Call it a clash of good intentions.
On one hand, there’s the Greater Portland YWCA, a nonprofit that had been providing women in need with shelter and services for nearly 150 years before financial problems compelled its board to fold the organization last year. Saddled with about $2.5 million in debts to the state, lending institutions, contractors and employees, the board is trying to sell its women’s residence and recreation facility on Spring Street in Portland to pay off creditors.
On the other hand, there’s the city of Portland. Several years ago, city councilors passed a law requiring developers who demolish housing units or convert them to non-residential use to help pay for construction of new units elsewhere, or pay into a fund dedicated to affordable housing construction. The law is intended to maintain Portland’s stock of housing for people of all income levels.
At first glance, one would think the two sides were on the same page, both dedicated to ensuring the availability of safe, affordable shelter for low-income people and women in crisis. And indeed, both sides say that’s exactly what they want. So why are they at loggerheads?
Simply put, the YWCA’s board believes the sale of its Spring Street building will not earn the organization enough money to pay off its creditors if the housing replacement law applies to the property. A developer who bought the building with the intention of demolishing or converting its roughly 50 rooming units to another use could be on the hook for nearly $1 million.
Granted, the Y originally put the property on the market for $4.9 million, and an appraisal of the building pegged its value at $4.75 million. So even if a buyer offered $1 million below the asking price to cover the cost of complying with the housing law, the Y would be able to cover its $2.5 million debt with at least $1 million to spare.
Trouble is, the building’s appraisal apparently isn’t worth the paper it’s written on. No one came close to offering the asking price for the 46-year-old building – in fact, Y officials say they got no reasonable offers last year, which led them to try to auction the property in mid-December.
That’s when board members say they first heard about the housing replacement ordinance, prompting the auction’s cancellation while they petitioned the city to have the building exempted as a “project of special merit.”
Most city councilors balked at this argument, countering that there is no “project” to consider until the building is sold to someone who plans to remove the housing units. Y officials have responded by threatening to declare bankruptcy. Bankruptcy proceedings could lead to a division of assets that leaves former employees and local contractors unpaid, but a majority of councilors are willing to take that risk rather than weaken the intent of the housing law.
And even if the city agreed to waive the law’s requirements, there’s no guarantee the Y could realize top dollar for the building. That’s because the Maine State Housing Authority loaned the Y money last decade in exchange for a covenant on the property’s deed that requires it to offer shelter to women in need until the year 2030.
Despite intense pressure from the YWCA and allies like the United Way, MSHA has not agreed to lift its covenant. It’s offered to buy the property itself, but not for a price that would cover the Y’s outstanding debts, so the board has refused.
Meanwhile, the building remains empty. YWCA board members say its costing thousands of dollars a week just to heat it and keep it lit. And revelations about the building’s deteriorating condition keep coming: it’s got asbestos and structural problems so severe that its pool can’t be drained for fear of causing further damage.
City officials are trying to broker a deal between the YWCA and MSHA, but no progress has been made so far. At the risk of thickening this alphabet soup, consider this: If a deal isn’t reached ASAP, everyone involved will be SOL.
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