The Maine Affordable Housing Coalition (MAHC), an NLIHC State Coalition Partner, and its partners in the architecture, engineering and contractor fields in Maine are celebrating their victory in ending a two-year moratorium on the sale of moral obligation bonds in the state. In August, Governor Paul LePage (R) announced his decision to reauthorize the sale of the bonds, which will help strengthen Maine’s economy and improve the state’s housing stock, which is among the oldest in the nation. This broad advocacy partnership has been key to advancing MAHC’s affordable housing priorities.
The suspension on the sale of moral obligation bonds, which are tax exempt municipal bonds that provide an additional security or “moral” pledge against default, has significantly impacted the state’s ability to create affordable housing. Prior to the moratorium, the Maine State Housing Authority (MSHA) used them to leverage its capacity to build affordable housing through the federal Low Income Housing Tax Credit (LIHTC) Program. Purchasing MSHA bonds provides private investors an automatic 4% federal tax credit through the LIHTC. The equity that investors provide to the program is then used to finance 30% of the development cost to rehabilitate or build affordable and highly energy efficient homes. As a result, the bonds can significantly stimulate the state’s economy, which proves attractive to investors and state officials alike.
The governor, key legislative committees and MSHA’s board received a February sign-on letter urging the bonds’ reauthorization. It highlighted MHSA’s good record with the program as it has never defaulted on its bond obligations. The letter’s organizers included MAHC, the Associated General Contractors of Maine, American Council of Engineering Companies of Maine, American Institute of Architects, Associated Builders and Contractors of Maine, Maine Real Estate and Development Association, GrowSmart Maine and the Maine Real Estate Managers Association. The letter had 128 signatories, an unprecedented number when compared to prior sign-on efforts.
Advocates pointed out that the program is a significant job creator for Maine builders, architects, engineers, trades people, and construction material suppliers, which were hurt by the recent recession. The number of construction jobs has decreased 26% since the industry’s peak in 2006, the equivalent of more than 8,000 jobs lost. They also noted that Maine ranked 43rd nationally in construction sector job growth compared to Massachusetts, Vermont, and New Hampshire, neighboring states that ranked 25th, 26th, and 29th, respectively.
After months of follow up and targeted advocacy with state administration and legislative officials, Governor LePage authorized MSHA to proceed with the issuance of new moral obligation bonds. MAHC reports that approximately ten additional affordable housing projects now will advance in the next six months, an accomplishment that the approval and issuance have made possible. It is estimated that each project site will employ up to 35 businesses.
“Governor LePage’s change of position on the sale of tax-exempt bonds is a huge win for both the creation of affordable, energy efficient homes and the creation of jobs in the construction sector,” said Greg Payne, NLIHC board member and MAHC coordinator. “We are grateful to our partners in the building contractor, engineering and, architectural trades for their collaboration on this important issue over the past year."
For more information, contact Greg Payne, [email protected]