Politics & Other Mistakes: Development demons

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If the road to Hell is paved with good intentions, Portland voters may have supplied all the material needed for an eight-lane superhighway to Hades.

Unlike the Maine Turnpike, no E-ZPass will be required.

Al DiamonIn November 2020, the city approved several referendums placed on the ballot by the Democratic Socialists and other progressive groups. A couple of these initiatives were meant to address Portland’s housing crisis. One created a form of rent control on multi-unit dwellings. Another required new developments of 10 or more apartments to set aside 25 percent of that housing for low-income renters.

After their first year in effect, these ordinances don’t seem to have produced the benefits the do-gooders who sponsored them expected.

In 2021, the number of new housing units proposed in Portland took a nosedive, down 82 percent from the previous year, according to a survey conducted by a real estate broker, The Boulos Co., that opposed the new law. Meanwhile, Mainebiz reported that while the real estate market boomed in every other category, sales of buildings with five or more units – those subject to rent control – declined 20 percent.

It would be easy to blame the new ordinances for both these downturns. And there can be little doubt they contributed to constricting the market. But to be fair (just this once), this batch of Satan’s hot asphalt only covers enough ground to get Portland halfway to the netherworld.

Supporters of rent control and affordable-housing mandates have been scrambling to explain away the negative consequences attributed to the new laws, insisting there could be other reasons for the pullback by developers and potential landlords.

In a Bangor Daily News column, former Portland Mayor Ethan Strimling argued the Green New Deal ordinance, which contained the affordable housing provision, forced some developers to begin the approval process earlier than they might otherwise have done. “We had a big bump prior to the Green New Deal going into effect,” Strimling said, “because developers wanted to beat the new regulations.”

That “bump” resulted in nearly 800 units of housing being approved in the year before the law changed. After it went into effect, applications dropped to 129 units.

Strimling said the market is now “adjusting,” which will eventually result in a return to more housing development. Possibly, but that construction might not be in Portland. John Finegan of The Boulos Co. told the Bangor paper, “Inclusionary zoning may be the catalyst that spreads the previously Portland-based development across the state.”

While it seems unlikely projects originally intended for Portland will suddenly sprout in Rumford or Presque Isle, there’s certainly solid evidence that cities along the Interstate 95 corridor in southern Maine are benefiting from developers fleeing the restrictive zoning. Westbrook, Biddeford, Saco, and South Portland have all seen jumps in apartment construction, with most of the new units being market-rate since none of those cities have any legal requirements encouraging cheaper rents.

It seems the road out of Hell runs parallel to the turnpike. And it doesn’t have tolls.

As for rent control, its impact has yet to be fully assessed. While sales of multi-unit buildings in Portland declined, the numbers are too small to draw long-term conclusions. The 20 percent drop in sales only amounted to a slump in one year from 25 buildings down to 20.

What might be more concerning is that at a time when prices of nearly any sort of housing are shooting up like they were poked in the butt by Beelzebub’s pitchfork, buildings subject to rent control sold for 3 percent less than the previous year.

It could be argued that anything having a moderating effect on real-estate prices should be considered a positive. But it’s also true that landlords who are realizing smaller returns on their property investments tend to spend less on maintenance and upgrades. Housing stock starts to deteriorate. And municipalities lose property-tax revenue.

It’ll be interesting to see how these experiments in housing affordability work out. They could result in more options for the working class, although they might have to live in crummier dwellings. Or they could turn Portland into an exclusive enclave for the rich.

Either way, they’d be giving the Devil his due.

Direct your fire and brimstone to [email protected].

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