PORTLAND — The City Council on Monday approved a 30-year tax break for developers planning to bring a mixed-use development to Thompson’s Point.
But councilors, all of whom supported the project and applauded the developers’ commitment to the city, did not cap the amount of money developers of The Forefront at Thompson’s Point would receive.
The Thompson’s Point Development Co. is projected to receive an estimated $31.5 million over the 30-year lifespan of the credit enhancement agreement.
That figure, however, is not set in stone. On average, the company will get back about 54 percent of the taxes on their investment, while the city will net the rest.
The city, meanwhile, will devote 25 percent of the new taxes into a Transit-Oriented Development Tax Increment Financing District to better connect the point to the downtown area.
Chris Thompson, one of the developers, argued against setting a monetary cap on the tax break, saying it would create a disincentive to find creative ways to add value to the project.
The company plans to invest about $100 million in a 3,500-seat arena for the Maine Red Claws, a 4,500-seat concert hall, a convention center, 125-room hotel and office space.
An economic impact analysis predicts the project will result in $169 million in one-time economic activity during construction, including $49 million in wages for more than 1,200 people.
Once complete, potentially by winter 2013, the development could result in $31 million in annual sales and support $11 million a year in wages for about 450 employees, Thompson said.
The project, which also includes a 700-vehicle parking garage that would also service the nearby Amtrak and Concord Coach Lines station, is projected to increase the property value by $78 million, according to city staff.
“Essentially, we’re going to be held to a value that is relatively modest,” Thompson said. “It was not part of the negotiation process to include a dollar-figure cap.”
But the council’s three-member Community Development Committee, which negotiated with the company for nearly a year before the project became public, disagreed.
Councilor Cheryl Leeman, who leads the CDC, said the nearly $31.5 million figure was consistent throughout the negotiations. She said the city needed the cap in order to have predictability.
“I feel we negotiated in good faith,” Leeman said. “There has to be a cap. It can’t be open-ended for 30 years.”
Councilor John Anton, another CDC member, agreed. He said that during negotiations developers presented relatively firm costs to justify their need for a TIF, and now they were saying those estimates are too fluid.
“I can’t reconcile those two points of view,” Anton said, adding the developers would still benefit if the project exceeds the cap. “(More value) is good for everybody, and it should be good for the city as well.”
But in the end, only Councilor David Marshall joined Anton and Leeman in supporting the cap.
Developers will get back 75 percent of their new taxes in the first 10 years once they invest $5 million. The return drops to 60 percent in years 11 through 15, 50 percent in years 16 through 20 and 40 percent in years 21 through 30.
The city, meanwhile, is expected to receive about $26.4 million over the term of the agreement. Twenty-five percent of that, or $6.6 million, will be devoted to transit-related projects.
City staff originally recommended devoting only 3 percent for transit. But some councilors, along with Portland’s Downtown District, argued more funding is needed to connect the new development with the rest of the city.
“Three percent is really inadequate to tie this new, exciting project that is going to bring thousands of people to the city of Portland, but not have good connections to downtown,” PDD Executive Director Janis Beitzer said.
Although a formal process is expected to be undertaken to determine the use of the transit money, Councilors Edward Suslovic and Marshall are already pitching their projects.
Suslovic would like the money to be used to make improvements to outer Congress Street that have been planned, but not funded. Those improvements are designed to ease traffic flow and improve bike and pedestrian safety.
Marshall, however, envisions creating an express bus service that would run from the Portland Jetport to Thompson’s Point and the Maine State Pier.
Planning Director Penny St. Louis said the development company has submitted a site plan for the project. A neighborhood meeting was scheduled for Tuesday evening at the Clarion Hotel.