Tax credit on affordable housing paves way for Thomaston rental units
Courtesy / Volunteers of America of Northern New England
Volunteers of America of Northern New England acquired two Thomaston properties, including the one seen here on Pine Street, to preserve as affordable rentals.
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Maine organizations are using a unique model to set aside affordable rural housing in the first use of the state's affordable housing tax credit.
A collaboration with the U.S. Department of Agriculture has acquired 28 affordable homes, creating a long-sought-after model for Maine and other states to reduce the looming loss in rural areas of thousands of federally subsidized affordable apartments.
Led by Brunswick-based Genesis Community Loan Fund, the model preserves affordable rental housing by transferring USDA Rural Development properties from private to nonprofit ownership. The Genesis Fund made loans to VOA Northern New England to purchase and renovate the properties. In the first use of the model, Volunteers of America of Northern New England became the new owner of two properties on 3 and 9 Pine and 63 Water streets in Thomaston that contain more than two dozen apartments.
“Genesis has made a strong commitment to bringing together the resources and partners needed to preserve this vital source of housing in rural communities,” Liza Fleming-Ives, executive director of the Genesis Fund, said in a news release. “Our model is a significant contribution to what needs to be a large, comprehensive effort by federal and state partners to secure affordable housing for the well-being of rural residents.”
Tax credit is key
Key to the new transfer model is Maine’s relatively new affordable housing tax credit, in a first use of the credit for rural housing preservation.
The credit was signed into law in 2020.
In Maine, 7,700 apartments are part of USDA Rural Development’s Section 515 program, which makes rent affordable for eligible families, elderly residents and people with disabilities. Established in 1963, the program made 1% interest mortgage loans to owners looking to develop rural housing.
At its height in the late 1970s, USDA financed the development of 35,000 rural apartments a year across the country.
Now the mortgages are maturing at the same time owners have become older and no longer want to own the properties. Properties may be sold and leave the program, which means the apartments may suddenly become unaffordable to tenants who have made them home for years.
With a grant from USDA, Genesis staff began work in 2018 on the complicated process of transferring 515 properties to local nonprofits and housing authorities in order to keep the properties in the USDA program.
The sellers
The two Thomaston properties were built in 1978 by Mary and Richard Nightingale.
“My parents recognized the importance of affordable housing and understood the impacts of removing the properties from the 515 program,” said Beth Nightingale, their daughter. “They chose preservation over maximizing profit, and were patiently committed to the process.”
Nightingale’s father died just months before the transfer was completed at the end of December.
She noted that twice between 2016 and 2019, she began the process to transfer the properties to a nonprofit organization, but those efforts failed. In 2019, she began working with the Genesis Fund and contracted with Volunteers of America Northern New England in 2020.
“I wish this could have happened more easily and quickly,” Nightingale said. “It was a protracted process that, without the Genesis Fund’s involvement, would not have resulted in a successful transfer."
The buyers
Rich Hooks Wayman, president and CEO of Volunteers of America Northern New England, said his organization is continuing to work towards a solution to the current housing crisis.
“In the midst of one of the worst housing crises in generations, VOA Northern New England is proud of our partnership with the Genesis Fund to be the first nonprofit in Maine to preserve affordable housing in this manner,” Wayman said. “We are especially focused on rural communities where there is a growing need for affordable and workforce housing."
Volunteers of America is a national, nonprofit, spiritually-based organization providing human service programs and opportunities for individual/community involvement.
MaineHousing, the Federal Home Loan Bank of Boston, Bangor Savings Bank and the Maine Department of Economic and Community Development were also key partners in preserving the properties.
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