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MaineHousing: Revamped Bidding Process Lowering Costs
12/18/2012   Reported By: A.J. Higgins

After a year of upheaval that resulted in the resignation of its executive director, the Maine State Housing Authority says it's now providing more low-income housing at lower costs. In fact, the authority's board says the agency has been able to significantly reduce the cost of developing or rehabilitating affordable housing in Maine and provide dozens more units than it did last year. A.J. Higgins reports.

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Under a revamped bidding process developed by the Maine State Housing Authority, quality work and adherence to state building codes are still top priorities, but developers can also get an edge in the competition for tax credits by pricing their projects competitively.

MSHA Executive Director John Gallagher says that if the project costs exceed the submitted bid, developers, and not the taxpayers, will now pick up the tab.

"They know in no uncertain terms that if they run into cost overruns, it's going to come out of their pocket, which is very similar to the private development world," Gallagher says.

Gallagher says as compared to last year, the agency has been able to reduce the price of affordable housing projects by 36 percent, and create 148 more housing units. Some so-called green incentives, says Gallagher, are receiving a lower priority under the revised system.

Instead, developers pick up extra points for meeting quality construction goals if their bid comes in lower than a targeted amount set by the agency. And Gallagher believes that many of those extra costs are simply a function of design.

"I've actually participated in the past, and as much respect as I have for architects, they do like to put their stamp on a building, and sometimes you wind up with some very beautiful, ornamental things hanging off your building that sooner or later you're going to have to either replace or maintain or whatever, so as a developer and an operator I would try to discourage those things," Gallagher says.

Peter Anastos, chair of of the MaineHousing Board, says it's often the little details incorporated into a major development that can contribute to added costs.

"The cost-competitive developer would have light posts, say, at $6,000, where the higher-priced one might have them at $30,000," Anastos says. "And when you don't have any penalty for putting in a fancy - or the choice by the architect that, say, he might want to put in - that's the sort of thing that happens," Anastos said.

Outgoing State Treasurer Bruce Poliquin pushed hard for lower development costs at MSHA when he assumed his place on the board two years ago. The new board put pressure on former Executive Director Dale McCormick, who resigned in March. Poliquin says the Maine State Housing Authority has proven that it's now an example of good government.

"I look at good government as being, 'How do you help the most number of people and use the least amount of taxpayer dollars?" Poliquin says. "And this is a great example of it. This is a terrific Christmas story, and I want to congratulate everybody that's been involved."

The MSHA board says that the six affordable housing projects will receive a share of nearly $3 million in federal low-income housing tax credits, which help leverage approximately $25 million in private investment into Maine. The projects are in Lewiston, South Portland, Portland, Saco and Biddeford.



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