October 30, 2006
Half full or half empty? | Saco Island LLC sees big potential in the mill complex on the Saco River, but the planned rehab faces big challenges
By Douglas Rooks
The old mills on Saco Island have tremendous potential. They offer hundreds of thousands of square feet of flexible space in the middle of two small but growing cities in southern Maine. They are located a few hundred feet from Amtrak's Saco station, where the Downeaster will soon expand to five round trips a day to Boston. The mills have the same classic profile as the ones that have been reborn in Lewiston, and Lowell and Lawrence in Massachusetts.
The old mills on Saco Island also have tremendous problems. Much of complex has been idle for 23 years, since textile production shut down. The biggest mill, Building No. 4, has few intact windows and has been open to the elements for years. Many buildings have never had modern utilities installed. There are complicated ownership and easement issues with Central Maine Power Co. and the city of Saco.
All that potential, and all those problems, are now in the hands of a new development group called Saco Island LLC, which thinks it has a plan that will finally bring the old mills back into use. Composed of many of the same investors as Winthrop-based Harper's Development LLC, the group created a serious media buzz in September when it announced a $100 million plan to overhaul all the vacant buildings, all at once.
Principal investors for Saco Island, as for Harper's, include Kevin Mattson, the firm president, nursing home developer John Orestis and Chris Harte, a member of the Harte-Hanks newspaper family and former president of the Portland Press Herald/Maine Sunday Telegram. Augusta lawyer-lobbyist Severin Beliveau also has a stake in both companies.
The plans for Saco Island (also known as Factory Island and, in some accounts, Indian Island) are nothing if not grand. The vacant buildings ˆ the mammoth Building No. 4, plus smaller structures also on the island in the Saco River ˆ would be fully renovated and reoccupied. Main Street now bisects the island, and, to the east, the vacant coal yards from the original mill operation would become home to 33 townhouse condominiums complete with boat slips (there would be 80 slips in all). It's just five miles from Saco to the sea, and the river is navigable.
Sam Spencer, the project manager for Saco Island, can envision Boston-area buyers hopping on the Downeaster on Friday evening to head north to Saco, walking across the street to their condo, and cruising off to points east on their boats Saturday morning.
Such amenities won't come cheap. The new condos are projected to cost $700,000-$800,000. In the old mill buildings, the "mid-range" condominiums will run from $300,000-$400,000. But these prices aren't scaring off potential investors, or buyers, said Mattson. "You can't create a housing market. You have to deal with the market that's already there, and the numbers tell us this will sell," he said.
Mark Johnston, who's been the mayor of Saco since 1987, is a big fan of the development plan. "There's almost nothing there now," he said. "We could see this become the biggest hub of prosperity Saco has seen since the mills were built in the 1830s."
Johnston also is not shy about touting the major Tax Increment Financing deal the development would require ˆ nearly a full rebate on property taxes from the project for the next 30 years, or $35 million in all. "It's the developers' money at risk," he said. "If they fail, we haven't lost anything. If they succeed, we have community assets most cities can only dream about."
Thus far, his enthusiasm is not universally shared by city councilors, but he said that councilors have been asking questions of the developers in preparation for a potential vote on the TIF in November. So far, though, no councilor has publicly opposed the plan.
Start and stop development
Sam Spencer recently conducted a tour of the sprawling mill complex ˆ the first for a reporter since last month's announcement ˆ and gave a frank appraisal of the challenges still to be overcome. Spencer has been working on Saco Island since he joined Harper's Development 30 months ago, and says that an earlier announcement to try to attract biotech companies to the island was premature. "We have to build for what people want, and this is what we see happening," he said.
The undeveloped lower portion of the island, where townhouses are proposed, totals six acres; the upper parcel with the existing mill buildings is 8.5 acres. In addition to the substantial residential component, Saco Island LLC plans to increase space for educational use ˆ a University of Maine center and an alternative school are already there ˆ and include a mix of retail, a restaurant and possibly a hotel. When Spencer first started work in Saco, he stayed in a motel five miles away. "It really doesn't make sense that there's no place to stay downtown," he said.
