Developers planning an ambitious 10-acre business district on Portland’s eastern waterfront are asking city officials to bless a complex tax structure that they say will help finance the project without direct cost to taxpayers.

Work is already underway on the first phase of the project, a redevelopment of the former Portland Co. property off Fore Street that will start with a new office building for the insurance company Sun Life U.S. and its subsidiary Fullscope RMS. The current phase will also include a market hall, event space, housing, structured parking and more restaurant and retail space.

What’s new is the developers’ request for help to finance the public improvements – roads, sidewalks, utilities – that would make the rest of their private development possible.

“We’re not saving any money on property taxes,” Casey Prentice, a principal for the developers, the Portland Foreside Development Co., said in an interview Sunday. “We’re just working together with the city to find the capital to build these public improvements without any added burden to the taxpayer.”

Prentice said he and his colleagues realized as the project progressed that the infrastructure costs were unmanageable. Banks and construction companies evaluated their plans and came up with numbers – as much as $70 million for all the improvements – that the developers hadn’t anticipated.

“It’s new to the public,” Prentice said of the proposal. “It’s somewhat new to us now.”

A 60-page proposal from the developers became public on the city’s website Friday afternoon, in advance of a meeting Tuesday of the City Council’s Economic Development Committee. Still, Prentice said, he has been working with city staffers for roughly a year on the new tax structure.

City councilor Justin Costa, who chairs the economic development committee, said he wanted to get the proposal on a public agenda to create a community conversation about the idea. “This is extremely preliminary. This will be the first time I am looking at it and the first time my colleagues will be looking at it,” he said Monday afternoon. “I have allowed this to come forward to the committee in the spirit of transparency. I have become aware of it, and I wanted it on (the agenda). The alternative is to talk about it behind the scenes in private communications.”

Costa called the proposal “unique” in its scope, and added, “Everybody has the right to ask for this under the law. I think these are things that have generated concerns on the council in the past.”

The developers’ plan lays out a proposed new Business Improvement District, similar to the existing Portland Downtown Business Improvement District, that would levy property taxes within the district to pay for public improvements. The plan would also create a tax increment financing, or TIF, district that would divert tax revenues from the area to those infrastructure projects.

The developers call their project the “Portland Market District,” and they say that, if fully built, it would roughly equal the size of the entire Old Port. Bounded to the north by Fore Street and to the west by a planned extension of Thames Street, it would include 638 units of rental and resident-owned housing, 132 hotel rooms, nearly 60,000 square feet of retail space, a new marina and nearly 124,000 square feet of office space.

Under Portland housing rules, 10 percent of the new housing units would have to be affordable to middle-income residents. The developers can avoid that requirement by paying $105,000 per unit into the city’s housing trust fund, but Prentice said he planned – for the first phase of housing, at least – not to do so.

The project has been in the works for years, starting with a 2015 rezoning process that spurred an unsuccessful citywide referendum to protect waterfront views. A master development plan was approved in late 2016, locking in key programming and land uses.

Financial projections prepared by the developers estimate that, at full build-out, the project would add about 3,400 jobs and $12 million in annual tax revenues to the city. That’s not including state sales and income taxes, which the developers say will increase by another $19 million annually.

Paying for all of that depends on a big bet that the district will be as successful as the developers claim. In anticipation of an increase in property values and thus in taxes, the city would take out municipal bonds to pay the upfront costs of infrastructure improvements.

Still, Prentice says, he is on the hook – and not taxpayers – if it doesn’t work out.

The money raised within the Portland Market District would go, not to his company, but to a new nonprofit that would manage the district’s public improvements, event planning and, importantly, its debt. If the tax base and revenue don’t increase enough to service the infrastructure debt, the nonprofit assesses additional taxes on property owners in its district. And for now, all the land there belongs to the developers.

Control of the nonprofit would be split among stakeholders in the area, so its governing board likely would consist of a mix of city officials, representatives of the developers, and others.

Prentice said he felt “really strong” about the job and revenue projections he laid out. He said Sunday that Sun Life already had committed to bringing about 700 jobs to the area, and that the company told him it had plans to grow.

The Yarmouth native is also laying down stakes of his own by moving Evo, the tapas restaurant and bar he owns on Fore Street, to the new district.

“I’m obviously a believer that this area will have energy, because I’m moving my restaurant down there,” he said.

TIF districts have been widely used in the U.S. to encourage investment in areas considered blighted or underdeveloped, but also have drawn criticism for using public dollars through tax incentives for private investment that can lead to gentrification.

Prentice said that he is aware of public wariness of tax breaks for private projects, and that he had originally approached city officials, in early 2018, with a “more traditional” plan that would have given tax revenues directly to his company, the developer.

The city eventually rejected the idea, he said, leading him to come up with a plan that would not directly finance the private pieces of the development.

City officials at the time withheld the name of the company that had asked for the tax break, for fear of compromising their negotiating position. Prentice said Sunday that it had been him.

The Economic Development Committee’s next meeting is scheduled for 5:30 p.m. Tuesday at City Hall.

Staff Writer Bob Keyes contributed to this story.

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