Maine’s affordable housing construction efforts are facing a major setback as state subsidy programs that have fueled recent development are now depleted. While MaineHousing has just awarded $13.4 million to fund the construction of 129 affordable rental units in Portland and Lewiston, agency officials caution that these could be among the last such projects for the foreseeable future unless new funding mechanisms are established.

Over the past several years, programs such as the Affordable Homeownership Program, the Rural Affordable Rental Housing Program, and the state’s affordable housing tax credit have been instrumental in the creation of nearly 900 new homes for rent or purchase across the state, according to MaineHousing. However, those funding streams have now run dry.

"There's going to be [fewer] projects getting built for sure," said Laura Mitchell, executive director of the Maine Affordable Housing Coalition. “So the production of homes will decrease. We'd love to see a housing bond be discussed, but as we reach the end of the last few days [of the Legislature] here we're really not sure that's going to happen."

Mitchell emphasized that without additional support, Maine risks losing critical momentum in its efforts to address a worsening housing crisis. The scarcity of affordable housing has become a central issue in both urban and rural areas, exacerbated by rising construction costs, limited land availability, and inflationary pressure on rents.

To potentially restore some stability to the funding pipeline, lawmakers are considering a proposal to restructure Maine’s real estate transfer tax. That measure, part of the current Democratic budget plan, would provide a more permanent funding source for affordable housing subsidies.

Mitchell acknowledged the proposal’s potential but also warned it may fall short of the funding levels needed to sustain recent development efforts. “The revenue that real estate transfer tax reform would raise for Maine's affordable housing subsidies programs will pale in comparison to the tens of millions of dollars that the state has invested in recent years,” she said.

The most recent tax credit allocations will help finance the construction of nearly 90 new affordable units in two developments in Lewiston, as well as a 41-unit building in Portland by the Developers Collaborative. But without renewed investment, such projects could become increasingly rare.

Housing advocates say the lack of consistent state-level funding will disproportionately affect vulnerable populations, including seniors, low-income families, and workers priced out of the market. They are urging the Legislature to act quickly and decisively before the end of the session to secure the future of affordable housing development in the state.

Without new measures, Mitchell warns, “The production of affordable homes will decrease dramatically—at a time when the need is greater than ever.”

Originally reported by Nicole Ogrysko in Maine Public.