vacationers, through services such as Airbnb. A property owner can make as much or more renting out a unit for a week or two a month than having a long-term tenant settle in, he said. Converting year-round units to short-term rentals further restricts housing opportunities for workers, he said, and it also harms the cohesiveness of the city’s neighborhoods.

“You can’t have people living in a unit a few days a month who will say, ‘Hey, there’s Joe’s dog running free, I have to grab it,’ ” he said.

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ity officials said they worry that the lack of affordable housing for middle-income earners will scare away companies from settling in Portland.

“Housing is economic development,” said Greg Mitchell, Portland’s director of economic development.

Mitchell said the city is focused on increasing the housing base, particularly on the Portland peninsula. More housing on the peninsula supports more economic activity downtown, he said, as residents patronize local shops and restaurants. And that, in turn, helps create more demand for downtown housing.

The Council of Governments study looked at what’s called “workforce housing,” and was aimed at examining the segment of the housing market serving those earning roughly the median family income for the region. According to the U.S. Department of Housing and Urban Development, the median income for a family of four in the Portland area is $77,100.

Using a rule of thumb that rent should be no more than 30 percent of a household’s gross income, that would appear to put about 90 percent of the city’s housing stock in the affordable range for those earning about 80 percent of the median family income.

But those statistics don’t reflect the reality. While homeowners as a group have seen incomes rise in recent years, the median renter household income in Portland is now slightly above $30,000, according to the U.S. Census. That puts the rent for an affordable apartment at less than $800 a month, and there are few units available at that amount.

“In a perfect world, employees could walk to work, which is what I do,” said Jeff Packard, who lives on Congress and Oak streets and has his Alodyne offices on Fore Street.

Finding affordable housing is more difficult for families, with about half of the affordable units in the city either studios, efficiencies or one-bedrooms, the Council of Governments report said, creating a mismatch between the apartments available and the market demand.

Andrea Tolbert hit that mismatch head-on.

She finished graduate school for social work in Florida in May and was eager to move to Maine, where she had lived before, with her young son. She got a job in downtown Portland and started looking for a one- or two-bedroom in a nice neighborhood for under $1,100 with heat included and within walking distance of work.

“Apparently those are unreasonable requirements,” she said, and by July she was looking for housing as far away as Lewiston.

“I’m not really OK with paying more than a mortgage” to live in a decent place downtown, Tolbert said. The pictures she saw online of available apartments showed dirty or damaged rooms, she said, and rents were sky-high.

She eventually found a two-bedroom apartment in Westbrook for $1,150 a month, without heat. And, like a growing number of Portland’s workers, she commutes.

Stories like that are behind the city’s focus on increasing affordable housing on the Portland peninsula, Mitchell said. That’s the most desirable area for many arrivals in Portland, particularly young people, and providing that kind of opportunity is a key part of the city’s “live, work and play” economic development theme.

The city is trying to drive development downtown with new zoning rules that allow higher-density housing on the peninsula and by selling surplus city property to housing developers, he said.

“Workers need places to live,” said Jeff Levine, Portland’s planner. “What’s really not being produced is housing for blue-collar workers and young white-collar workers. We’re trying to think about the future.”

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ope Burnell, human resources director for health care provider Intermed, said housing has never proved to be a barrier to someone accepting a job. But the issue does come up, such as when a new employee expressed surprise about the high cost of housing in Portland.

Where did she move here from?

“New York,” Burnell said. “Manhattan.”

Christine Rogers, the Alodyne employee who commuted from Bridgton while looking for an apartment downtown, said she can relate.

Rogers moved to Maine from Morro Bay, on the coast of California about halfway between Los Angeles and San Francisco. She still owns a home there, about two blocks from the beach, with room for a garden.

Moving to Portland provided a jolt beyond the change in climate.

Rogers thought she could fairly easily and quickly find a two-bedroom apartment downtown.

“That was absolutely not the case. … The reality set in very quickly,” she said, recounting that she saw apartments that were dirty and dingy, with dishes in the sink and clumps of cat hair on the floor. “I was amazed the Realtors would actually show them in that condition.”

Rogers thinks she was hurt in her search by being from away, without a local rental history for landlords to check on. She said she was close to being able to rent a condo that she liked, but the owner went with a local tenant instead.

She pressed on for more than a month until she finally found a place on Munjoy Hill that meets her needs. The cost was high – $1,450 a month, plus $50 a month because she has a dog. The apartment is in a building on a small lot, Rogers said, and she misses having a garden, especially considering the cost.

“I don’t pay as much on my mortgage (in California) as I do in rent, she said.

Rogers said that in California, she worked for San Luis Obispo County, where she researched economic issues.

Her experience in Portland drove home one lesson, she said: “I realized how important housing is to your economy.”

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