Profit vs. community in plan for former Brunswick base housing

BRUNSWICK — When the U.S. Department of Defense announced the closure of Brunswick Naval Air Station in 2005 , the one of the biggest concerns was what would happen to the military housing.

Town Council Chairwoman Joanne King, who would later serve on the Brunswick Local Redevelopment Authority's housing subcommittee, said the question was on everyone's mind.

"That was the only thing people would talk to me about," she said. "It has really been the singly most talked-about item in town since we heard we were (designated for closure)."

In 2009, the Midcoast Regional Redevelopment Authority commissioned a study that recommended ways to soften the impact of introducing 702 housing units to the Brunswick-Topsham market.

The study's authors acknowledged that the new units would have an undeniably negative short-term effect. But they were "cautiously optimistic" that the market could recover by following the plan's recommendations, which included selective demolition and ownership of the assets by "a well-capitalized entity with the capabilities and commitment to balance community objectives with private gain."

Both recommendations are in the spotlight now, as developer George Schott prepares to sign an agreement to acquire the land beneath the housing units from MRRA – a move that will allow him to finally put the homes on the market. Schott has only been able to rent the units since he purchased them last fall.

While many aspects of Schott's housing plan are similar to MRRA's 2009 study, one difference in particular has attracted attention: he does not propose to demolish any properties in Brunswick, and only 56 in Topsham.

The discrepancy is raising a question that has persisted since Schott became involved with the former Navy housing: is he looking out for the best interests of the community, or trying to maximize profit?

Changes in markets, opinions

The 2009 study recommended demolishing 239 obsolete units in Topsham and Brunswick, one of seven suggestions to help stabilize the housing market and local communities.

The study tapped 48 of the 231 units on McKeen Street for demolition, as well as all 62 units at Midway Terrace, at Cook's Corner, and all the units in Topsham.

But the authors noted that it could be difficult for MRRA to compel a private developer to follow the plan.

"It is important to acknowledge that it would be entirely logical for a profit maximizing/risk avoiding purchaser of the property to avoid the complexity and risk associated with this community-centric design & development plan," they wrote.

Avoiding that outcome was exactly why MRRA was hoping its bid to purchase all the former Navy housing would be successful. But former owners Northeast Housing, a partnership between the U.S. Navy and Balfour Beatty Communities, rejected MRRA's bid in fall 2009, in favor of Schott.

"We just think we're in the best position to deal with the housing because our goals aren't to generate the maximum profit. We're coming at this from a different perspective (than Schott)," Steve Levesque, MRRA's executive director, said in March 2010, after requesting a formal inquiry into the sale.

Brunswick Town Manager Gary Brown also expressed concern at the time that unlike MRRA, Schott may not have the communities' best interests in mind.

"MRRA is invested in this community," he said. "They're not as motivated to make a profit and cut and run."

But both men now say they've changed their minds.

"We felt that we weren't sure that (Schott) was going to have the same interests (as MRRA), but he has proved that he is listening to the communities and his plan articulates that," Levesque said on Nov. 10.

Brown said that although he was initially worried Schott would try to "flip the houses as quickly as possible," that's no longer a concern.

"I certainly expect that George wants to make a profit, and I respect that, but the conversation that we've had with him has made me feel that he's going to be much more responsible in his housing plan than what could have happened," he said last week.

They also both noted that there have been some significant changes since 2009 that may make the original demolition numbers less applicable now.

In April, Schott signed a 10-month contract with the Navy to house sailors from the Supervisor of Shipbuilding, Conversion and Repair, or SUPSHIP, group at Bath Iron Works. According to Schott, that effectively removes 110 units from the local housing market.

Brown agreed with Schott's logic, and added that the high occupancy rates at the Cook's Corner housing developments – 90 to 95 percent according to Schott's consultant, Scott Howard – have a similar effect as demolition because they are, at least temporarily, off the rental market.

But he still believes that some demolitions at McKeen Street would be better for Brunswick.

"The overall housing market would be better served if there were fewer units on McKeen Street, but it's not reasonable for a private developer to be concerned about the entire housing market rather than being concerned about the initial investment," he said.

Mitigating impact

Despite demolishing fewer houses, Schott said his intention has never been to undercut local landlords and residents trying to sell their homes.

According to an internal study done by his property management company, only 12 percent of his current tenants came from Brunswick, a figure that he believes shows that he is not poaching tenants.

"We're not affecting the local landlords, we're getting people into town from other communities,” he said.

He also pointed to his plan to sell the McKeen Street homes 40 at a time in five-year stages as a way to reduce the impact on the local housing market.

Schott has also applied for two Affordable Housing Tax Increment Financing districts on McKeen Street and in the Cook's Corner housing, but is not requesting any of the tax revenue from the TIFs. Instead, the revenue will go to the town of Brunswick.

But the deal partially benefits Schott because the town would take over the roads in the McKeen Street development. That cost has not yet been calculated, according to town Finance Director John Eldridge.

Local reaction

Jane Millett, a Realtor with a home for sale on McKeen Street, was concerned about the unknown costs to the town, but otherwise supportive of Schott's plan. She said demolishing perfectly good homes in the neighborhood to protect the real estate market would have been short-sighted.

"It's housing that we're going to be needing going forward into the future. When the base is built out and it's fully occupied, my guess is we're going to be right back where we were six years ago when the base was fully operational, which was a housing shortage in Brunswick," she said.

But others, like John Hodge, executive director of the Brunswick Housing Authority, don't think the plan is doing enough to help low-income people find homes.

At Wednesday's selectman's meeting in Topsham, he noted that Schott's plan calls for designating some of the units as affordable housing, but uses a definition of affordable (120 percent of median area income) that excludes the neediest people.

"We might have to sit down with Mr. Schott to see how to make (the housing plan) work for all working families, not just some working families,” Hodge said.

Brunswick Town Councilor Benet Pols, who represents the McKeen Street district, said he wouldn't endorse Schott's plan unless it calls for more demolitions.

The 2009 MRRA plan, he said, was "produced with a lot of input from experts in the economics of the housing field. So far I have not heard a satisfactory explanation for abandoning it."

But he noted that the town has little authority to compel Schott to do anything, something that also worries King, the council chairwoman, who said she does not like the idea of endorsing a plan over which the town council has no control.

"They can do this without us anyway," she said.

But Schott said he'd be willing to work with the councilors to address their concerns because getting the town's endorsement is "a big part of the package."

"I will work with the towns and MRRA to make sure everybody is happy, whatever that means," he said.

The Town Council will discuss whether to endorse the plan at its Monday, Nov. 21, meeting. Schott declined when asked what he would do if councilors ask him to demolish some of the Brunswick units.

"I'm not going address that until I come to that," he said.

Emily Guerin can be reached at 781-3661 ext.123 or eguerin@theforecaster.net. Follow her on Twitter: @guerinemily.