These are the signs of hard times in Portland town: both the homeless and the home builders are begging us for money.
The homeless are out on the sidewalks trying to collect a few bucks from the public. The developers are in City Hall asking the public for more than a million bucks to rebuild the sidewalks around their hotel and condo projects.
We can each decide whether or not to give a homeless person a dollar, but the decision to give the developers hundreds of thousands of our dollars will be made for us by the nine members of the Portland City Council. As of this writing, it looks like we can kiss that money goodbye.
Next Monday, the Council will vote on two requests for property tax breaks by two companies trying to finance projects a couple blocks away from each other, in the up-and-coming area between the Old Port and Munjoy Hill. A majority of councilors appear to support both requests.
One is by Opechee Construction Corporation, a New Hampshire-based firm that’s built scores of hotels, stores, office buildings, housing developments and industrial facilities in New England. Opechee recently completed the first phase of its project on the block formerly occupied by the Jordan’s Meats hot dog factory. It includes a 122-room Hampton Inn, Sebago Brewing Company’s new restaurant and 12 condos. The second and final phase of this project would include a five-story building with retail on the ground floor, three floors of office space, two parking garages constructed inside the building and 18 more condos on top.
Opechee didn’t ask for a tax break to build the first phase, but is now seeking a property tax deal worth $650,000 to help cover the approximately $1 million cost of burying utility lines strung on poles along the sidewalk on Middle Street. The Tax Increment Financing, or TIF, deal would cut the new building’s tax bill in half during the first two years, and Opechee would pay only 60 percent of the property tax bill during the next two years.
The other project is the Bay House development on the former site of the Village Café Italian family restaurant. A Boston-based development firm wants to construct two residential buildings with parking and retail space. One would have 42 condos. The other would have 52 “high-end” apartments that the developer hopes to sell as condos as soon as the economy improves.
Condo developments are technically ineligible for this type of tax break, so the TIF would only apply to the posh apartment building, though the deal’s stated purpose is to help pay for sidewalks and other public infrastructure improvements around the entire site. The tax break would be worth nearly $650,000 and last 10 years, with the developer only paying 25 percent of the bill through 2017. If even one of those apartments is sold as a condo, the deal ends.
Proponents of the tax breaks say the lost revenue is a small price to pay to reap much greater rewards. For example, the second phase of Opechee’s project will generate over $1 million in new property tax money for the city during the four years of the deal, and about $300,000 annually in subsequent years. Both projects will add housing on the peninsula, where the market is quite cramped, and those new residents and office workers will generate new economic activity.
But opponents — and I count myself among them — just can’t stomach the idea of giving wealthy developers tax breaks for projects that primarily benefit their own bottom line.
“Real estate’s about risk and reward,” said City Councilor John Anton, who’ll be voting against both deals. The developers are sitting on some of the most valuable property in the state — downtown parcels with waterfront views. The recession continues to make financing a challenge, but it’s not the responsibility of the residents of Portland to make up the difference between what the developers want and what banks and investors are willing to pony up right now. After all, Anton noted, the economy is cyclical and credit markets will loosen up again.
In the meantime, say Anton and others, the city needs to tighten up its TIF policy so the tax breaks are used to support projects with clear public benefits in blighted areas of town. For example, a nonprofit seeking to build affordable housing in Bayside is a worthy candidate for a TIF. A private developer with plans to build $500,000 condos in the East End’s hippest district, not so much.
If these developers want to ask us for money, they’re certainly welcome to do so. There’s enough room on the sidewalks and median strips for everyone willing to beg.
Chris Busby is editor and publisher of The Bollard, a monthly magazine about Portland. His column appears here weekly.