Rockland has been on the vanguard of housing reform for years.
The coastal city was the first one in the state to eliminate density restrictions on most in-town land when it did so this year. It allowed in-law apartments on any single-family lot, slashed residential parking requirements and partnered with mall plaza owners to embrace all types of housing years before a state law mandated some of those changes.
But the city still faces a crippling lack of inventory and is struggling to attract new development. Large parcels have sat vacant, and Rockland officials are now considering a local housing bond and other financial incentives to attract developers held back by massive construction costs. Their experience could show the next obstacle for places across Maine.
“If we had done zoning reform 20 years ago, we’d be in a much different spot now,” City Councilor Nathan Davis said.
Interest rates are rising, and construction costs that rose during the COVID-19 pandemic have now stabilized at high levels. Prime parcels in Rockland have been zoned to allow dense multi-family development. Though zoning reduces the price of land, that’s only around 5 percent of a developer’s budget, said Kevin Bunker, founder of Developers Collaborative.
“They are probably the most progressive city in the state, maybe even above and beyond Portland, with their zoning,” he said. “But all zoning does is remove a barrier to access the market, right? So it’s construction costs and interest rates together that are the problem.”
One 10 acre parcel on Limerock Street has been zoned for up to 200 units since 2022. Its owner wrote on Facebook that he’s lined up all the site work, engineering, lending and builders, but a shortfall in funding means it’s not yet reached the finish line. Davis is sure that if costs “weren’t so obnoxious,” the property would have been snapped up and built up years ago.
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A municipality’s ability to attract zoning goes beyond zoning and even beyond construction costs, too, Kelly Flagg, the executive director of Maine’s association of general contractors, contends. Many communities still have lengthy and costly permitting processes that drag out developments and unnecessarily increase costs, she said.
Flagg also pointed to community opposition to new housing as a considerable impediment to getting dense, multi-family developments built. In recent years, projects proposed in Cape Elizabeth, South Portland and Cumberland have been shot down because of resident backlash.
“All of those things prevent new housing from getting built and prevent people from wanting to start a project,” Flagg said. “Developers need to have a level of confidence that a project is going to happen in order to start the investment in engineering and planning.”
There have been some success stories in Rockland, including Firefly Field, a pioneering 13-unit project run by the local Habitat for Humanity chamber that mixes homeownership with more traditional forms of affordable housing. There was some community opposition but not enough to hamper the development.
Coastal communities like Rockland have been hammered by the affordability crisis. The median sale price for a single family home in Rockland has doubled since the onset of the pandemic. The median rental unit currently sits at $1,650 per month there, according to Zillow data.
A large majority of Rockland residents signaled that they want to explore affordable housing in the city in a referendum question put to voters last month. City officials have taken that as license to form a working group to study local impediments to housing development. A local housing bond is the most concrete proposal to emerge there so far.
“Our economy is strong, but it’s also underperforming because businesses can’t be open to their 100 percent capacity. They’re closed multiple days a week because of the shortage of workforce,” City Councilor Adam Lachman said. “The jobs are available, we’re going to be competitive on wages, but where are you going to live?”
Rezoning communities to promote denser development is an important and free tool to promote housing, Jeff Levine, a former planning director for the city of Portland, said.
But it’s not a short-term fix, and he said it might take 10 to 15 years to see any effects. Having the right zoning in place is important even with adverse economic conditions, because when costs come back down, development can happen immediately, Bunker said.
“Interest rates will stay sticky for a little while. A lot of people thought they would drop after the election, but they haven’t, and construction costs don’t appear to be dropping anytime soon,” Bunker said. “You can’t control the [macroeconomic] factors, but you can maximize your chances of getting a wave of development when you can.”
