The South Portland City Council unanimously approved the creation of a new Tax Increment Financing District (TIF District) and thirty year credit enhancement agreement (CEA) — or property tax reimbursement plan — for a mixed-use housing project slated to be built in the heart of Mill Creek.
Set to be located at 170 Ocean Street, this nearly $79 million development will have 17,000 square feet of retail space on the first floor and 124 to 146 studio and one-bedroom units on the upper floors.
City officials explained at a recent Council meeting that the development would not require any zoning amendments and is consistent with the Mill Creek Master Plan adopted in May of 2015.
Among the objectives included in this plan are making the Mill Creek area more pedestrian-friendly, creating “a high-quality visual environment,” and making the area “greener” both literally and metaphorically.
The plan also specifically lays out the intention to transform Mill Creek into “a true mixed-use downtown neighborhood” through the development of “multi-story, mixed-use buildings within a more pedestrian focused, urban environment.”
Rents for these new studio and one-bedroom units are expected to fall within the so-called “workforce housing” range of 80 percent to 120 percent of the area median income (AMI).
Based on data from Maine State Housing, the AMI for a one-person household in South Portland for 2024 is $85,625, meaning that using this figure, the range of incomes for which these units are expected to be affordable would range from $68,500 to $102,750.
For a two-person household, South Portland’s AMI is $97,812, increasing this target range to between $78,250 and $117,375.
Concerns over the potential coast of these units were raised by Councilors during last Tuesday’s meeting.
Councilor Elyse Tipton cited the statistic that the AMI for a family of four in the area would be $123,000, placing the range for workforce housing at $98,000 to $147,000, questioning how this would translate to smaller households and if it would be affordable for those who actually work in the Mill Creek area.
The City’s Economic Development Director later estimated that the AMI for a single-person household would be around $56,000 or $58,000 and a bit higher for a two-person household. He went on to suggest that, for example, a household with a policeman and a teacher could theoretically afford to live in these apartments.
Next to Mill Creek Park and across the street from several restaurants, this space is currently home to a large parking area and Town & Country Federal Credit Union
Based on concept art displayed during last Tuesday’s City Council meeting, it appears that the project will be a total of seven stories tall.
The credit enhancement agreement approved last Tuesday gives the developers a property tax rebate that becomes incrementally smaller over the life of the agreement, starting at 50 percent in the first two years and decreasing to 10 percent in the final five years.
Although the Council was originally presented with a plan to cap the total lifetime value of these rebates at $11 million, staff and the developers came up with a new proposal shortly before the Tuesday night meeting that eliminated this cap in exchange for a less generous rebate percentage.
Under the original TIF proposal, a fifty-fifty split would have been maintained through the twenty-sixth year of the agreement, dropping to a twenty-eighty split for the final four years.
William J. Mann, Economic Development Director for the City of South Portland, argued during last Tuesday’s meeting that the new project would result in a “significant injection of investment in our downtown and it will bring density in terms of households.”
The developers of the project went on to explain to the Council that the original vision had been to construct condo units on the property, but they eventually shifted toward a “workforce housing” model in order to better serve the needs of the area.
Because “there’s no such thing as a free lunch,” however, the developers suggested that they “needed city support to get there,” which comes in the form of a continuous benefit over the next thirty years as a result of these property tax rebates.
Although the idea of a cap had initially been floated to the developers, they felt that this would present a “financial barrier” to the project.
“[We] don’t want to be seen as grasping or overreaching but this is critical,” a representative of the developers said.
It was said that this negotiation was completed “at the eleventh hour” due to a communication breakdown between developers and the City.
During the brief public hearing on the proposal, a male resident raised concerns similar to those of Councilor Tipton, suggesting that it “doesn’t make any sense,” arguing that the “numbers aren’t adding up” if the “goal is to achieve workforce housing.”
Representatives of the Portland Regional Chamber of Commerce and the South Portland Chamber of Commerce both expressed support for the project, suggesting that the City continues to say that it wants to address housing but has yet to follow through with any policies or projects that would achieve this aim.
Both representatives cited the recent withdrawal of the contract zoning application by the developers of the expansive mixed-use project Yard South in mid-November.
“This isn’t a tough choice, it’s exactly the type of project the city is asking for,” the South Portland Chamber of Commerce representative said, referring to the new development slated for 170 Ocean Street.
The Portland Regional Chamber of Commerce representative argued that allowing a project such as this to move forward would help shift the property tax burden away from residents and back toward the commercial tax base.
He went on to suggest that the City’s recent rejection at the ballot box of a more than $12 million bond for a new high school athletic stadium complex by a margin of 1,805 votes was a “consequence of slowing moving failure of this community to attract and retain commercial development.”
Although the City’s TIF Counsel advised Councilors that they did not have a vote on the proposal on the same day as the public hearing, they ultimately decided to move forward with finalizing the project that night by a vote of 3-4.
This came despite Councilor Natalie West raising concerns about rushing to a decision, particularly in light of the new property tax rebate structure being released just a few hours earlier.
Councilor Linda Cohen echoed the Chamber of Commerce representatives’ sentiment that the City “never back[s] up [its] words with action” when it comes to housing. She went on to explain that the options were either to leave the property as it is or vote in support of this proposal and reap the benefits it would potentially bring.
“We’ve got to do something,” she said, “and here’s a chance for us to do something.”
Councilor Rachael Coleman reiterated concerns outlined earlier in the night that the expected rental rate for these apartments won’t “really [be] workforce,” but went on to say that “it is affordable.”
“It’s at least affordable housing, but to say its workforce [is not accurate],” she said.
Mayor Misha C. Pride suggested that the new mixed-use building “fits the character of the neighborhood” and expects that the market will somewhat control what the developers will ultimately be able to charge tenants for rent.
“It will be worthwhile,” he said. “It will provide more housing.”
The South Portland City Council ultimately voted unanimously in support of approving the amended TIF District and property tax rebate schedule, paving the way for this mixed-use building with nearly 150 units and 17,000 square feet of commercial space to begin development.
A specific timeline for the project does not yet appear to be available.
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