Spencer said developers would love to land the pharmacy school proposed by the University of New England as a tenant; UNE is also believed to be considering sites in Biddeford and Portland. But he said the redevelopment does not depend on any one tenant.
Saco Island was the scene of one attempted revival in the 1980s, when Gavin Ruotolo, a native of Romania who had launched ambitious projects in New Hampshire and Maine, got a Finance Authority of Maine loan and a TIF from Saco to work on the property. He rehabbed a small mill, Building No. 2, that now houses a deli, law offices and other tenants. The much larger Building No. 1 also was converted into 91 condominiums called Island Terrace, and is nearly fully occupied.
Ruotolo declared bankruptcy before he could carry out further plans, which included a 14-story high-rise on the land the new developers have tabbed for condos and boat slips. But Mark Johnston said Saco benefited from the TIF. "That was directed toward utilities and other infrastructure," said Johnston. "We got our money's worth."
The results of the Ruotolo projects are mixed. Building No. 2 is functioning well, as is most of Building No. 1. Saco Island LLC plans to rehab the lower level of that building, which has 30,000 square feet, into small retail and office space. But Ruotolo also constructed a "promenade," a concrete roof over ground-level parking, that must be considered an urban design failure. Its desolate pavement attracts few pedestrians, and almost no one wants to linger. Spencer says it will be torn down, while existing building facades would be improved and expanded.
A chainlink fence along the river also will come down under Saco Island's plans, to be replaced by trees, a pedestrian path and, possibly, bridges across the river to Biddeford. "This site has no connectivity now," Spencer said. "That's one of the biggest challenges ˆ to make people want to walk around and use it."
Dealing with decay
Saco Island LLC has already sunk $1 million into its "due diligence" activities, which helped uncover some challenges for the proposed redevelopment. The deeds are highly complex, and utilities easements have made things even murkier. Central Maine Power, which owns most of the easements, has been "highly cooperative," Spencer said, and the environmental hazards, which could include dyes from textile making and contamination from coal, appear manageable ˆ though the state's liability protection program could prove important to the project. Federal Superfund grants are no longer available, though more limited brownfields money may be.
Still, there are uncertainties. Asked about a steam pipeline that bridges the river from Saco to Biddeford, Spencer said, "No one is too sure who owns that."
It is in Building No. 4, a 238,000-square-foot monster on three levels, where the obstacles and opportunities are most evident. The gaping window frames are matched by floors that have long since lost their finish. A few holes run clear through to the basement (which would accommodate some of the parking for the units above). Squint hard and it's easier to see a ruined cathedral than a thriving rehabbed mill building. Spencer believes it can be done, though. "The advantage is that the space is totally flexible," he said. "You can build anything you want, for whoever wants it."
Mills in grimmer shape have been brought back to life, he said. But the willingness of local people to help will be one of the key elements bringing the project along, he said. "It's been so long since anything happened here that some have given up, but others are hopeful," Spencer said.
While the scale of new development appears generally acceptable to local residents, there are questions. The marina plan has raised concerns, and because it's located on what the Army Corps of Engineers considers a navigable channel, developers might have to dredge or downsize the number of slips.
Councilors, meanwhile, have questioned whether it makes sense to give back nearly all the property tax revenue the project would generate for 30 years. In Augusta, however, the city council unanimously approved a similar deal with a North Carolina developer that wants to convert the historic Kennebec Arsenal to housing ˆ a complex that has sat vacant for 30 years. Saco Island LLC will no doubt emphasize the similarities.
Spencer said that all aspects of the plan are negotiable, though Mattson also emphasized that changes have to be affordable for the developers. "The numbers have to work," he said.
