Council approves sale of former USM lot


Future site of a raging kegger. (photo/The Fuge)
Future site of a raging kegger. (photo/The Fuge)

Council approves sale of former USM lot 
Parking issue and tax break decisions to come later

By Chris Busby

At its Oct. 5 meeting, the Portland City Council approved the sale of a former University of Southern Maine satellite parking lot in Bayside to a development team that plans to build student housing and office space on the site. The sale of the property, located on the corner of Marginal Way and Preble Street, will net the city $1 million and an as-yet-undetermined amount of annual property tax revenue. 

That’s because rising construction costs and design changes urged by city staff and councilors prompted developer Ted West of Atlantic National Trust LLC to ask for a tax break that could return up to half of the property taxes generated by the $25 million project. With no tax break, the buildings would pump about $400,000 into city coffers, according to an estimate by Jack Lufkin, director of the city’s Economic Development Division.

West, who built the AAA building across from this site, is building a nine-story, 60,000-square-foot office building on the corner of the property. His partner in this project, Rockport-based Realty Resources Chartered, will construct two four-story housing complexes on the same site. The 101 housing units, with over 400 bedrooms, are designed to appeal to area college students.

West told the city he needs the tax break in order to offer his office tenant, the medical group InterMed, a competitive rent compared to the cost of office space elsewhere in the region.

In a change from past Tax Increment Financing (TIF) arrangements, in which developers get back a predetermined percentage of their property taxes, this deal could change depending on the financial performance of West’s part of the project. West has agreed to provide the city with yearly financial statements detailing the office building’s revenues and expenses, and to cap his return on this investment to ensure that any refunded property tax revenue helps offset the cost of providing parking on the first four floors of the building.

Lufkin told the council that cap will be determined at a later date, based on “industry standards.” He added that the cap will not allow West to get more than a 25 percent return on Atlantic’s investment. The council will consider this financing deal at a future meeting.

Issues concerning parking for the apartment tenants will also be hashed out at a later date, as part of the Planning Board’s site plan review process. 

Councilor Will Gorham aggressively questioned Terry Turner, development manager of Realty Resources, over parking for his part of the project. The exchange got so tense that Mayor Jill Duson interrupted and asked Gorham and Turner to keep their comments respectful. 

Under scrutiny from Gorham, whose council district includes the Bayside neighborhood, Turner acknowledged that Realty Resources has no agreement with any area college to provide student housing. He further acknowledged that if Realty Resources can’t fill the units with students, it must rent them to the general public. 

Realty Resources will lease 100 parking spaces in Atlantic’s office building, and residents will also be able to park in the 460-space garage from 5 p.m. to 7 a.m. Some students are expected to leave their cars in the new parking garage on USM’s Portland campus. 

“This parking agreement is no more than smoke screen and mirrors,” said Gorham, who told Turner, “I can guarantee you [parking] is not going on the streets of Bayside.” Gorham tried to delay the site’s sale so the parking issue could be reexamined, but no other councilor supported his motion to send the matter back to committee. 

Before the council debated the sale, a group of public transportation advocates tried to get the council to insert language into the sale agreement directing the developers to work on establishing bus service between the Bayside, Parkside, and USM neighborhoods. Called the Portland Alliance for Choice in Housing and Transportation, the group also suggested that Atlantic and Realty Resources should be obligated to help pay for such a public bus line, but only if “other developer contributions are secured.” 

Councilor Jim Cohen, a member of the Greater Portland Transit District’s board, said that suggestion will be considered as part of an ongoing study of changes to Metro bus routes. The language the group submitted was not included in the agreement approved later that night.

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