January 14, 2008
City living | Locals say downtown residential development is key to an Augusta revival
Despite an enervated national housing market, Augusta had a growth spurt this past year. The city's first upscale housing development in more than 30 years broke ground in November. Last March, a developer closed on the Kennebec Arsenal with plans to fill the former arms factory with a hotel, condominiums, apartments, retail shops and offices. This fall, city councilors also issued a tax break to boost a new affordable housing subdivision. And another developer put the final touches on 24 subsidized downtown apartments this summer.
The city is preparing for what some experts say could be a 21st century revival ˆ if it can supply the housing and urban life that will lure baby boomers to settle within city limits and attract young families to choose homes close to metropolitan offerings. Mayor Roger Katz, for one, is seeing propitious signs. "The stars are really lined up here for a real rebirth of the city and an increase of our population," he says.
For the city to be reborn, it must reverse what has been a steady exodus of Augusta's residents, who left to pursue the dream of owning a home on a large, inexpensive lot with low taxes, Katz says. Cheap gas fueled the migration into surrounding towns. Between 1990 and 2000, the city's population shrank from more than 21,000 to about 18,500, according to U.S. Census data. By 2000, only one out of four people who worked in the city also lived there.
"We were shocked when the census results came out in 2000," City Manager William Bridgeo recalls. "It became an important priority of the city in 2000 to address the issues that were causing the people to leave and do whatever the city could do to encourage residential growth."
To make matters worse, between 2000 and 2006, 196 housing units were demolished, many of them to make way for the stores that fueled an Augusta retail boom. As its population was declining, the state capital was blossoming into a regional shopping hub. Commercial retailers built up the periphery of the city, developing malls and big-box stores like Lowe's and Circuit City. But while development amassed along the edges of the city, it helped drain the downtown, turning Augusta into a place to buy stuff but not necessarily to live.
Now, though, due to shifting demographics and market forces, city officials and a handful of developers are betting that the city is on the brink of a residential housing boom, and that the historic area on the Kennebec River could again spring to life.
A healthy downtown has ripple effects throughout the city's economy. Bridgeo says a lively center will attract new people to live and work in the community, as well as preserve a historic commercial district that has in the past provided a good part of the city's tax base. And because Augusta's downtown lies along the river, it could boost future plans to make more use of the waterfront property, which Bridgeo calls the city's "strongest asset." "It's vital we do everything we can to preserve and improve our downtown," he says.
Some, though, are more hesitant to express optimism. "The key question is, will the people who go to the two malls end up going into the city itself? And if that happens, will that result in new businesses and restaurants and more housing opportunities?" asks Mark Lapping, a professor of public policy and community development at the University of Southern Maine's Muskie School of Public Service. "The jury is still out on that."
In with the new
In September, Frank O'Hara, vice president of Hallowell-based consulting firm Planning Decisions Inc., completed a city-commissioned housing report meant to complement Augusta's comprehensive plan, which is being revised with an eye to tempt more people to settle in the city.
"I was asked to do the housing picture as a whole. Part of what Augusta wants to do is attract all sorts of people: high income, middle income, low income, everybody," O'Hara says in a telephone interview. "I think that is part of what makes cities interesting, that variety. You live next door to someone who is different from you."
And to capture the middle to upper strata ˆ the one that largely disappeared from the city in the last 20 years ˆ the city is hoping to seize on the upcoming deluge of baby boomer retirees. Nearly 40% of state government employees will become eligible for retirement in the next five years, according to 2007 estimates by the Maine State Planning Office. And as the older generation retires, a new demographic will replace them in the workforce ˆ one that is also appealing to city revivalists. This set will generally be young and looking for nightlife, recreation and culture. (And if gas prices stay high, too, the incentive to live close to work will be even greater.)
O'Hara says that older, well-off workers living in pastoral settings are likely to consider downsizing to more manageable in-town homes that are nearby to arts, culture, friends, health services and walking trails. "What is different about the baby boomer generation is there is so many people," he says. "In the 1970s, they clogged up the apartment [market]. In the 1980s, they clogged the starter homes. They've had that effect on the market for the last 30 years. There will be another slug of demand."
