Scarborough council supports tax shelter for affordable housing project

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SCARBOROUGH — The Town Council Wednesday gave preliminary approval to a 17-year tax increment financing district for an affordable housing project planned at the historic Southgate House property. 

Councilors also gave the initial OK for a plan to make it easier to establish small and boutique manufacturing businesses in town, and appropriated funds to preserve and move the historic Danish Village archway.

Avesta Housing applied for a contract zone for the three-acre parcel at 577 U.S. Route 1 in the spring, with the intention of repurposing the Southgate House and two adjacent buildings for construction of 50 affordable housing units.  

The brick Southgate farmhouse and barns are believed to have been constructed between 1798 and 1805 by Dr. Robert Southgate, who farmed on the surrounding land and was married to Mary King. King’s brother, William, was Maine’s first governor.

Today the farmhouse is broken up into seven apartment buildings, five of which are occupied. 

Using a TIF for the affordable housing project would reduce taxes paid by the developer and shelter additional revenue the development produces for the town, Avesta consultant James Damicis said at the Aug. 19 council workshop.

“Without the use of the TIF, currently the town loses 58 percent of revenues from new development due to negative impacts (from) added valuation on the state school funding formula, state revenue sharing formula and county tax assessment,” Damicis, senior vice president of Camoin Associates, said.

After the project is completed in August 2017, the property is estimated to be valued at about $2.6 million; with a TIF in place, it would yield about $40,000 in taxes, to be shared equally between the town and Avesta, Damicis said. Without a TIF, that would drop to about $16,800 in new tax revenue for the town. 

Because the town is required to use its share of the revenue for purposes associated with the project, those funds would likely be allocated to an affordable housing initiative fund, Town Manager Tom Hall said. 

The Avesta housing units will be available for individuals and families that earn an annual salary between $17,000 and $45,000, said Kyle Ambler, a development officer with Avesta. 

Avesta Housing, founded in 1972, has about 2,000 apartments in Maine, and about 75 developments in southern Maine, President Dana Totman told the Town Council in May. About 11 are renovations of historic properties.

In the council meeting following the workshop, councilors unanimously voted to approve the first reading for designation of the Avesta TIF district. The Planning Board is expected to approve the project Monday, Aug. 24.

“I can’t tell you how excited I am about this project,” Chairwoman Jessica Holbrook said. 

Small-batch businesses 

The council unanimously approved a first reading of a rezoning proposal that would change select districts around town to allow for processing and production facilities that aren’t just in Industrial Districts. 

“It is evident that smaller-scale food and drink production, as well as other producers of small lots of consumer goods are on the rise,” Karen Martin, executive director of the Scarborough Economic Development Corp., wrote in a memo to councilors. 

Many of the small-scale producers, Martin wrote, “are types of businesses that may be fitting and appropriate in our commercial zones, where they can provide some retail space and can be more integrated into our activity centers. A bakery, coffee producer, craft brewery or furniture maker all come to mind, many of which are growth industries in greater Portland.”

Town Planner Dan Bacon suggested new zoning that requires small-batch production facilities to operate in no more than 5,000 square feet. “Maybe it’s a craft brewer that has a tap room, maybe it’s a jam maker that has a tasting room, that kind of thing,” Bacon said. 

Councilor Jean-Marie Caterina, a member of the Long Range Planning Committee, which originally proposed the idea, said because Maine supports “more locally-grown, self-sustaining types of products, I think this would be a fabulous opportunity for us to tap into that.

“I think that having these opportunities in our town would be a nice way of diversifying our business base,” Caterina said.  

Archway preservation

The red-brick Danish Village archway, which dates to the early 1930s, is about 100 yards from Route 1 near the intersection of Lincoln Avenue. It will be preserved and moved to Memorial Park at 5 Durant Drive. 

The option of moving the structure came after the archway site was designated for new administrative offices for Hospice of Southern Maine last summer. 

“This undertaking is not simple, as it involves moving the structure and nearly complete restoration,” Hall wrote in a memo to the council.

The archway would span the sidewalk at the entrance of the park, an area that “is heavily used,” Hall said.

Approximately $25,000 will be appropriated from the Land Acquisition Reserve Fund. The project is expected to be completed in the fall. 

Alex Acquisto can be reached at 781-3661 ext. 106 or Follow Alex on Twitter: @AcquistoA

Scarborough will likely designate a tax increment financing district for a proposed affordable housing project at 577 U.S. Route 1. 

The historic Danish Village archway in Scarborough will be moved to Memorial Park at 5 Durant Drive. 

South Portland and Scarborough reporter for The Forecaster. Graduate of Western Kentucky University and the Salt Institute for Documentary Studies. Alex can be reached at 781-3661 ext. 106.