SCARBOROUGH — The Town Council will vote Nov. 28 on a potential tax break for developers of the Crossroads Holdings project proposed at Scarborough Downs.
The vote will come after the council on Wednesday discussed establishing a downtown tax increment financing district, which would include authorization of a credit enhancement agreement with developers.
Prior to the workshop, newly elected councilors were sworn into office and Councilors Peter Hayes and Katy Foley were unanimously elected chairman and vice chairwoman, respectively.
“I would like to thank Bill for his service and guidance,” Hayes said of former Chairman William Donovan. “I have big shoes to fill.”
Crossroads Holdings, the partnership that includes developers Rocco, William and Marc Risbara, of Risbara Bros. Construction Co., and Peter and Richard Michaud, purchased the property in January for $6.7 million. The group signed a two-year lease with the Downs’ former owner, Sharon Terry, to keep the racetrack operational for the time being.
The town and the developers hope to overhaul the property to create a mixed-use village center and have tentatively agreed on a tax increment financing package that could produce benefits of up to $81 million.
The TIF district designates the area that includes Oak Hill and the Scarborough Downs property for growth over a maximum 30-year lifespan. The parties agreed on a credit enhancement agreement where 40 percent of new tax revenue generated incrementally from the property could be returned to the developers for additional investment. If performance standards are not met, only 25 percent of taxes would be reimbursed to the project in years 11 to 20.
At public hearing also held Wednesday, the council received endorsements of the plan from the Scarborough Chamber of Commerce, the Scarborough Economic Development Corp. and the Portland Regional Chamber of Commerce.
In a memo to the council, the SEDCO Board of Directors said the developers have introduced “a vision of the Downs property that fits the goals of the Comprehensive Plan, takes advantage of the transportation logistics and provides significant economic development opportunities for residents and businesses.”
The Scarborough Chamber called the proposal an “extraordinary opportunity” that would afford a “controlled and balanced” use of the property.
The Portland Regional Chamber said the project would create jobs; increase Scarborough’s housing inventory and provide affordable housing; establish new commercial space, and add significant tax revenue to the town.
The majority of speakers who addressed the council during the public hearing supported the proposal, but some still aired concerns.
Susan Hamill, wife of newly installed Councilor Donald Hamill, questioned why they’re “encouraging and incentivizing” such “rapid residential growth.” She also suggested approval would set an unwanted precedent for future credit enhancement agreements.
Russell Coon, of Eastern Road, said he didn’t believe potential project risks, such as inflation, had been sufficiently assessed.
Councilor Hamill said he, too, would like to see an analysis and plan for any potential “downsides” or “worst-case scenarios” that could come with development and felt the agreement required more specific language to protect the town. He was also concerned about how the developer’s performance would be measured and quantified.
“How will we know that we’re on a trajectory for success?” Hamill asked.
Foley said worst- and best-case scenario are subjective.
“Something’s going to happen there, so I want to have the best partner and I think we do,” she said. “… For me, the worst-case scenario would be that we weren’t at the table.”
Under the proposed agreement, the non-bonus cap to be returned to Crossroads if the development meets town standards of scale and mixed-use is $55 million over 20 years, according to the town.
If the project outperforms standards, such as faster development, and the cap of $55 million is reached, the project will be eligible for a 10 percent bonus for the next 10 years, capped at $2 million per year, for a potential total of $81 million.
The development will only receive payments on new revenue it generates. Developers will foot the initial $265 million cost of an infrastructure build-out for roads and sewers.
In total, the TIF district would encompass 955 acres, with 424 at the Downs property and the rest comprised of the town’s municipal campus and area around Oak Hill.
Rocco Risbara said initial infrastructure construction is underway off Route 1, designed to serve the master plan at Scarborough Downs. As long as a credit enhancement agreement is secured, he said the developers would like to begin the next phase of work, which includes light industrial manufacturing development, by next July.
“We and the town have done our due diligence and research,” Risbara said. “I’m feeling positive and … am pleased (the project) is going to a vote.”
Scarborough Town Clerk Tody Justice swears in newly elected Town Councilors Paul Johnson, center, and Donald Hamill prior to Wednesday’s council workshop.