Solutions Library

Islesboro Affordable Property

Addressing Affordable Housing

On many Maine islands, there is a shortage of affordable, year-round housing. This includes affordably priced homes for sale and rental units, especially those available for a full year rather than only in off-peak seasons. The effect of this lack of housing is to make attracting and retaining families—and especially the young residents of islands as they become adults—much more difficult. The lack of housing also provides a significant barrier to economic activity. It’s extremely difficult to find qualified applicants for year-round positions (e.g. school teachers or town employees) or even for summer positions (restaurant staff, sternmen for lobster boats, etc.) without affordable, comfortable housing units in which those employees can live. In the long run, an inability to offer quality housing to school teachers and to the young families that provide island schools with new students could be an existential threat to the year-round nature of many of these communities. Recognizing the significance of the problem, several islands have launched organizations to address this issue. They have used a combination of philanthropic donations, state funds, and sweat equity to create housing units appropriate to their communities. But in nearly all cases, there remains a significant need for more housing.

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Islesboro Affordable Property was founded in 1988, one of the oldest affordable housing groups on a Maine island. It is also one of the few with a paid staff person, executive director Rick Rogers.

 

HOW IT WORKS

Initially, IAP built an 8-unit project, the Ruthie James Subdivision. IAP retained ownership of the land in that project, but residents own the homes. After that, IAP constructed and sold a single-family home, subsidizing the purchase price to make it affordable. Since those projects, IAP has built or acquired homes for rent. In 26 years, IAP has built or acquired 13 homes.

 

Q & A WITH RICK ROGERS, DIRECTOR OF ISLESBORO AFFORDABLE PROPERTY

What constitutes “affordable” housing?

If you are asking what the housing market is like, the bottom of the market for something you might consider living in is around $150,000. But these homes often require an extensive rehab and winterization which can bring the cost up to what a new prefab home costs. While we are sensitive to “adding to the island inventory” at least in the recent past, building new has been the way to go. Currently, there are many homes for sale on island and the prices have dropped dramatically. So, going forward if IAP choses to acquire another property perhaps a purchase of an existing home and

Where does the funding for these projects come from?

We use Camden National Bank and The Genesis Community Loan Fund extensively for our loans. We use MaineHousing funds. But, most of our money is privately fundraised.renovation will be the way to go.

Has there been resistance to this work in your town?

No, though you sometimes hear some grumbling about those we select. Especially from some of the single people but when a home comes up. We try to serve the most people we can with the asset and this by definition hurts the application of the single person with no children. The town is working on an initiative to address this.

With this experience under your belt, what advice would you give someone trying to do a similar project in their town?

Start small, know your market, know who you are targeting, know what level of assistance they will need, know what level of support they can personally provide and most importantly, watch your debt.

 

KEY FACTORS

  • Attract capital. IAP has repeatedly partnered with Genesis Community Loan Fund and Camden National Bank for financing. It has also relied on MaineHousing funds.
  • Know your market. “Start small and know the people you are targeting, and know what level of assistance they will need,” says IAP executive Rick Rogers. “Most importantly, watch your debt.”

 

CHALLENGES

  • Taking on too much debt. IAP’s original plan was to borrow money and have the income from rental units cover the payments. “The problems with that plan are that sometimes people don’t pay their rent, insurance has dramatically increased since purchase of some of these homes and taxes must be accounted for,” Rogers said. “In practice, the rents seldom pay for the mortgage, and they do nothing to cover the upkeep, taxes and insurance. IAP must fundraise $13,000 per year to cover all of the expenses. Since I’ve taken over IAP, we have reduced our debt by $142,000.”
  • Constant fundraising. “The biggest challenge is the constant need to fundraise,” says Rogers. That coupled with an aging donor base is the greatest concern for me.”

 

ADDITIONAL RESOURCES

Originally Published March 2016

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