Brunswick’s new Housing Committee, created this week by the Town Council, will search for policies to help ease the local housing shortage. Yet experts say committee members will have to overcome powerful economic forces that have made market-rate housing far more appealing for developers than affordable units.

Developing market-rate housing works basically the same as buying a home, according to Deb Keller, executive director of Bath Housing. A developer will generally borrow money to help pay for construction costs and then set rents at a price point that will eventually pay off the loan.

Because rents are held to artificially low levels in affordable housing developments, they alone can’t cover construction and maintenance costs, Keller said. Instead, developers must find subsidies and other funding sources, including federal Low Income Housing Tax Credits and Community Development Block Grants.

Finding the right package of funding sources can be a complex and time-consuming process, experts say.

“We call it ‘wedding cake,’” said Scott Thistle, MaineHousing’s director of communications. “Because the layers of financing are like the layers of a wedding cake.”

The Topsham Housing Authority’s recent efforts to develop 38 affordable units on Tedford Road showcases the challenges of building low-income housing, said Executive Director John Hodge.

The organization has worked since 2018 on its plan to build the two- and three-bedroom units, Hodge said. While a market-rate developer can act quickly, affordable developers can’t finalize land purchase agreements or begin construction until they’ve secured financing, often from multiple different sources that give out grants or loans at different points throughout the year.

“Typically, you’re dealing with sellers who are interested in cashing out on their assets,” Hodge said. “They don’t want to wait two years.”

While recent supply chain issues and the labor shortage have pushed up the cost of all construction, they’ve particularly hurt affordable projects. While market rate builders can offset higher construction costs by raising rent prices, affordable developers must instead look for more financing layers to add to their ‘wedding cakes.’

Even though plans for the Tedford Rd. units are as barebones as possible, the housing authority’s estimated project costs have shot up by millions of dollars in recent years, likely to a total that MaineHousing will not be able to fully finance, Hodge said. While the organization seeks out alternative options, construction must wait.

The pandemic has brought some good news to proponents of affordable housing, according to MaineHousing Director Daniel Brennan. State and federal funds have flowed into the organization’s coffers in recent years, which has allowed it to finance a growing number of projects.

“All of our various pots of subsidy got much, much bigger, and we had more efficient tools, Brennan said. “Right now we have the largest pipeline of multifamily projects we’ve ever had.”

While the organization has historically helped fund about 250 affordable units each year, he said MaineHousing financed over 500 units in 2021, and he hopes to soon reach a standard of 1,000 units per year.

Yet thus far this boom has not reached Brunswick, according to town data. While the Brunswick Planning & Development projects the town will add 776 housing units in multi-family developments in the next two years, an increase of 456% over the previous decade of construction, none of those properties will be set aside of low-income buyers or renters.

Even affordable projects often don’t help residents who make between 60 and 100 percent of the area median income, Hodge said. While government subsidies can make it profitable for developers to build housing for the poor, little incentivizes them to help members of the lower-middle class, who don’t qualify for most affordable housing but can’t afford market-rate properties.

“There’s not enough incentive there,” Hodge said. “The numbers don’t work. No developer nor non-profit will do a project that’s going to lose money. You know, you’ll end up bankrupt, and then you’re not helping anyone.”

Brunswick’s new Housing Committee will search for policies that will correct that imbalance by providing incentives to developers who build affordable housing or by mandating that some portion of all large projects include affordable housing.

“You have to do some policy alchemy and kind of concoct the right mix of carrots and sticks and outright zoning changes,” said Town Council Vice Chairperson Dan Ankeles. “Whatever we change will probably be better than the zero we’re getting now.”

Hodge, who said the town could help affordable housing developers by streamlining its project approval processes, said he is happy Brunswick is working to address the housing crisis. But he added the problem is bigger than any one town could handle.

“I don’t think it’s possible for just the local community to find policies that are going to attract enough development to meet their community’s housing needs,” Hodge said. “It has to come from the local community, the state and the federal government. We all have to do our part.”