Scarborough council considers 'unique' funding tool for Martin's Point project

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SCARBOROUGH — The Town Council on Wednesday took the first step toward approving a new funding mechanism to assist the Martin’s Point Health Care center being built on Route 1.

Under the Finance Authority of Maine program, Martin’s Point would be allowed to borrow up to $8 million in the town’s name, using the town’s favorable bond rating and ability to garner relatively low interest rates.

The town’s bond attorney, Shana Mueller, assured councilors at their meeting Wednesday that such a move would not leave Scarborough on the hook for any financial obligation, even in the unlikely event that Martin’s Point would default on the loan.

While the town would be the issuer of the bond, it would not be held responsible for making any payments to the bond holder, which in this case would be Androscoggin Bank, Mueller said.

While this would be a first for Scarborough, other municipalities in Maine have used this process to support economic development to good effect, the council was told.

Bill Donovan, the council chairman, called the funding mechanism “unique,” but said “it’s not binding on the town” and would only allow the town to “cooperate with Martin’s Point and be a partner” in the project.

Martin’s Point, a nonprofit, is in the process of building an 18,000-square-foot medical office building at 153 U.S. Route 1.

Under the so-called Inducement Resolution the council passed in a 6-1 vote, with Councilor Kate St. Clair opposed, the town is supporting the funding proposal for the project because it “will make a contribution to the economic growth of the town and to the betterment of the welfare of the inhabitants.”

While Mueller admitted that allowing Martin’s Point to borrow in the town’s name would have an impact on Scarborough’s debt limit, “it’s my job to make sure the town can do this without any risk.”

Although the council majority initially supported the proposal, Councilors Jean-Marie Caterina, Chris Caiazzo and Peter Hayes also expressed reservations.

Caterina confessed to being “hit between the eyes” and said, “I truly have a lot of questions” that she wanted answers to before she could give final approval to the funding mechanism being suggested.

Caiazzo said while he could “agree in principle, any time we take an $8 million hit to our bond total it requires a lot of discussion and justification.”

He added, “The devil’s in the details. There are a lot of questions out there and since this is new to the town we have a responsibility to ensure it’s fully understood.”

And Hayes said, “We really, really need to understand if there are any financial consequences and also (consider) what kind of precedent we might be setting for economic development down the road.”

For St. Clair, the “many, many questions” she has about the proposal meant she couldn’t support it, even in the initial stage. “I’ve been bitten too many times to simply pass this through,” she said.

Councilor Shawn Babine called the funding proposal “very unique, but also very exciting” and said, “This could be an example for future projects.” However, he too, had several issues he wanted addressed before any final vote is taken.

Babine said he wants to know what, if any benefit there would be for the town and how the financial arrangement would be reported on the town’s own financial statements. In addition, like other councilors, Babine said he wants to make sure the public is fully informed and that the town is reimbursed for any costs associated with the paperwork and management of the borrowing process.

Donovan agreed the council and the public must fully understand how the process will work before any final steps are taken and, to that end, he scheduled a public hearing on the issue for Sept. 21.

Under normal council procedure a final vote would also be taken the same night as the public hearing is held, but in this case Donovan said no vote would be scheduled until the first meeting in October, at the earliest.

“This is a novel enough program that we (won’t be ready) to take a final vote in two weeks,” he said.

The goal of the public hearing, Donovan said, would be to “hear about the experience of other communities” and to hear the results of further investigation into the process and how it would all work by Town Manager Tom Hall.

In the materials submitted to the town by Martin’s Point, the organization said it is moving from South Portland to Scarborough because it has outgrown the South Portland location.

Martin’s Point also indicated that it employs more than 700 people statewide and has an annual payroll of $195,000. Including the South Portland location, there are seven Martin’s Point facilities across southern Maine, the documents said.

In the materials submitted for the council’s review, Martin’s Point described its new Scarborough facility as including individual exam rooms, procedure rooms for “minor surgical procedures” and administrative space.

It also said the organization has “determined that demand for medical services in Scarborough significantly exceeds the capacity of the existing health infrastructure.”

Other business

The council also approved first reading of a blasting ordinance that would require developers to get a permit from the town before any blasting would be allowed.

Fire Chief Mike Thurlow said blasting done by Martin’s Point at its construction site is what moved the issue to the forefront, although he’d been working on such an ordinance for awhile based on the experience of fellow fire chiefs in surrounding towns.

“There’s no intent to regulate blasting,” Thurlow said, “but to create a permit process so that we would know when and where blasting was being done and could provide the appropriate notice to abutters.”