“Fire-induced storms” are a terrifying phenomenon of the massive wildfires that have been sweeping through Western forests in recent years.
When a fire gets hot enough, an updraft of superheated air and ash goes high in the sky and cools to form clouds that behave like storm clouds, unleashing lighting strikes that start more fires.
We recently got a look at a similar phenomenon that is threatening to burn up Maine’s already-overheated affordable housing market. High rents lead to speculative investment, leading to even higher rents. Like a wildfire, this broken market perpetuates itself. And, in the process, families are losing their homes.
That’s what’s happening in Redbank Village, a 500-unit apartment complex in South Portland that has provided affordable workforce housing in the region for 80 years. Six months ago, JRK Property Holdings, a California-based investment company, was attracted by the region’s high rents and bought the development. Tenants of Redbank Village recently received notice of rent increases that range between $300 and $600 a month, increases of more than 20 percent.
Some people will say, “Tough luck, that’s how markets work.” If the rents are too high, people will move, the management will lose business and have to lower them. But the market can’t function if the tenants don’t have any real choice.
Their only options are paying up or competing for a place in Portland, South Portland or Westbrook, where too many people are already chasing a small number of vacancies. Meanwhile, surrounding towns have few available rentals but cling to zoning regulations that make building multi-apartment complexes next to impossible.
Despite having a slowly growing population, Maine is experiencing shortages of the right kind of housing in the right places. While we welcome real estate investors who want to build new housing to meet demand, what’s happening in Redbank is different.
JRK bought the property for $143 million in November, paying more than twice the selling price from 2016, the last time it changed hands. The company says the new rents are based on a study of prevailing rates in Portland, which has been fighting a housing shortage for the last decade.
Without building a single apartment, JRK plans to extract millions of dollars from working families in Maine. That might be profitable, but it’s not right. And if that’s not galling enough, the complex was originally built with public money to deal with an earlier housing crisis.
In 1942, the U.S. government built 250 duplexes near Long Creek in South Portland to house the families of men and women working at the South Portland shipyard.
Redbank Villiage was more than transient housing. The duplexes were designed as a neighborhood arranged around an elementary school and a community center, providing stable and affordable homes for people doing essential work. The complex passed from the federal government to the city, and was sold to a private owner in 1954.
With the creation of the Maine Mall and other developments, Redbank remained an affordable option that was near schools and jobs and served by public transportation. Charging the inflated rents found in formerly working-class neighborhoods like Portland’s Munjoy Hill will take that resource away from people who desperately need it.
It’s frustrating to watch this happening, especially when no clear policy solution is in sight.
South Portland does not have rent control. The federal government stopped building housing in the 1980s, and now acts indirectly, through the tax code.
Nonprofit agencies are leveraging state and federal assistance to build affordable housing as quickly as they can. MaineHousing, the state housing authority, has 24 projects now under development, but as they put 572 affordable apartments on the market, owners like JRK can jack up the rents at Redbank, and put almost as many out of reach.
It should at least be clear by now that the market won’t solve this problem on its own; Without intervention, it can only make things worse.
Our neglect has allowed this fire to get so hot it’s making its own weather. If we don’t do more, people are going to get burned.
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