One of the reasons for the "big bang" of the project's design ˆ which could see an army of 2,000 workers descend on the site ˆ is that the equity investors need to see a return within five years. Mattson has been traveling the country looking to sign up such investors, and says he's succeeding. He declined to say who has signed on, or how much has been raised, but said that he is within striking distance of raising sufficient capital. "This has to be an equity project. No one wants to loan money for this kind of venture," he said.
Yet no one who alights on the train station platform, which directly faces Building No. 4, can fail to see the site's potential, said Spencer. "Right now, this is a hole in one of the fastest-growing areas in Maine," he said. "If redevelopment is going to happen, it's going to happen now."
But Spencer added that this is probably the last chance for the buildings to be reused. "If this doesn't succeed, they'll probably have to be torn down," he said.
Johnston, who tends to be an optimist, didn't disagree with that assessment, and noted that losing the buildings would be a huge setback. "Sure, it's hard to reclaim them, but this is our history. This is why Saco is here," Johnston said. "If we can bring them back, we can generate a level of prosperity we haven't seen for more than a hundred years."
The old mills on Saco Island also have tremendous problems. Much of complex has been idle for 23 years, since textile production shut down. The biggest mill, Building No. 4, has few intact windows and has been open to the elements for years. Many buildings have never had modern utilities installed. There are complicated ownership and easement issues with Central Maine Power Co. and the city of Saco.
All that potential, and all those problems, are now in the hands of a new development group called Saco Island LLC, which thinks it has a plan that will finally bring the old mills back into use. Composed of many of the same investors as Winthrop-based Harper's Development LLC, the group created a serious media buzz in September when it announced a $100 million plan to overhaul all the vacant buildings, all at once.
Principal investors for Saco Island, as for Harper's, include Kevin Mattson, the firm president, nursing home developer John Orestis and Chris Harte, a member of the Harte-Hanks newspaper family and former president of the Portland Press Herald/Maine Sunday Telegram. Augusta lawyer-lobbyist Severin Beliveau also has a stake in both companies.
The plans for Saco Island (also known as Factory Island and, in some accounts, Indian Island) are nothing if not grand. The vacant buildings ˆ the mammoth Building No. 4, plus smaller structures also on the island in the Saco River ˆ would be fully renovated and reoccupied. Main Street now bisects the island, and, to the east, the vacant coal yards from the original mill operation would become home to 33 townhouse condominiums complete with boat slips (there would be 80 slips in all). It's just five miles from Saco to the sea, and the river is navigable.
Sam Spencer, the project manager for Saco Island, can envision Boston-area buyers hopping on the Downeaster on Friday evening to head north to Saco, walking across the street to their condo, and cruising off to points east on their boats Saturday morning.
Such amenities won't come cheap. The new condos are projected to cost $700,000-$800,000. In the old mill buildings, the "mid-range" condominiums will run from $300,000-$400,000. But these prices aren't scaring off potential investors, or buyers, said Mattson. "You can't create a housing market. You have to deal with the market that's already there, and the numbers tell us this will sell," he said.
Mark Johnston, who's been the mayor of Saco since 1987, is a big fan of the development plan. "There's almost nothing there now," he said. "We could see this become the biggest hub of prosperity Saco has seen since the mills were built in the 1830s."
Johnston also is not shy about touting the major Tax Increment Financing deal the development would require ˆ nearly a full rebate on property taxes from the project for the next 30 years, or $35 million in all. "It's the developers' money at risk," he said. "If they fail, we haven't lost anything. If they succeed, we have community assets most cities can only dream about."
Thus far, his enthusiasm is not universally shared by city councilors, but he said that councilors have been asking questions of the developers in preparation for a potential vote on the TIF in November. So far, though, no councilor has publicly opposed the plan.
Start and stop development
Sam Spencer recently conducted a tour of the sprawling mill complex ˆ the first for a reporter since last month's announcement ˆ and gave a frank appraisal of the challenges still to be overcome. Spencer has been working on Saco Island since he joined Harper's Development 30 months ago, and says that an earlier announcement to try to attract biotech companies to the island was premature. "We have to build for what people want, and this is what we see happening," he said.
