Major Maine Cities Examined
Portland
Portland is both the largest city in Maine and the best known nationally, and because of this, the housing policies on the books in Portland often serve as a model for other Maine cities. This, and the fact that the ordinances in Portland affect more Mainers than any other city, make the effects of Portland’s policies some of the most important in the state. It is because of these reasons that the harmful anti-housing policies Portland employs are concerning for the state as a whole.
Some of Portland’s housing policies are actually quite beneficial. The city has abolished off-street parking requirements for most residential areas, and the recent “Recode Portland” zoning reform efforts have included some positive changes. The largest is cutting back on the massive size of the city housing code from more than 1,000 pages to less than 400. Another is simplifying and merging several zones together and weakening many setback, height, and use regulations, especially in residential areas.
Portland has tried to communicate to developers that it especially wants to pursue “transit-oriented development,” or development along the major transportation corridors. Lastly, Portland has made several steps toward encouraging Accessory Dwelling Units and multi-family housing uses in traditionally single-family zones.
However, the anti-development and anti-housing policies in Portland dwarf the pro-development ones, and what’s worse is many of the above positives have major caveats. Transit-oriented development focuses reform on only a small section of the city of Portland, reducing the market impact that can be achieved. Additionally, the ADU and single-family neighborhood reforms were actually mandated by LD 2003, and Portland instituted several strange rules to restrict the impact of these reforms. Lastly, the actual reforms to height requirements, setbacks, and permitted uses were quite limited. While they represent a step in the right direction, they are a set of very small reforms that could have greater impact with greater deregulation.
As for anti-development policies, Portland has plenty of them. The city’s inclusionary zoning ordinance mandates 25% of multi-unit developments to be workforce housing, which ties the rent charged to a percent of the area’s median income rather than what the landlord wants to charge. These units are rented out at far below market rate, and as discussed earlier, this is a major disincentive for potential Portland housing developers. The city’s rent control ordinance also requires that landlords only increase rent by 70% of inflation in the Boston area, which means accounting for inflation, Portland landlords are guaranteed to see profits decline year over year. Investors are known to avoid risky investments, but even less popular are investments with a guaranteed loss in value over time. That is what an apartment that can’t keep rent stable with inflation is–a losing investment.
The combined effect of these policies is quite apparent when one looks at the Portland housing market, as the referendum to increase inclusive zoning from 10% to 25% was passed in 2020, and looking at Figures 22 and 23 of Portland’s 2023 Annual Housing report shows a massive increase in housing that has been approved, but not completed. This shift is clearly due to various factors, one prominent issue being the lack of return on investment in housing and the extra cost of the fee-in-lieu system.
Furthermore, Portland has a strict quota and registry system for short-term rentals, meaning that units with a short vacancy period cannot be utilized by landlords and are guaranteed to be a losing investment. With these policies on the books, which reduce the total revenue a landlord can generate from multi-unit developments and their reliability of return, one wonders why anyone would ever want to build apartments in Portland. At this point, building multi-unit housing in Portland is a nonprofit endeavor because there is little to no chance a landlord will make a long-term profit.
Portland’s residential zones have quite restrictive height and use limits, even when accounting for recent reforms. Most zones have a maximum height allowance of 35 feet, which makes it very difficult to develop multi-family housing in such confined spaces. Many zones also have setback and coverage requirements, meaning that expanding multi-family housing from preexisting buildings is technically possible but not at all feasible. Removing parking requirements but keeping many coverage requirements the same often means a parking spot turned into more yard space rather than more housing.
Portland’s business zones are far less restrictive, but the more permissive ones cover a very limited part of the city. If Portland truly wants to encourage a walkable, dense, modern, and affordable city, encouraging more mixed-use zones that allow both housing and businesses is the best pro-development policy they can implement, as would the lifting of the many anti-development policies described above.
Bangor
Bangor, compared to Portland, is broadly less experimental. Experimentation can have both good and bad outcomes, as with its parking requirement abolition, Portland actually did something very good for the housing market. However, experimenting can also have very bad effects, such as with policies like rent control or inclusionary zoning. Bangor often seems to copy Portland’s policies a few years after they’re passed, which means that some of the newer, more radical regulations haven’t reached Bangor yet. Some of Portland’s major policies have already spread to Bangor, though, such as rental notification requirements and short-term rental restrictions, while inclusive zoning is now being considered.
One of the good things Bangor has done is recently approving a tiny home park to provide low-cost, smaller rental properties. Additionally, Bangor has recently supported projects to renovate older large homes and turn them into boarding houses, thus turning underutilized properties into several new units. Additionally, Bangor’s Housing Work Group worked to reduce minimum lot sizes in much of the town by up to 50%, and in 2022, the city approved over 345 new housing units which surpassed the Portland number of 344. This is especially impressive considering Portland’s population is more than double that of Bangor, meaning that the same number of new units proportionally impacts the city’s housing problems twice as effectively.