Developer William Kieltyka, an engineer who designs loudspeakers and lives in Brunswick, is counting on that demand. For his first large-scale development project, he chose to invest in Augusta, pouring about $1.4 million into buying and developing a 35-acre parcel on South Belfast Avenue, about a mile from downtown. He envisions creating a neighborhood of 55 houses, each with a two-car garage, priced between $250,000 and $279,000. Lots ranging from a half-acre to more than one acre will go for about $50,000. He says he has already sold four parcels to the Augusta Board of Trade, which invested $200,000 to support his project, and four others to contractors. "I believe that will be the bulk of the market, baby boomer retirees. We're coming up on that point," Kieltyka says.
Another factor in this confluence of economic forces was the vigorous housing market in the early part of this decade. Those priced out of southern and coastal Maine have been drawn to Augusta and the surrounding area's lower housing prices ˆ and to Augusta's now relatively affordable property tax, O'Hara says. From 1998 to 2007, O'Hara reports that the tax bill on an average Augusta home increased only $50, from $1,700 to $1,750. The tax rate stayed flat in part because of the influx of commercial properties. But at the same time, property values have increased due to the plethora of new retailers, a new high school, a cancer center and a YMCA. The median home value in Augusta jumped from $68,000 to $125,000 between 2000 and 2007, according to O'Hara's report.
Michael Duguay, Augusta's director of economic and community development, is filled with cheer about what he's seeing in the city. "Augusta is a much more desirable housing location than ever before. The community has been perceived as a well-managed community, it has kept its tax rate down and grown its amenity base," he says. "It is not by default now, it is by choice that people are looking to Augusta."
The new wave
O'Hara says the city should maneuver smartly to take advantage of the demographic changeover, assuming the current housing depression will not affect Augusta too keenly or for too long. (Officials are dismissive about concerns the housing market will hurt Augusta. They say housing growth here has been steadier than in other booming markets and consequently there isn't the overabundance of supply that's pushing down prices in other markets.) "Augusta has an opportunity to be more competitive for attracting the upcoming housing demand than it has been for many years," O'Hara recently wrote in a housing study on Augusta. "The key to success, however, is not to try and build suburban-style subdivisions. ˆ Augusta's advantage is in providing a rich urban environment, with dense housing and arts and shopping and work located downtown and along the river."
For the city to capitalize on demographic shifts, O'Hara recommends the city amend its zoning laws to encourage compact development, rather than requiring large setbacks and lot sizes that create the feel of suburbia. He also supports tax breaks as an enticement for developers. He argues, too, that the city should work on upgrading the quality of neighborhoods by constructing more sidewalks, calming traffic and investing in landscaping.
The city already has lent its hand to developers by extending residential tax-increment financing programs ˆ or housing TIFs ˆ to two affordable housing divisions. In one of these developments, the TIF is expected to bring down price tags on half the homes by $30,000, to $140,000. And the city and school helped finance a $275,000 sewer line to Kieltyka's subdivision by supplying him with $155,000.
Bridgeo says Augusta will consider other actions when officials set future goals and update the comprehensive plan. But he says supporting the arts, even though there is a demand, is difficult because of the cost. "It is not that there is no passion for the arts in Augusta," he says. "But most of [the art and cultural groups] don't have financial resources. Where is the money for that?"
The key to encourage more downtown investment that in turn will attract more in-town dwellers, however, is regional cooperation to steer growth, according to Lapping at the Muskie School. "I think it has to be a commitment to controlling infrastructure investments so they fulfill land use roles," he says, pointing, as a bad example, to a Kennebec River bridge just north of the city center built in 2004 that could push development away from Augusta's downtown.
But Duguay disagrees. He sees the bridge, colloquially called the "Third Bridge," as easing mobility from east to west in the city, which he says makes the community more livable. Duguay also argues that downtowns come back not from strategic transportation rerouting, but rather by attracting the types of classy shops and fun restaurants that will make an area a destination. Already the city has tried to help the city center in the last few years by upgrading its infrastructure, as well as overlaying the district with a TIF.
Katz says, as well, that he has just wrapped up a new plan for developing the city's riverfront. Although he is mum about details, he says he hopes at least some of the plan will be included in next year's budget. "The end goal is to make it clear that we are serious about our downtown and creating an environment for considerable private investment," Katz says.
