Published Date Written by Craig LyonsTwo India Street-area developments received a boost last night when the City Council approved tax breaks to help offset the costs of public infrastructure improvements.
The City Council on Monday granted two tax increment finance districts, one to the Bay House development, which was approved by a 5-3 vote; and the other to Fore Middle India development, which was approved by a 6-2 vote. While both TIFs were approved, several members of the council voiced concerns that the projects raised questions about city policies concerning developments.
Councilor John Anton said he doesn't have any objections to either project but sees that the city's TIF policies can be refined and that the impact fees imposed on developers aren't clear to them at the outset.
It's clear that developers have confidence in the market as they prepare their projects, said Anton, but he's unsure at what level the city should intervene in lieu of a poor capital market to fund developments.
"Simply subsidizing without sharing in potential upside is something I'm not comfortable with," he said.
Anton said both developers and members of the public can't foresee the amount of public infrastructure improvements that will be required of them going into the process. He said the city ought to make that more transparent.
From one project to the next, Councilor David Marshall said, you see problems that developers have with unpredictable impact fees. He said it limits the city's potential growth and prevent projects from being done without intervention from the city.
"That's largely the reason why we have two projects coming before us today," he said.
Both Anton and Marshall voted against both TIF requests.
For the Bay House development, a $647,971 TIF was proposed that would go toward public infrastructure improvements. The amount originally discussed was $200,000 more because it included a community contribution that was included in the development's conditional zoning agreement.
The developers asked the city to waive a $200,000 community contribution.
The Bay House project — which is proposed for Newbury and Middle streets —includes 94 apartments with 80 on-site parking spaces and 20 off-site leased spaces.
The TIF district includes only one of the two buildings — which will house 52 apartments — in the development since the second building will be condominiums. The TIF district will expire if the developers convert the building from apartments to condos.
The second TIF — for $650,000 — would include the Fore Middle India Development that's being proposed by Opechee Construction to add onto the Hampton Inn and Sebago Brewing Company complex.
The new condo and retail/office space development — which is planned for a portion of the former Jordan's Meats property — would include a five-story building housing retail space, offices, condominiums and parking for the building.
The developers requested the city consider creating a TIF district for the complex to assist with the cost of public infrastructure improvements, namely an estimated $1 million cost to put utility lines underground on Middle Street.
The TIF would cap revenue to the developers at $650,000 throughout the four years of the agreement. The money would be dedicated to public infrastructure improvements and primarily be used to bury utility lines on Middle Street.
Councilor Kevin Donoghue said there's a difference between the two projects that led him to voting against the Bay House request and not the one for Opechee's project.
The Bay House project is subject to a contract zone that was negotiated when the development was first being planned nearly five years ago. Donoghue said the zoning that was given to the property was more aggressive than what's allowed in that area and was objected to by the neighbors.
"That's a key difference to me," he said.
Further, Donoghue said the developers requested a waiver for the $200,000 contribution that was negotiated as a part of the contract zone. He said the city was not only giving the developers a tax break but waiving a requirement that was negotiated in spite of objections from the neighborhood.