Rental apartment construction subsidized by federal and state tax credits
Originally published at WMTW News 8 on March 24th, 2023, by Phil Hirschkorn.
(Video on site)
BATH, Maine — For Portland-based real estate developer Nathan Szanton, creating new affordable housing is a mission.
Szanton’s company is halfway through the 18 months of construction of a four-story apartment complex in Bath called The Uptown.
It will have 60 apartments, and three-quarters of them will be set aside for low-income residents.
Szanton said in an interview, "If these were luxury condominiums, probably I could make a lot more money, but that's not the business I'm in."
Instead, The Szanton Company specializes in building affordable rentals in Southern Maine.
"I've always wanted to try to provide housing for a diversity of people, a diversity of incomes, and not just the top echelon," Szanton said. "I think it helps make our society better if people who are struggling to find stable housing can find more if it. The people who are well-to-do have plenty of options.”
The Uptown will have mostly one-bedroom apartments and some two-bedrooms.
A 600-square foot one-bedroom will rent for $1,250 a month at market rate, and the affordable rate will be $950.
What "affordable" generally means is only people who earn up to 60% of an area's median income can apply, and their rent is capped, so they pay no more than 30% of what they make.
Szanton said, “Experts on housing and finance say that a family or a household shouldn’t spend more than about 30% of their income on the combination of rent and utilities, or if you’re a homeowner, on a combination of a mortgage, insurance, and taxes.”
At Milliken Heights, Szanton's new development in Old Orchard Beach, 40 of the 55 affordable one-bedroom units are rented, and it opened just one week ago.
Szanton relies on federal tax credits awarded when at least 60% of units are affordable. The credit goes to banks, who then give him cash to reduce the amount he must borrow.
Szanton said, "Without those financing programs, you can't make the financing work and still charge low rents."
In Bath, state historic rehabilitation tax credits spurred the project, as some apartments will be in a renovated 1893 YMCA building designed by renowned architect John Calvin Stevens.
“This was a vacant lot owned by the City of Bath. We had to convince the city to sell it to us,” Szanton said. “In Southern Maine, land prices have just shot up in the last 10 years or so, so finding a site that we can afford to buy, that’s in a good location where our residents can access the services that they need, is really a challenge.”
Szanton designated both The Uptown and Milliken Heights for residents 55-years-old and older.
Federal discrimination law allows a minimum age requirement to create affordable housing for senior citizens.
Szanton said of the Bath project, “We opted to make this 55-plus to reduce the number of cars that we’d likely have to accommodate, because our parking – we had less than one parking space per unit. So, we decided to feature older residents who are less likely to drive a lot of cars.”
Both developments are in walkable neighborhoods near amenities like grocery and hardware stores, libraries, and parks. The Old Orchard Beach project is also near a bus line.
"Because more people want to live in Southern Maine than we have dwelling units for them, prices just keep going up and up and up, and who gets hurt by that? It's people who have little money,” Szanton said. “Anything that we developers can do to build housing that's affordable for them is a lifeline."