Rental shortage needs fast political response City and state officials can play a role in Portland's solution.

January 24, 2001

EDITORIAL, Portland Press Herald

Rental shortage needs fast political response City and state officials can play a role in Portland's solution

The housing crunch in Portland can no longer be left to "the market" alone to solve. The invisible hand that guides economic choices has blocked the development of badly needed apartments, and it's time for policy makers to take action.

Vacancy rates of 1 percent or less have driven rental rates sky-high. While real wages in Portland have increased 132 percent since 1980, rents have jumped by 289 percent -- more than twice as fast. That, experts say, explains the 50 percent increase in the number of homeless residents who use the city's shelters each night during a time of prosperity. The shortage also makes it hard for growing companies to attract new workers to Portland. Those who do work in the city move to the suburbs, increasing sprawl and traffic congestion.

According to Dana Totman, a member of the new Southern Maine Affordable Rental Housing Coalition, the problem is rooted in economics. It costs developers $1,500 per month to rent a newly constructed apartment on the peninsula, but the average family can only afford about half that much. Thus, there's no market to encourage new construction.

Even worse, without new apartment construction, rental rate increases will continue to outstrip income. Left to the market, the housing crunch will become a full-blown crisis.<.p>

What will it take to deflate rents? Experts who met Monday at a housing coalition conference said reducing vacancy rates to around 95 percent would help in the short term. For that reason, state and local officials should support efforts to subsidize new multifamily housing construction in Portland through loans, tax incentives, and where appropriate, outright grants.

Over the long term, Portland needs to review its housing development rules. Density requirements, for instance, may need to be relaxed on a case-by-case basis. Flexible codes for renovating or rehabilitating older buildings may be in order, as well as tax breaks for construction that meets city housing goals.

Portland's housing market is out of balance. It will take deliberate public action to restore its equilibrium.

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