And though the city still has a fair ways to go, it has at least seen the migratory outflow of residents stop. "The state planning office says our population has stabilized and started to grow," Bridgeo says. "It seems we've turned it around."
The city is preparing for what some experts say could be a 21st century revival ˆ if it can supply the housing and urban life that will lure baby boomers to settle within city limits and attract young families to choose homes close to metropolitan offerings. Mayor Roger Katz, for one, is seeing propitious signs. "The stars are really lined up here for a real rebirth of the city and an increase of our population," he says.
For the city to be reborn, it must reverse what has been a steady exodus of Augusta's residents, who left to pursue the dream of owning a home on a large, inexpensive lot with low taxes, Katz says. Cheap gas fueled the migration into surrounding towns. Between 1990 and 2000, the city's population shrank from more than 21,000 to about 18,500, according to U.S. Census data. By 2000, only one out of four people who worked in the city also lived there.
"We were shocked when the census results came out in 2000," City Manager William Bridgeo recalls. "It became an important priority of the city in 2000 to address the issues that were causing the people to leave and do whatever the city could do to encourage residential growth."
To make matters worse, between 2000 and 2006, 196 housing units were demolished, many of them to make way for the stores that fueled an Augusta retail boom. As its population was declining, the state capital was blossoming into a regional shopping hub. Commercial retailers built up the periphery of the city, developing malls and big-box stores like Lowe's and Circuit City. But while development amassed along the edges of the city, it helped drain the downtown, turning Augusta into a place to buy stuff but not necessarily to live.
Now, though, due to shifting demographics and market forces, city officials and a handful of developers are betting that the city is on the brink of a residential housing boom, and that the historic area on the Kennebec River could again spring to life.
A healthy downtown has ripple effects throughout the city's economy. Bridgeo says a lively center will attract new people to live and work in the community, as well as preserve a historic commercial district that has in the past provided a good part of the city's tax base. And because Augusta's downtown lies along the river, it could boost future plans to make more use of the waterfront property, which Bridgeo calls the city's "strongest asset." "It's vital we do everything we can to preserve and improve our downtown," he says.
Some, though, are more hesitant to express optimism. "The key question is, will the people who go to the two malls end up going into the city itself? And if that happens, will that result in new businesses and restaurants and more housing opportunities?" asks Mark Lapping, a professor of public policy and community development at the University of Southern Maine's Muskie School of Public Service. "The jury is still out on that."
In with the new
In September, Frank O'Hara, vice president of Hallowell-based consulting firm Planning Decisions Inc., completed a city-commissioned housing report meant to complement Augusta's comprehensive plan, which is being revised with an eye to tempt more people to settle in the city.
"I was asked to do the housing picture as a whole. Part of what Augusta wants to do is attract all sorts of people: high income, middle income, low income, everybody," O'Hara says in a telephone interview. "I think that is part of what makes cities interesting, that variety. You live next door to someone who is different from you."
And to capture the middle to upper strata ˆ the one that largely disappeared from the city in the last 20 years ˆ the city is hoping to seize on the upcoming deluge of baby boomer retirees. Nearly 40% of state government employees will become eligible for retirement in the next five years, according to 2007 estimates by the Maine State Planning Office. And as the older generation retires, a new demographic will replace them in the workforce ˆ one that is also appealing to city revivalists. This set will generally be young and looking for nightlife, recreation and culture. (And if gas prices stay high, too, the incentive to live close to work will be even greater.)
O'Hara says that older, well-off workers living in pastoral settings are likely to consider downsizing to more manageable in-town homes that are nearby to arts, culture, friends, health services and walking trails. "What is different about the baby boomer generation is there is so many people," he says. "In the 1970s, they clogged up the apartment [market]. In the 1980s, they clogged the starter homes. They've had that effect on the market for the last 30 years. There will be another slug of demand."
