PORTLAND — The India Street neighborhood could be a hotbed of construction by the end of the year if negotiations between the city and developers of three major projects go smoothly.

The projects include the long-delayed Bay House development at the site of the former Village Cafe at Newbury, Hancock, and Middle Streets; a condominium project on property along Franklin Street owned by billionaire S. Donald Sussman, and a multi-use building that is the second phase of the new Hampton Inn.

Bay House developers want the city to create a Tax Increment Financing district to limit the developer’s need for cash as construction and the process of filling units gets off the ground. TIF districts are typically used to encourage major construction, by reducing or deferring tax payments for an established period of time.

The TIF request was discussed in executive session during a Housing and Community Development Committee meeting on May 9, Mayor Michael Brennan said. Brennan and other city officials declined to discuss details of the request.

But news of the TIF request was no secret to members of the India Street Neighborhood Association, which discussed all three development proposals at their recent meeting, also on May 9.

Several members of the neighborhood association’s board are opposed to the Bay House request and skeptical of the project as a whole. They said it is out of scale and character with the rest of the neighborhood, and criticized its still-evolving site plan. 

In recent months, developers have moved away from a plan to build 82 condominiums in favor of 94 rental apartments. An original proposal, in 2006, included nearly 200 high-end condos in three buildings over two stages of construction.

Allison Brown, president of the India Street Neighborhood Association, said it makes little sense to grant a TIF to a residential project because it would increase the tax load on individual taxpayers.

The city has not granted TIFs to residential projects in the past, but it could, said Joe Malone, who brokered the Village Cafe land sale, but also helped found the neighborhood association a year and a half ago because, he said, he felt the neighborhood’s voice was missing from the development process. He now serves as the group’s vice president.

Giving the Bay House developers a TIF would be “a policy-setting sort of thing,” Malone said: after its approval, others would surely line up with similar requests.

To some in the neighborhood, the TIF request also seems like a last-ditch effort to piece together sufficient financial resources for the project, which has languished since the housing market crash and overall recession of 2008.

“It makes me wonder,” Brown said. “It sounds like they’re strapped for cash.”

A representative of the Bay House developers, Portland attorney Nathan Smith, said the project will be less valuable as a rental property than as condos, but will cost just as much to build, making it harder to “make the numbers work.”

A TIF will bridge the economic gap and help developers make ends meet during the project’s early years, he said.

The condo-to-apartment decision is largely responsible for a bank commitment from a lender, Smith said. The combination of the guaranteed loan partner, a TIF, and several changes to the project plan to reduce costs means developers could break ground by June if the city approves the TIF and other changes, he said.

“This is as close to being shove ready as you’re going to get,” he said.

The city Planning Board will hold a workshop on Tuesday, May 22, to discuss the latest Bay House plan as well as cost-saving measures, like reducing the parking from two underground floors to one – a move that Smith said would reduce the building’s height by five to six feet and might appeal to neighbors who think the project is too tall – and revisions to its utility plan.

The same day, the Planning Board will hold a public hearing to consider the developer’s request to amend a conditional zone agreement to permit a 10-year payment plan for a $200,000 commitment they made to make improvements on Hancock Street.

‘Feet on the street’

Despite the lack of support for the Bay House project, India Street neighborhood leaders say that residents are not steadfastly opposed to development.

The area was more vibrant in the past, when the Village Cafe did steady business and workers from the former Jordan’s Meat plant flooded the streets in their hair nets and work clothes at lunch hour, Malone said.

While the neighborhood is now home to several establishments that on paper would indicate a growing local community – including two well-regarded coffee shops, an upscale grocer, and a yoga studio – most traffic to those businesses is vehicular, and the area lacks the urban energy of the arts district or the Old Port.

What the area needs more than anything, Hugh Nazor, India Street Neighborhood Association secretary and treasurer, said is a phrase also used by Brown: “feet on the street.”

They want greater population density, and they want the many empty lots in the neighborhood filled with residential buildings and commercial space.

The same leaders who are opposed to the Bay House project are more open to the two other projects that could start building this year.

The developers of the Hampton Inn, opened last year at 209 Fore St., have submitted site plans to the city for approval of a large, multi-use building that would fill the block between Middle, Fore, and India streets, next to the existing hotel, developer Greg Kirsh of Opechee Construction said.

The building would include 18 residential units, several retail spaces, and some offices, plus underground parking, Kirsh said. The plans are fully compliant with the plot’s existing zoning, he said, and if the permitting process goes smoothly, the company hopes to break ground around Labor Day.

Neighborhood support for the building is lukewarm, but receptive.

Brown said she hasn’t seen plans for the building, and Nazor said that neighbors are “breathing a half-sigh of relief that it’s not worse than it is.” The neighborhood has gone along with the plans, he said, but might have chosen another use for the space if there were a well-developed vision for development in the area.

Developers will hold a neighborhood meeting to discuss the plans on the second floor of the Hampton Inn at 6:15 p.m. on Wednesday, May 16.

The neighborhood association has the sunniest disposition about a revised proposal for land between Franklin, Hampshire, Federal and Newbury street. The property belongs to billionaire hedge fund manager S. Donald Sussman, owner of The Portland Press Herald and husband of incumbent U.S. Rep. Chellie Pingree, D-Maine. 

“We’re pretty excited about the Hampshire Street projects,” Brown said.

The project, originally proposed as a complex of artists’ studios and residential units, has morphed into a 26-unit condominium project.

The project is in the hands of Kevin Bunker of the Developers Collaborative, who said that a request to rezone the property from residential to mixed use was submitted on Monday. The plan is to have the condos on the market next year, he said, requiring a fast pace for permitting and rezoning.

The building must have visual impact along Franklin Street, Bunker said, and so the plan calls for height easements along Franklin.

The project is perhaps the best designed of the three in the works for the India Street area, Nazor said. Its smaller scale makes it more likely to succeed than the Bay House project, he said, and it would increase density without imposing on the neighborhood.

“I hope it goes ahead,” Nazor said. “It’s the right thing to do.”

A neighborhood meeting will be held in the next two or three weeks to discuss the plans, but has not yet been scheduled, Bunker said.

Andrew Cullen can be reached at 781-3661 ext. 100 or acullen@theforecaster.net. Follow him on Twitter: @ACullenFore.

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The site of the proposed Bay House project in Portland’s India Street neighborhood could be under construction as soon as the end of June if developers can negotiate new terms with the city.

An artist’s rendering of the Bay House apartment project.

An artist’s rendering of the multi-use commercial and residential building proposed by the developers of the Hampton Inn on Fore Street for the rest of the former Jordan’s Meats property.

An artist’s rendering of the condominium project proposed for land owned by S. Donald Sussman along Franklin Street in Portland, between Federal, Newbury and Hampshire streets.