Amy Smith, executive director of Healthy Homeworks, speaks to a crowd in April 2024 at the ribbon-cutting ceremony for a condominium project at 51-53 Howard St. in Lewiston marketed to first-time homebuyers. State legislation proposed by local lawmakers seeks to create a state grant program that would encourage building rehabilitation toward starter homes. Andree Kehn/Sun Journal file

LEWISTON — Legislation sponsored by local lawmakers aims to create a grant program that would encourage the development of more starter homes, modeled after a Howard Street initiative that came online last year.

If ultimately supported, Maine Housing would create a pilot program that would provide up to $80,000 to nonprofit housing developers looking to rehabilitate  housing stock for first-time homebuyers.

The Lewiston-based Healthy Homeworks spearheaded a program last year that turned a triple-decker Howard Street building into condominiums. Those units are occupied by first-time homebuyers, but the $150,000 price tag for each unit did not cover the total cost of rehabbing the building.

Instead, the organization relied on philanthropic donations to bridge the gap, but its founder, Amy Smith, said the proposed legislation could make the model work at a statewide level.

“If people like this model, we have to find a way to cover that gap in order to make it sustainable,” she said.

She said while her organization has been lucky enough to receive charitable donations, that kind of fundraising is hard work and doesn’t build a sustainable model for a new type of housing.

“This could be a game changer all over Maine,” she said. “There are a lot of people, once this gap is closed, who would be able to do this work.”

The legislation, co-sponsored by state Rep. Julia McCabe, D-Lewiston, and state Sen. Peggy Rotundo, D-Lewiston, would create a $1.2 million pilot program, enough to award $80,000 to 15 units.

Eligibility requirements stipulate that a unit renovated by the program “must be available for purchase by a first-time homebuyer who will occupy the unit, and has an income that does not exceed 120% of the area median income.” The homebuyer would also agree to relinquish a graduated percentage of profit if they sell the unit within the first three years of ownership.

With the housing market maintaining record high prices, the affordable starter home is no longer attainable for most low-to-moderate-income people.

Smith said while the state has many programs that subsidize rental housing, there are none that create incentives for these type of home ownership initiatives.

She said home ownership is the “principal asset that Americans have,” and is how many build intergenerational wealth, or build equity to start a business. But, she said, the rate of home ownership has plateaued at about 67%, with Lewiston at about 50%. The rate in the Tree Streets neighborhood was roughly 4% in 2023.

“I think we can always do more, especially for first-time homeowners to buy their first home,” she said.

In an email to city officials regarding the legislation, Smith said the cost to acquire and rehab units to the standards that banks and insurance companies demand for condominiums “is significantly higher than the resulting market value.”

She said the cost to acquire and rehab the Healthy Homeworks units has been $200,000 per unit.

Smith and Healthy Homeworks unveiled the new program last year, pitching it as a way to create low-risk starter homes in Lewiston by renovating and converting downtown rental stock. But, she’s hoping a statewide program could result in a variety of housing types using the model, not just in urban settings. She gave the example of someone using the funds toward an aging single-family home in a rural area in need of renovation.

“LD 1167 would make our model financially sustainable for Healthy Homeworks and other developers throughout the state who might want to pursue a similar model,” she said.

On Thursday, Smith said Healthy Homeworks has a goal of creating 20 more units over the next three years. A standalone single-family home rehabbed by the organization is also set to hit the market soon, she said.

The Legislature’s committee on housing and economic development will host a public hearing on the proposed bill at 1 p.m. Tuesday.