Thanks to Bernie Sanders, we’ve been hearing a lot about how Wall Street fat cats are screwing over poor and middle-class Americans. I believe what he’s saying, but I also believe in the adage “All politics is local.” So let’s look at a specific, local example of Wall Street greed making life harder for ordinary folks, and talk about a specific action local government can take in the coming weeks to remedy it.
The representative of the “billionaire class” in this case is S. Donald Sussman. The community being harmed by his speculation and profiteering is Portland, Maine; more specifically, the India Street neighborhood where Sussman and Rep. Chellie Pingree, his ex-wife, had a townhouse. As reported in The Bollard four years ago (see “Donald Sussman’s Dumps”), The Other Donald, as I call him (in deference to Mr. Trump), began buying apartment buildings along Hampshire Street in 2008. The goal was to transform this historically working-class neighborhood of Italian and Jewish immigrants into Portland’s version of Tribeca, an upscale enclave of condos, boutiques and art galleries.
To make a long and sordid story short, Sussman strung the neighborhood along for years. The development he promised never materialized, despite the fact he had more than enough money to build whatever he wanted and didn’t really need the profits. Meanwhile, the apartment buildings in his portfolio were mostly left vacant and dumpy while Portland experienced a severe shortage of affordable housing and homelessness spiked.
In the summer of 2013, Sussman had two apartment buildings, containing a total of six units, demolished. Portland has a local law, the Housing Preservation and Replacement Ordinance, that requires developers who eliminate units to either replace them or pay about $65,000 per unit into a municipal fund to support affordable housing development.
In a June 26, 2014, column for the BDN, I revealed that city officials allowed Sussman to apply his investment in six luxury condos atop Munjoy Hill to cover his obligation to pay $385,200 into the housing-replacement fund. Due to this loophole, which blatantly contradicts the intention of the ordinance, Portland lost six apartments that housed working-class families for generations, received no compensation to help finance the construction of new units, and “gained” six condos that would have been built anyway.
On Feb. 2, the Portland Press Herald reported that Sussman’s partner in the Munjoy Hill condo project, Chip Newell, recently bought three apartment buildings in the India Street neighborhood from The Other Donald and plans to build a six-story condo complex on the site of two vacant dumps on Newbury Street. The third property, a three-unit building on Hampshire Street, will remain standing, but one of the residential units may be converted into an office.
Once again, city officials are allowing a developer to replace affordable apartments with unaffordable condos. In this case, five or six rental units will be taken off the market and “replaced” by condos in the 26-unit project, dubbed Luminato. The fee to demolish or convert six residences without replacing them would be close to $400,000.
Newell told the Press Herald his goal is to price the condos such that the monthly mortgage payments will be about the same amount a household would pay these days to rent a new apartment in Portland. Nevermind that rents on the peninsula are already unaffordable for most people. Newell neglects to mention the down payment. For a 500- to 740-square-foot, one-bedroom condo, priced “starting in the $200,000s,” an individual or couple would have to drop at least $20,000, and possibly more than $40,000 on a down payment. In the real world, that’s an insurmountable barrier for too many people.
Talk about feeling the burn…