Against the odds: Scarborough Downs faces an uncertain future

The town of Scarborough is racing. Racing to build classrooms to accommodate its booming child population. Racing to bring in high-tech jobs and streamline residential and commercial development. Racing to define what this rapidly growing town of some 19,000 residents will look like in the 21st century.

Meanwhile, on 485 mostly undeveloped acres in the center of town, another winter has chilled Scarborough Downs. Sharon Terry, president of Davric Maine Corps., the owner of the harness race track, says the track’s annual revenue has hardly budged from a barely profitable $6.4 million since she took over the business eight years ago after the death of her husband, Joe Ricci. The track under Ricci was never profitable, says the Downs’ spokesman and lawyer Ed MacColl, and in 2001, Terry inherited the majority share of the troubled business and, along with it, Ricci’s famously relentless dedication to harness racing despite the industry’s increasing challenges.

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Terry will need that dedication. At Scarborough Downs, the total amount wagered has continued to slide since the Downs’s heyday in the 1960s. Over the last decade, the amount wagered, or what’s known in the racing world as the “handle,” decreased $28.7 million in 1998 to $20 million in 2008, according to the track, as live horse racing around the country buckles under competition from online gaming and flashy, user-friendly casinos. The track generates a consistently modest profit of $150,000 to $200,000 annually, from income Terry claims is barely enough to put on a season of races that involves dozens of horse handlers, jockeys, racing officials and clubhouse employees, and not enough to market the business effectively or to improve the property.

And property improvement is exactly what town officials have in mind for one of the oldest businesses in Scarborough. In February, the town’s Comprehensive Plan Implementation Committee began reviewing the zoning of the Scarborough Downs parcel to steer any development of that land toward the multi-use, walkable village model officials now tout for the center of town. This month, the Scarborough Economic Development Corp. will begin surveying area businesses about what type of development they’d like to see in Scarborough. As part of this process, SEDCO hopes to meet one-on-one with Terry, the owner of the largest contiguous parcel of land in Scarborough. Terry’s parcel is centrally located near the Haigis Parkway, which the town hopes to turn into a high-end commercial row, and the hustle and bustle of the densely developed Route 1.

“As I said to Sharon,” explains Tom Hall, Scarborough’s town manager, “location, location, location. That’s exactly what they have.”

But Terry says she doesn’t have any plans to develop the land. And if anyone is interested in buying it, she hasn’t heard from them. She instead has a single goal in mind — save Scarborough Downs by expanding gambling.

“We’re going to pursue [harness racing] as long as we can, because it really does encompass a large amount of people, a large amount of livelihood, it’s open space,” Terry says. “We’re just not going to go away, we’re going to continue to pursue the avenue that will keep the industry alive.”

At a crossroads

To the west of the Scarborough Downs marshland lie remnants of the Scarborough the Downs knew when it opened more than half a century ago. This part of town along the border of Gorham and Saco is occupied by homes on sprawling parcels of land, a handful of farms, quiet country roads. When the Downs ran its first race on July 1, 1950, Scarborough’s economy was based on farming and fishing, and the Downs’ 500-worker payroll dwarfed other businesses in town. Owners hoped the new, million-dollar race track would generate over $200,000 in wagers each day from locals and tourists, but the actual profits proved to be much more modest, and Downs lawyer MacColl says the track has struggled for most of its existence to turn a profit.

Today, much of Scarborough’s farmland has been converted to dense housing developments occupied by retirees, or young parents who commute to white-collar work in Portland. According to the U.S. Census Bureau, the primary occupations in town are now management and professional services (farming, fishing and forestry account for a mere 0.6% of the workforce) and the median household income is among the highest in the state at $56,500. The largest employer is the Hannaford Bros. Co. headquarters, according to SEDCO, though Scarborough Downs remains a major player in the local economy, ranking as the 10th-largest employer in 2008.

“Scarborough Downs was really part of the rural nature of the community,” says Harvey Rosenfeld, president and executive director of SEDCO. “It’s one of those things that the Downs is part of Scarborough, and you always hate to lose things that are a part of the community. But Scarborough has changed, it’s a suburb.”

While Scarborough has drifted from farming, the world of gambling has drifted from the derby. According to a University of Maine study on harness racing published in 2000, the industry generates $50.7 million for the Maine economy annually and provides 1,600 jobs at places like the Downs and at fairs featuring harness racing. But the sport is in decline — the report found that the amount of money wagered at live races in Maine dropped more than half from $27.9 million in 1982 to $11.3 million in 1995, the most recent data available, and that race attendance declined from 407,173 in 1986 to slightly more than 221,695 in 1995.

Slot machines have lately provided critical revenue for some of the country’s storied harness and thoroughbred racing tracks, and, according to the U.S. Trotting Association, 15 of the 40 live harness racing tracks in the country now rely in part on revenue from slot machines. In Maine, Bangor’s Hollywood Slots Hotel and Raceway opened last summer ostensibly as the state’s first racino, although the track is across the street from the slot machine parlor.

By state law, 10% of the state’s 39% share of the racino’s revenue is distributed to harness racing outfits like Terry’s. Besides the welcome boost in income, Terry also hopes the Bangor racino will improve her case for slot machines, though the jury is still out on the success of gaming up north. In its first fully operational year, gross revenue at the racino dropped from a $76 million peak in July 2008 to about $47 million in January, the most recent figures available, according to the Maine Gambling Control Board. The racino has blamed the change on the recession.

