Avesta Housing hopes to buy the Winchester Woods complex in Portland, depicted above, to provide housing for asylum-seeking families. Contributed / Avesta Housing

South Portland will not be contributing toward the $16 million purchase of a 48-unit housing development in Portland that would be reserved for asylum seekers, potentially putting the project at risk.

The South Portland City Council voted 3-2 Tuesday against providing $500,000 in city American Rescue Plan Act funding to help nonprofit Avesta Housing close on the deal. Councilors Misha Pride, Linda Cohen and Katherine Lewis voted against contributing.

Avesta Housing plans to buy the new Winchester Woods complex adjacent to the Presumpscot School in Portland for $16 million and reserve it for asylum-seeking individuals and families. MaineHousing committed to providing $8.3 million, Cumberland County $2.5 million, and Portland is expected to provide just over $4.2 million, toward the acquisition. MaineHousing will provide an additional $2.1 million in rental assistance for two years. The contribution from South Portland would have cut the remaining funding gap of $1 million in half.

“This piece of funding is incredibly critical in getting this over the line,” Rebecca Hatfield, president and CEO of Avesta Housing, said at Tuesday’s council meeting before the vote. “It is possible, if we don’t get this, we have to think very seriously about whether we can move forward.”

Avesta has three weeks to secure the outstanding $1 million or risk losing the property, Hatfield said.

In a statement Wednesday, she said Avesta will “continue to pursue other resources in hopes of bringing this project to fruition.”

Pride, Cohen and Lewis cited a wide range of reasons for their votes against providing ARPA funds, including a lack of funding from other municipalities, that there are no guarantees South Portland-based asylum-seekers would be housed there, and that the city’s ARPA funds should go toward efforts that directly impact South Portland families, including asylum-seekers currently living in hotels in the city.

Lewis said the city was being asked to invest $500,000 of its $642,000 remaining ARPA funds in a project “that can’t necessarily be tied back to investing in this community.”

“I’m hard-pressed to support this with just a ‘yes’ vote now without a lot more discussion and a lot more requests to other entities and tax-paying bases, frankly, like our (neighboring municipalities),” she said.

South Portland increased its social services budget by 1,460% in the FY23 budget, said City Manager Scott Morelli, from $835,000 to $13 million in large part because of the influx of asylum-seeking families and domestic unhoused individuals. Roughly $2.4 million of that was covered by city ARPA funds, and with those funds dwindling, taxes are expected to go up. In addition, Emergency Rental Assistance funds are expected to expire this month, and FEMA funds are only guaranteed through Jan. 13, posing an even heftier ask from taxpayers.

Cohen said that South Portland has “paid through the nose” already, and she is concerned about the looming tax increase.

“I would rather we keep the ARPA funds that we have in the account,” she said.

Pride agreed.

“I think that I can’t support this,” he said. “Unfortunately, it’s not our job to negotiate. We can’t force anyone to do things and it’s not our project.”

While Avesta cannot guarantee that asylum-seekers living in South Portland hotels would be housed there, Hatfield said that will “very, very likely” be the case.

“We leased out a building and we opened up applications for housing for one week. We saw 1,000 asylum-seekers walk through the doors and 75% of them are in hotels and motels in the city of Portland and South Portland,” she said. “It’s highly likely people going into Winchester Woods will come from hotels and motels in South Portland or in the city of Portland.”

A guarantee is not possible because “hand-selecting somebody from a specific location” could pose “fair housing challenges,” in addition to conditions set by the state, she said.

“The state is coming forward with the majority of the money and they have said they will not allow any local preferences as it is a collaborative response,” Hatfield said.

Councilors Jocelyn Leighton and Susan Henderson voted in favor of providing the contribution. Mayor Deqa Dhalac did not attend Tuesday’s meeting.

Leighton said she was “100% supportive” of providing the funds.

“I want to support people who are seeking a better life here in South Portland and in Portland,” Leighton said. “Limiting our resources in this particular way, in this extreme housing crisis, extreme human rights needs; I just want to bring that to the table. Perhaps we can broaden our scope a little bit.”

Avesta Housing estimates that the cost of keeping people in hotels is roughly $240 per night per household. Acquiring the property and providing rental assistance to asylum-seeking occupants would give them time to file asylum claims and gain work permits, it says, which in turn would allow them to secure jobs and pay rent when assistance expires.