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(CLICK HERE for full Mainebiz article.) A panel of developers for projects on Portland's eastern waterfront said Thursday that residential projects are key to continued development in that slice of the peninsula.
The three developers, speaking at the Maine Real Estate and Development Morning Menu forum, are behind some of the city's largest developments, all in a four-block area of the peninsula. A decade ago the slice was vacant lots and derelict buildings.
So far, most of the development has been commercial, but that's changing.
"Portland's potential and growth potential will really be driven by residential," said Ara Aftandilian, managing member of EssexNorth Portland LLC, of Topsfield, Mass. The company developed the AC Hotel By Marriott, at 158 Fore St., which opened in 2018, and the adjacent 27-unit Twenty Thames condominium development, which opened last year.
Next month the developer plans to break ground on a 24-apartment building with ground-floor retail, at 7 India St., on the same block as the two other developments.
Aftandilian was joined by David Bateman, president of Bateman Partners LLC, which is developing the 211,000-square-foot 86 Newbury/Covetrus project, and Jonathan Cohen, developer of 0 Hancock (the Wex building) and 100 Fore St. The panel was moderated by David Soley, a partner at Bernstein Shur.
Bateman's multifaceted development on the block bordered by Hancock, Newbury, Mountfort and Fore streets only has 10 residential units. But he said the businesses locating in the hundreds of thousands of square feet of office space he, Cohen and Aftandilian are developing, or have developed, also need residential development.
"On the recruiting end, the good news is it's a great place to live, and the bad news is there's no place to live," Bateman said.
Ballot questions concern developers
The developers all said they're concerned about three referendums on Portland's Nov. 3 ballot, which they say will restrict how residential property is developed.
Specifically, they oppose the "Local Green New Deal," which among other things would change the city's inclusionary zoning requirement for affordable housing. Currently, any development of more than 10 units must make 10% of them affordable, according to a matrix based on the area median income and the standard of a resident paying no more than 30% for housing. Developers can avoid that by paying a fee to the city that goes into an affordable housing fund. The referendum calls for raising the percentage of affordable units to 25%.
The questions, put on the ballot by People First Portland, part of the Southern Maine Democratic Socialists of America, also include provisions for more energy-efficient housing, higher pay and training for laborers and other things that would have an impact on development. They are aimed at improving the quality of life in the community, as well as helping to ease the city's housing crisis, particularly for people with middle or low incomes, proponents say.
But the developers said the changes would have the opposite effect of what's intended, halting development projects that include workforce housing and dampening the economic benefits that come from development.
Aftandilian said the inclusionary zoning ordinance change "would be catastrophic."
"If the new inclusionary zoning regulations came in, we couldn't build residential any more," he said. EssexNorth paid $270,000 into the fund for the high-end 27-unit Twenty Thames development. He said his 24-unit development at 7 India St. wouldn't get built with the 25% requirement.
"Costs are costs," Bateman said, and developers walk a fine line between what a development costs and the payback they have to get from it. "Nothing is going to get cheaper tomorrow."
Bateman, Cohen and Aftandilian said that increasing the inclusionary zoning requirements would push development out of the city to other growing communities like Biddeford and Westbrook, along with the economic benefits.
More parking needed
"Portland needs to take a look at what some other cities do," Cohen said. He added that, particularly with changes brought by the COVID-19 pandemic, the changes called for in the ballot questions "are just not practical at all."
The panel also said that credit enhancement programs are needed to develop more parking in the neighborhood, as more workers flock to the newly developed buildings.
Cohen said that while the city is trying to find ways to decrease the need for car commuting, any solutions are far down the road.
He's developing a 600-space parking garage at 100 Fore St., but said that more parking is needed in the neighborhood, and developers also need credit enhancements to build them. Most of those come in the form of tax increment financing districts, which return a percentage of a development's tax money for further development.
Developing a 'wasteland'
All three of the developers took a chance on an area that was an industrial wasteland, originally a rail yard, and more recently vacant lots and industrial space. But they said the path to success was paved for them before they got there.
The developers credit Drew Swenson, of Riverwalk LLC, who developed the 720-space Ocean Gateway parking garage on Fore Street, in 2007, and Fred Forsley, founder of Shipyard Brewing Co., on Hancock Street.
"Everyone else saw a brownfield site, deserted buildings and not a lot of promise," Bateman said. The pair, though, cleaned up the area and made development there possible.
Bateman's project encompasses the Shipyard building, where the top three stories will be veterinary pharmaceutical manufacturing; 10 units of housing on Newbury Street; a hotel, which broke ground a year ago; parking under the hotel and Covetrus' 100,000-square-foot headquarters.
He and Aftandilian said that the form-based zoning in the area, which focuses on how a development fits in with what's around it rather than requiring certain elements, has made their developments possible.
Projects by all three developers in the neighborhood were designed by David Lloyd, of Archetype Architects. Bateman said while there's a danger of form-based projects being bland, Lloyd managed to design distinct and unique buildings in all the developments.
'We had blinders on'
Aftandlilian is also part of the group that built the Residence Inn on Fore Street in 2009, said the the Ocean Gateway parking garage was a big draw for them to build in the undeveloped area. "We didn't have to add parking," he said.
He also said that, from out of state, "we had blinders on."
"We didn't realize that Franklin Street was the boundary where development stopped," he said.
He said he continues to see development potential in the neighborhood.
Besides the 7 India St. project, he is filling in the remaining lot on the block, 170 Fore St., with what was originally planned as a seven-story, 41,000-square-foot office and retail building, but may now be residential.
EssexNorth also bought the Galt Block on the corner of Commercial and Franklin streets in November for $10.5 million. Aftandilian said developers are seeking approval for mixed uses for the 160-year-old brick building and are also filling in an empty lot next door.
