The foundation has been poured for a condominium development at 5 Merrill St. on Munjoy Hill. As written, a rule that Portland adopted nearly 40 years ago to regulate the conversion of rental units into condos doesn’t apply when apartment buildings are torn down and replaced.

Nearly 40 years ago, Portland adopted an ordinance to regulate the conversion of rental units into condominiums, in part, to ensure a diverse housing stock and protect tenants.

But the ordinance, as currently written, only kicks in when an existing rental unit is sold as a condo, not when a building full of apartments is torn down and replaced by a new building full of condos.

The demolition of affordable housing for boxy new condos is a trend that is alarming some residents on Munjoy Hill, a highly desirable neighborhood near Portland’s downtown that has views of Casco Bay.

At least two elected officials were surprised to learn of the apparent loophole.

“That’s ridiculous,” said City Councilor Belinda Ray, who represents the district. “We have to fix that.”

Mayor Ethan Strimling was equally surprised to learn that not only does the city’s condo conversion ordinance not apply to tear-downs, but that the conversion fee charged to developers – $150 for unit converted – is so low.

“That’s a loophole we absolutely have to close,” Strimling said. “I’m also very supportive of looking at that fee. It’s simply too low.”

Munjoy Hill residents have been amping up pressure on city officials to enact a moratorium on tear-downs in their neighborhood, which they say is leading to a loss of affordable housing and in some cases historic buildings.

Ray’s proposed moratorium, which would prohibit tear-downs for six months and freeze all development on the hill for 45 days, is lined up for a Dec. 18 vote by the City Council.

Area residents Karen Snyder and Maggy Wolf told the City Council during a recent public meeting that more than 20 buildings have been torn down on the East End since the city changed zoning on the peninsula two years ago to make it easier to develop housing.

But city officials, who are currently reviewing the impact of the R-6 zone changes, said their analysis shows that 14 buildings have been torn down, or are planned to be torn down, since 2015, most of them in East Bayside and on Munjoy Hill.

Officials could not say Thursday how many of those tear-downs involved replacing apartments with condos. But a review of planning files at City Hall shows that in most cases, apartment buildings – or single-family homes – are being demolished and being replaced with multi-unit condos.

When a six-unit apartment building at 15 Merrill St. was rumored for demolition to make way for condos, Lisa Adams said she and her husband purchased the building and renovated it to preserve the rental units.

Ray said her proposed 180-day moratorium would begin on Dec. 4 and would stop the issuance of demolition permits in the R-6 zone on Munjoy Hill for projects that would tear down more than half of a building’s exterior, or a building’s front facade.

Ray’s proposal also would block site plan applications for projects in that same area from being filed within a 45-day period to give staff time to come up with different, interim design standards for new buildings. Staff would then work with the community to develop final design standards, which could be enacted before the end of the six-month moratorium.

“I think what we’ll do is we’re going to try to have a lot of community conversations,” Ray said. “There are a lot of people on the hill who have ideas about how these things could be addressed.”

‘DEMOLITION PRESSURE’ ENDURES

The recent pushback against the development activity on Munjoy Hill comes in response to two condo proposals, one on Monument Street and the other on St. Lawrence Street. The two-family home at 24 St. Lawrence St., which was built in 1851 and like other houses on Munjoy Hill survived the Great Fire of 1866, would be torn down and replaced with a four-story, five-unit condo.

The moratorium, as currently drafted, would apply to the projects on St. Lawrence and Monument streets, since the only exemptions are for projects with site plan approvals before Dec. 4.

The resolution accompanying the moratorium indicates that the R-6 zone changes have produced 92 new units of housing, including 29 on Munjoy Hill, in the last two years.

“There is a strong likelihood that the R-6 zone on Munjoy Hill will continue to be subjected to this demolition pressure,” the resolution states.

A new condominium complex replaced an apartment building at 31 Fore St. on Munjoy Hill, where residents have been calling for a moratorium on tear-downs.

During the moratorium, city officials may consider adopting some sort of conservation district for Munjoy Hill, an idea that has been proposed in the past by Greater Portland Landmarks, a nonprofit preservation group, but failed to generate support.