Developer William Kieltyka, an engineer who designs loudspeakers and lives in Brunswick, is counting on that demand. For his first large-scale development project, he chose to invest in Augusta, pouring about $1.4 million into buying and developing a 35-acre parcel on South Belfast Avenue, about a mile from downtown. He envisions creating a neighborhood of 55 houses, each with a two-car garage, priced between $250,000 and $279,000. Lots ranging from a half-acre to more than one acre will go for about $50,000. He says he has already sold four parcels to the Augusta Board of Trade, which invested $200,000 to support his project, and four others to contractors. "I believe that will be the bulk of the market, baby boomer retirees. We're coming up on that point," Kieltyka says.
Another factor in this confluence of economic forces was the vigorous housing market in the early part of this decade. Those priced out of southern and coastal Maine have been drawn to Augusta and the surrounding area's lower housing prices ˆ and to Augusta's now relatively affordable property tax, O'Hara says. From 1998 to 2007, O'Hara reports that the tax bill on an average Augusta home increased only $50, from $1,700 to $1,750. The tax rate stayed flat in part because of the influx of commercial properties. But at the same time, property values have increased due to the plethora of new retailers, a new high school, a cancer center and a YMCA. The median home value in Augusta jumped from $68,000 to $125,000 between 2000 and 2007, according to O'Hara's report.
Michael Duguay, Augusta's director of economic and community development, is filled with cheer about what he's seeing in the city. "Augusta is a much more desirable housing location than ever before. The community has been perceived as a well-managed community, it has kept its tax rate down and grown its amenity base," he says. "It is not by default now, it is by choice that people are looking to Augusta."
The new wave
O'Hara says the city should maneuver smartly to take advantage of the demographic changeover, assuming the current housing depression will not affect Augusta too keenly or for too long. (Officials are dismissive about concerns the housing market will hurt Augusta. They say housing growth here has been steadier than in other booming markets and consequently there isn't the overabundance of supply that's pushing down prices in other markets.) "Augusta has an opportunity to be more competitive for attracting the upcoming housing demand than it has been for many years," O'Hara recently wrote in a housing study on Augusta. "The key to success, however, is not to try and build suburban-style subdivisions. ˆ Augusta's advantage is in providing a rich urban environment, with dense housing and arts and shopping and work located downtown and along the river."
For the city to capitalize on demographic shifts, O'Hara recommends the city amend its zoning laws to encourage compact development, rather than requiring large setbacks and lot sizes that create the feel of suburbia. He also supports tax breaks as an enticement for developers. He argues, too, that the city should work on upgrading the quality of neighborhoods by constructing more sidewalks, calming traffic and investing in landscaping.
The city already has lent its hand to developers by extending residential tax-increment financing programs ˆ or housing TIFs ˆ to two affordable housing divisions. In one of these developments, the TIF is expected to bring down price tags on half the homes by $30,000, to $140,000. And the city and school helped finance a $275,000 sewer line to Kieltyka's subdivision by supplying him with $155,000.
Bridgeo says Augusta will consider other actions when officials set future goals and update the comprehensive plan. But he says supporting the arts, even though there is a demand, is difficult because of the cost. "It is not that there is no passion for the arts in Augusta," he says. "But most of [the art and cultural groups] don't have financial resources. Where is the money for that?"
The key to encourage more downtown investment that in turn will attract more in-town dwellers, however, is regional cooperation to steer growth, according to Lapping at the Muskie School. "I think it has to be a commitment to controlling infrastructure investments so they fulfill land use roles," he says, pointing, as a bad example, to a Kennebec River bridge just north of the city center built in 2004 that could push development away from Augusta's downtown.
But Duguay disagrees. He sees the bridge, colloquially called the "Third Bridge," as easing mobility from east to west in the city, which he says makes the community more livable. Duguay also argues that downtowns come back not from strategic transportation rerouting, but rather by attracting the types of classy shops and fun restaurants that will make an area a destination. Already the city has tried to help the city center in the last few years by upgrading its infrastructure, as well as overlaying the district with a TIF.
Katz says, as well, that he has just wrapped up a new plan for developing the city's riverfront. Although he is mum about details, he says he hopes at least some of the plan will be included in next year's budget. "The end goal is to make it clear that we are serious about our downtown and creating an environment for considerable private investment," Katz says.
And though the city still has a fair ways to go, it has at least seen the migratory outflow of residents stop. "The state planning office says our population has stabilized and started to grow," Bridgeo says. "It seems we've turned it around."
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