Collaboration preserves affordable housing in Aroostook County

Two people stand on a line outside of an apartment building.

Photo / Courtesy Tonia Dupler The seller, Lester Hersey, with his wife Debbie Hersey, stand outside the Mapleton property.

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By Laurie Schreiber

In the rural Aroostook County town of Mapleton, residents of a 12-unit apartment complex had enjoyed affordable rental rates for decades, thanks to a U.S. Department of Agriculture-backed loan program that helped finance construction of the complex and included rental assistance.

But with the loan nearing maturity this year and the owner of the complex looking to sell it so he could retire, the residents were facing the possibility of a private buyer coming in who would charge market-rate rents.

Responding to the problem, financing and guidance from the Genesis Community Loan Fund, based in Brunswick, made it possible for the Presque Isle Housing Authority to acquire the property, ensuring it remains affordable.

A building in the background and a sign in the foreground around surrounded by snow.

Photo / Courtesy Presque Isle Housing Authority

Financing and guidance from the Genesis Community Loan Fund made it possible for the Presque Isle Housing Authority to acquire a Mapleton rental complex, ensuring it remains affordable

"Preserving this property ensures that low-income families and seniors in this rural community will continue to have an affordable place to call home," said Jennifer Sweetser, executive director of Presque Isle Housing Authority.

Early financing

In the early 1980s, the property at 24 Pulcifur Road was developed by Lester Hersey, a local resident, who relied on financing through the Section 515 program of U.S. Department of Agriculture Rural Development to carry out the development.

Established in 1963, the 515 program provided 1% interest mortgage loans to owners looking to develop rural housing and to make rent affordable for tenants. The mortgages are made by USDA to provide affordable rental housing for very low-, low- and moderate-income families, elderly persons and persons with disabilities, according to the USDA.

For many years, Hersey rented the units at affordable rates to older adults in Aroostook County. Like other rental-housing owners who took advantage of the program, he is older now and was ready to sell.

But there’s a sticking point. If the properties leave the 515 program and go to private buyers, the new owners could rent the apartments at market rates, resulting in the loss of affordable rental housing in rural communities, according to Genesis.

Without the transfer, the property faced the potential loss of federal rental assistance, which would make these homes for older adults unaffordable, according to a news release.

Preserving affordability

Instead, Hersey and his wife worked with Genesis to transition the property to the Presque Isle Housing Authority, rather than risking it being lost to the private market.

“It’s critical to preserve these homes that the 515 program makes affordable,” said Liza Fleming-Ives, Genesis’s executive director. “They are some of the only quality rental homes available in many rural communities and especially for households with low-income.”

Presque Isle Housing Authority owns, manages and rehabilitates affordable housing. It will make renovations to improve building safety and residents’ apartments. Maine’s State Affordable Housing Tax Credit will help finance the renovations.

The Presque Isle Housing Authority bought the property for $252,000. Financing included U.S. Housing and Urban Development’s Community Development Block Grant Program and a bridge loan provided by Genesis.

“This is an older property and there was a small USDA loan remaining on it that the housing authority will be assuming,” Fleming-Ives told Mainebiz.

About $200,000 of deferred work will be carried out, including exterior siding, paving and some interior work to the apartments.

“It takes time to put these property transfers together and do the introductions and work through the process,” Fleming-Ives said.

She added, “Public housing authorities and other nonprofits are stepping up, understanding the critical need to preserve existing affordable housing. Many of these properties are in communities that haven’t seen construction of affordable homes for years, so it feels critical to preserve the affordable housing that’s there.”

Over 300 properties

Genesis has compiled a list of properties in Maine financed decades ago by the USDA program, with a focus on transferring them, before their mortgages mature, to nonprofits and local public housing authorities that have a mission to keep them affordable.

Maine has over 300 such properties, totaling about 7,600 apartments, some in communities where they serve as the only rental housing with rental assistance or subsidies.

Over the last few years, Genesis has facilitated the transfer of six such properties.

One of the transfers occurred last November for Main View Apartments, a 24-unit property at 95 Main St. in Orono that offers affordable housing to older residents.

Genesis financing supported the purchase of the property by the Housing Authority of the City of Old Town. Like the Mapleton project, the Maine Affordable Housing Tax Credit helped with repairs and upgrades. The seller was ready to retire.

The transfer was the Orono housing authority’s third acquisition of a USDA-subsidized property aimed at supporting residents who were at risk of losing affordable housing, Laurie Miller, the authority’s executive director, said at the time.

“With many nearby apartments being rented at significantly higher rates, maintaining affordability in this building is essential for the current tenants,” Miller said.

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