The preservation group conducted an inventory of historic and architecturally significant homes on Munjoy Hill that was last updated in 2003. Existing buildings near Fore Street at the end of St. Lawrence, Waterville and Atlantic streets were built around the 1846 founding of the Portland Co. to house workers at the railroad foundry.

At the same time, city planners could present a set of recommendations for strengthening the city’s condo conversion ordinance early next year, said Jeff Levine, the director of Planning and Urban Development.

Currently, the ordinance, which requires extended noticing periods and payments to low-income residents and assesses a per-unit fee on conversions, only applies to existing apartments that an owner wants to sell as a condominium, but not projects that demolish apartment buildings to make way for new condos.

SITUATION HAS CHANGED SINCE 1981

According to data provided by the city, 40 properties, totaling 167 units, have been converted from rentals into condominiums. A third of those conversions have occurred on Munjoy Hill. That figure does not include tear-downs.

The ordinance does not specifically exempt tear-downs, but Levine said his research showed that councilors in 1981 debated whether condo conversions were even a problem and do not appear to have intended to cover tear-downs.

“It doesn’t talk much about a situations where a building gets torn down and replaced,” Levine said. “My guess is that’s because there just wasn’t much of that happening in 1981.”

The ordinance, which has never been amended, seeks to regulate the conversion of rental units into condominiums and protect tenants by requiring developers to provide ample notice of when a conversion would take place, allow the tenant the right of first refusal to purchase the condo, and pay low-income tenants two months worth of rent to help off-set relocation expenses.

Tenants must be given between 120 days and one year’s notice depending on how long they have lived in the apartment. The ordinance also requires developers to pay a $150 per-unit fee to the city. By comparison, the Housing Preservation and Replacement Ordinance, adopted in 2002 and strengthened in 2010, requires developers to pay roughly $65,000 for every housing unit that is converted to non-residential use.

Levine said the staff is considering recommending a “significant increase” in the conversion fee as a way to capitalize the city’s Housing Trust, which is used to help develop affordable housing.

“There was some interest in this proposal at the Housing Committee, but they understandably wanted a more detailed proposal,” Levine said.

Lisa Adams of Portland adjusts a shade in the six-unit apartment building at 15 Merrill St. After learning that the Munjoy Hill building might be demolished to make way for condominiums, she and her husband bought the property and renovated it to preserve the rental units.

Levine said staff also may consider expanding the ordinance to cover cases when apartment buildings are torn down, though he cautioned it was too soon to say exactly what their recommendations might be.

“We are aware that the current trend is slightly different – tearing down a rental building and replacing it with a condo building – and will be looking at that issue for possible recommendations to the Housing Committee,” Levine said in an email.

‘WE CAN’T … FEE PEOPLE TO DEATH’

City Councilor Jill Duson, who leads the Housing Committee, said the recommended changes will be taken up by the next Housing Committee, which will be appointed by the mayor next week.

Duson said she was open to ways to help preserve housing that’s affordable to low- and middle-income people, making new development blend in better with existing neighborhoods and looking into whether the city’s condo conversion ordinance is working. However, she was not sure that tearing down apartments so condos can be built can be defined as a conversion.

“That doesn’t mean we’re not concerned about it or shouldn’t find a way of disincentive,” Duson said. “I don’t think it needs to be defined as a condo conversion for us to do something about it.”

Jay Norris, president of the Munjoy Hill Neighborhood Organization, said he personally would not support increasing fees on developers, but believes the city should treat tear-downs as conversions.

“We can’t continue to fee people to death the way we’re doing now,” Norris said. “I’d support amending the ordinance for equal requirements, regardless of tear-down or conversion of multi-unit rentals into condominiums. Let’s be careful how we legislate the morality of private property development where it isn’t an absolute necessity.”

Snyder, who lives on Waterville Street, agreed that the loophole in the ordinance should be changed.

“That is a loophole that we would like to be closed in the future,” she said, ‘but we need the temporary moratorium to be able to stop the tear-downs temporarily.”

Randy Billings can be contacted at 791-6346 or at:

rbillings@pressherald.com

Twitter: randybillings