To meet expected housing demand in 2030, the average number of new units built in South Portland each year would have to increase more than 3½ times over the current yearly average, according to a recent study.
The city will need 2,905 new houses by 2030, according to the Housing Needs Assessment conducted by the Crane Associates consulting firm and city staff.
On average from 2000 to 2020, the city has created 102 housing units a year, for a total of 893 single-family units and 1,147 multi-family units.
Recommendations in the final report of the study, presented to the City Council Thursday, include allowing duplexes to be built in single-family districts, increasing residential density, speeding up the permit approval process for developers and assisting renters in multiple capacities, including improving their credit scores.
The report also recommends that the city incentivize accessory dwelling units, or ADUs, also known as “granny plots.”
The council heard the recommendations while it is already exploring ways to implement rent stabilization, and weeks after it enacted an eviction moratorium and 10% cap on rent increases. Those steps were taken in the wake of shocking rent increases at Redbank Village Apartments.
The report, Councilor Misha Pride said, also helps explain why residents at Redbank Village Apartments were issued rent increases of up to $598 in March.
“One of the reasons the whole Redbank thing is happening is because a company thought, ‘Well, this is what the market will bear for rental housing, because there’s not enough housing,'” Pride said.
‘THE MISSING MIDDLE’
The recommendations in the report are geared toward what consultants call “the missing middle,” or those making 60% to 120% of the area median income, expected to be about $118,000 for a home-owning family of four by 2030. The median income in 2020 for a home-owning family of four was $90,276.
“The missing middle is a challenging place to be from a housing perspective,” said Milan Nevajda, the city’s planning director. “What it means is that you’re earning too much for federal and other subsidies to be applied to you, but you’re not earning enough to be able to afford what the free market is putting online.”
The Maine State Housing Authority deems housing to be affordable if the owner or renter pays 30% or less of their annual income on housing needs, like mortgages, rent, insurance and utilities.
Homeowners making 60% of the median income in 2030, the report estimates, will be able afford a home of $184,000 or less.
“We know we’ll never see a livable house for $184,000,” Nevajda said.
The report projects a shortage in 2030 of 1,760 housing units affordable to those making 60% of the median income, a shortage of 1,057 for those making 100%, and a shortage of 87 for those making 120%. The shortage of housing for those making 60% of the median income causes a chain reaction, where those making 100 and 120% of the median income are forced to pay for housing outside their income levels as well.
“If they can’t find housing that’s affordable to them, they buy up in the cost range,” Nevajda said. “They are then using units that would take away the supply for the high-income earners as well. Everyone is competing with one another.”
IMPACT ON RENTERS
Renters are also being forced to “buy up.” The median income for a renting family of four is projected to be $63,669 in 2030. While there will be an excess of roughly 800 units for the 100-120% income range in 2030, consultants said there will be a shortage of 863 rental units for those making 60% of the area median income.
The report estimates that those making 60% of the area median income will not be able to pay more than $1,000 a month for their rental unit for it to be affordable in 2030. Renters making 100% of the area median income will be able to afford $1,600 per month, and those making 120% will be able to afford less than $2,000 per month.
This causes the same chain reaction homeowners are facing, where those in the 100% to 120% income levels are renting units intended for higher incomes.
“Sometimes, (residents) pay more than 30%, sometimes they pay 60%, sometimes they pay 70% of their income on housing,” said Michael Crane, founder and principal of Crane Associates. “They’re sacrificing household income for other purchases — food, medicine, education, entertainment, anything else. They’re what we call ‘housing-cost stressed.’”
The thought of residents giving up other basic needs just to have a roof over their head, Mayor Deqa Dhalac said, is “absolutely sad to see … Whatever we can do here in South Portland, we should be doing it.”
Another catalyst of the crunch is a decline in the number of people living in each household, according to Jeff Carr of Crane Associates.
“For each 1,000 people in your population, the housing stock has to work significantly harder than as recently as the 1980s and 1990s,” Carr said.
Accessory dwelling units are one solution, the study said, but a regional approach to the housing crisis is needed.
A regional effort would likely require cooperation between upward of 60 municipalities, including South Portland. Getting 60 towns and cities to collaborate, however, is a daunting task, and would likely require action from the state or county level, as well as regional organizations.
“I think the idea about the regionalization is excellent and true, but I think that’s going to take forever,” said Councilor Susan Henderson. “I think the rubber needs to hit the road, and so we should start with the ADUs.”
Henderson said ADUs would allow seniors to continue living in South Portland on fixed incomes and make property taxes for younger people more affordable.
The consultants said a state law scheduled to take effect next year could make some of the city’s decisions for them.
“By state mandate, LD 2003 allows for up to three, and even four units (in designated growth areas) to be put onto any single-family lot within the community,” Nevajda said.
Councilor Linda Cohen said ADUs should be the first step but, with the new law coming, any further action the city takes should consider the impact of LD 2003.
“I really, really want to know the impacts of LD 2003 on the community before I can make a lot of decisions based on the recommendations in this report,” she said.
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