In the Scarborough town hall lobby, an aerial map of the town covers one wall. In the center sits Scarborough Downs, an irregular block of land with an assessed value of $9.7 million that’s so large it has its own development zone, called, appropriately, “The Crossroads.” “The Crossroads Mixed Use Development District is in the new heart of Scarborough,” the 2006 Comprehensive Plan reads. “Redevelopment of the Scarborough Downs property along with development of adjacent land results in a vibrant, mixed-use center for the community that includes a variety of uses and environments and preserves significant open space and natural resources.”

While the open space that has sat undeveloped on the Downs property since the business was founded remains wild, the town has lately invested millions in building up bordering land to boost the local economy. The town spent about $10 million to prepare the Haigis Parkway, a 1.3-mile stretch of road on the western border of the Downs, for high-end commercial development. On the western border of Terry’s land, an $11.7 million office condominium complex is under construction. Payne Road on the northern border of the property extends into the heart of the Maine Mall, where lucrative big-box retailers like Super Wal-Mart and Lowe’s contribute to the Scarborough tax base. And on the southern border of the property is Oak Hill, the center of town off of Route 1 that includes town hall, Scarborough’s public schools, and Memorial Park.

“Clearly this area of town has the most and best chance of being central at this point and into the future,” says Hall. “I think given [Scarborough Downs’] location it is destined for development at some point, whether it’s near-term or medium-term or long-term. And I really strongly encourage Sharon, and I hope she takes my friendly advice, to be an active part in this zoning conversation. It’s truly remarkable to have one owner of 500 acres; most of our [rezoning] discussions involve hundreds of landowners.”

All bets are off

Three years ago, Sharon Terry did appear to want to develop her land. In 2008, she unveiled plans for Scarborough Village, a roughly $200-million complex that embodied Scarborough’s comp-plan wish list for the spot. Terry planned to build a public safety building, community center, senior housing, office and retail space in a walkable neighborhood anchored by a racino connected to the current Scarborough Downs clubhouse. The development would have boosted the town’s annual tax revenue on the property from around $119,000 to around $8 million. But it all came with a catch — Terry said she’d need slot machine revenue to make the $20 million in necessary sewer, water and energy upgrades to the property. So if Scarborough voters didn’t approve the slots — nudge, nudge — then the whole development would be nixed.

Scarborough voters didn’t bite — they said no to slot machines at Scarborough Downs on Nov. 4 by a margin of 240 votes. It was the latest failed attempt to convince townspeople to allow expanded gambling at the track — in 2003, Scarborough voters also said no to machines in town.

The November vote was a setback for Terry, who maintains the only way to improve the bottom line at the harness racing track is to welcome gambling that doesn’t relate to horse racing, although she can’t quantify how much she expects the business’s bottom line to improve with slot machines other than to say “it’s certainly going to be better than what we have presently.” After overseeing a recount to confirm the loss, Downs spokesman and attorney MacColl announced the track would look at moving to a Maine municipality where slot machines were welcome. MacColl says that search has been limited to the southern and central Maine counties of York, Cumberland, Androscoggin and Oxford, because the Bangor racino serves northern Maine, and the tribes likely have the edge on a racino should one ever be approved in Down East Maine.

In late January, MacColl, Terry and other representatives from Scarborough Downs met with members of the 12-Town Group, which includes town officials from Acton, Alfred, Buxton, Dayton, Hollis, Limerick, Lyman, Newfield, Parsonsfield, Shepley, Sanford and Waterboro. According to John Sylvester, a selectman in Alfred and chairman of the 12-Town Group, only five members showed up to the meeting at the Waterboro town hall, himself included, and none of them were interested in the Downs moving to their towns. In essence, explains Sylvester, they’re just too rural for a big-city outfit like the Downs.

Sylvester vaguely recalls the Downs people talking about the revenue a racino may generate, although he couldn’t remember the figure because, he says, it didn’t matter. Everyone on his side of the table was more concerned with the traffic the racino would create, or the stress on the local police department and infrastructure.

“In small-town, rural Maine, in central Maine, in York County, [in] the small towns that I work with, the money amount is not something that in and of itself is very persuasive to any of us,” says Sylvester. “We’ve all been around long enough to know these kinds of additional incomes come with prices that are not sometimes obvious on the surface. Preserving the quality of life and things like that, people hold that dear. Knowing who your neighbors are, being able to see 50 feet up the road without seeing 15 to 20 neon signs. So every single selectman with whom I have spoken, nobody gets excited about having to deal with all of these issues because it gets a lot more complex. You get all of this extra money, but what the hell good is it?”

On April 10, Terry will open the track for another season of live horse racing. Another season, she says, of just scraping by, of looking for a home that’s just the right fit for her 59-year-old business, of figuring out how to keep the horses running.

“We’re looking at what’s out there to make a decision,” says Terry. “We really feel that the industry is not going to survive unless we continue to pursue the slot machine revenue.”

Sara Donnelly, Mainebiz managing editor, can be reached at sdonnelly@mainebiz.biz.

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