While these policies seem to be alleviating much of the rising demand for housing, there are several caveats to them. First, while turning older properties into multi-unit housing is a good temporary measure, it becomes less effective as the number of larger older properties in the city becomes depleted. Additionally, the tiny home units will allow for more densely concentrated housing, but not to the degree that apartment buildings would, as they fail to utilize a large amount of vertical space.
Bangor’s copying of some of Portland’s anti-development policies will also reduce its market’s ability to shift supply. While Bangor does not yet have rent control or inclusionary zoning, it does have short-term rental restrictions. As with Portland, the justification for this is the false belief that short-term tenants compete with long-term ones when this is simply not the case. Landlords will automatically prefer a more guaranteed long-term investment if they can afford it. Thus, if a unit is set up for long-term tenants and there are, in fact, interested potential tenants, then they will be preferred over short-term applicants already.
Short-term tenants often occupy apartments for shorter periods of time to supplement the landlord’s revenue during the long-term off-season, such as during the summer when college students are no longer commuting to the University of Maine. Alternatively, part-time owner occupants may lease their property for only a few weeks or months to short-term tenants, and restricting them from being able to do so does not mean these units would be leased to long-term tenants instead.
Additionally, Bangor has quite strict rent increase notification requirements, requiring 60 days prior notice to any rent increase. This is not quite as long as Portland’s 90-day increase notice, but two months prior notice is a lot, especially since Maine law already requires 45 days notice. Requiring over two weeks longer notice only seems to complicate and make renting in Bangor harder than necessary, rather than actually providing extra protection for tenants.
In addition to the poor policy moves copied from Portland, Bangor has some original regulations that provide greater barriers to the housing market. One is how difficult Bangor’s zoning code and map are to navigate compared to other cities.
Portland’s code has been massive and difficult to use and understand for quite some time, but the city is at least in the middle of reforming it. Additionally, Portland’s zoning map is middle of the road in difficulty of use, but Bangor’s only shows the zone in which properties are located if one toggles the option. Also, zooming out too far automatically turns off the zoning labels, and one either has to click on the parcels or cross-check with the colors legend to see which color represents which zone. Doing either of these will only give you the zone acronym, and then cross-referencing again with the list of zones and their purposes is the only way to understand them. This is quite a cumbersome process considering other Maine cities, such as Auburn, have far easier to navigate codes and maps.
Lewiston
Lewiston appears to be better off than the other two large cities in several ways. First, they are not currently considering instituting rent control. In fact, in an article in the Sun Journal, a member of the Lewiston Housing Committee was quoted as saying, “I, like most, think rent control is the worst thing we could do. It causes current landlords to increase rents and scares off too many potential developers. Portland may be able to afford to turn investors away, but Lewiston cannot.” Short-term rentals also are not restricted like Bangor or Portland, nor is inclusionary zoning being considered. All of these policies reduce the incentives to develop housing, so the fact that Lewiston does not implement any is positive for the city’s housing market.
Additionally, while Lewiston’s zoning map is not easy to navigate, its zoning ordinances are, and its land use code is only 287 pages, more than 100 pages smaller than Portland’s code. Additionally, it is divided into sections by purpose, making it easier to navigate than other codes’ either mono document format or page-based, ordinance-focused systems. Finding different parts of Lewiston’s code that apply to a specific property or issue is much easier than Bangor or Portland.
Lewiston still has several areas where it can improve, though. Its maximum impervious coverage requirement, which covers both buildings and other rain-impervious areas, is below 100% in all but one zone. Impervious coverage requirements are quite similar to lot coverage requirements, but instead of just including buildings, they also include other rain-impervious structures, like concrete parking spots. The fact that this includes impervious structures other than buildings, such as concrete parking spaces or driveways, makes this even more restrictive, especially on smaller lots where parking spaces can take up a large portion of the property. It may further exacerbate parking problems as well by restricting those attempting to provide parking spaces from making parking lots readily available to meet demand.
Additionally, unlike the other two cities, every zone in the city has some sort of setback requirement, as well as a far lower height maximums. While Lewiston has not adopted any recently trending anti-growth policies, it also has not adopted many pro-growth reforms some other cities are adopting to encourage housing market innovation. This means that developers make far less of a gamble building in Lewiston because the policy dynamic of the city is less volatile, and thus more predictable.
Especially since Lewiston is just across the Androscoggin River from Auburn, one would hope that they would copy more of the policy innovations coming from the other side of the river. This sadly has not been the case, although their refusal to copy many of Portland’s more ill-advised schemes is still a good policy move. Auburn has created many pro-development policies over the last 10 years, though, and has, as a result, faced a significant increase in housing growth.
In general, Lewiston’s policies can be summarized as slow-moving, but since most of Maine’s larger cities are moving in the pro-regulation and anti-development direction, this position appears to be more positive than negative by comparison. Still, one would hope that with the obvious negative consequences of policies like those on the books in Portland, Lewiston will see the writing on the wall and move in the opposite direction in the future.