The undeveloped lower portion of the island, where townhouses are proposed, totals six acres; the upper parcel with the existing mill buildings is 8.5 acres. In addition to the substantial residential component, Saco Island LLC plans to increase space for educational use ˆ a University of Maine center and an alternative school are already there ˆ and include a mix of retail, a restaurant and possibly a hotel. When Spencer first started work in Saco, he stayed in a motel five miles away. "It really doesn't make sense that there's no place to stay downtown," he said.
Spencer said developers would love to land the pharmacy school proposed by the University of New England as a tenant; UNE is also believed to be considering sites in Biddeford and Portland. But he said the redevelopment does not depend on any one tenant.
Saco Island was the scene of one attempted revival in the 1980s, when Gavin Ruotolo, a native of Romania who had launched ambitious projects in New Hampshire and Maine, got a Finance Authority of Maine loan and a TIF from Saco to work on the property. He rehabbed a small mill, Building No. 2, that now houses a deli, law offices and other tenants. The much larger Building No. 1 also was converted into 91 condominiums called Island Terrace, and is nearly fully occupied.
Ruotolo declared bankruptcy before he could carry out further plans, which included a 14-story high-rise on the land the new developers have tabbed for condos and boat slips. But Mark Johnston said Saco benefited from the TIF. "That was directed toward utilities and other infrastructure," said Johnston. "We got our money's worth."
The results of the Ruotolo projects are mixed. Building No. 2 is functioning well, as is most of Building No. 1. Saco Island LLC plans to rehab the lower level of that building, which has 30,000 square feet, into small retail and office space. But Ruotolo also constructed a "promenade," a concrete roof over ground-level parking, that must be considered an urban design failure. Its desolate pavement attracts few pedestrians, and almost no one wants to linger. Spencer says it will be torn down, while existing building facades would be improved and expanded.
A chainlink fence along the river also will come down under Saco Island's plans, to be replaced by trees, a pedestrian path and, possibly, bridges across the river to Biddeford. "This site has no connectivity now," Spencer said. "That's one of the biggest challenges ˆ to make people want to walk around and use it."
Dealing with decay
Saco Island LLC has already sunk $1 million into its "due diligence" activities, which helped uncover some challenges for the proposed redevelopment. The deeds are highly complex, and utilities easements have made things even murkier. Central Maine Power, which owns most of the easements, has been "highly cooperative," Spencer said, and the environmental hazards, which could include dyes from textile making and contamination from coal, appear manageable ˆ though the state's liability protection program could prove important to the project. Federal Superfund grants are no longer available, though more limited brownfields money may be.
Still, there are uncertainties. Asked about a steam pipeline that bridges the river from Saco to Biddeford, Spencer said, "No one is too sure who owns that."
It is in Building No. 4, a 238,000-square-foot monster on three levels, where the obstacles and opportunities are most evident. The gaping window frames are matched by floors that have long since lost their finish. A few holes run clear through to the basement (which would accommodate some of the parking for the units above). Squint hard and it's easier to see a ruined cathedral than a thriving rehabbed mill building. Spencer believes it can be done, though. "The advantage is that the space is totally flexible," he said. "You can build anything you want, for whoever wants it."
Mills in grimmer shape have been brought back to life, he said. But the willingness of local people to help will be one of the key elements bringing the project along, he said. "It's been so long since anything happened here that some have given up, but others are hopeful," Spencer said.
While the scale of new development appears generally acceptable to local residents, there are questions. The marina plan has raised concerns, and because it's located on what the Army Corps of Engineers considers a navigable channel, developers might have to dredge or downsize the number of slips.
Councilors, meanwhile, have questioned whether it makes sense to give back nearly all the property tax revenue the project would generate for 30 years. In Augusta, however, the city council unanimously approved a similar deal with a North Carolina developer that wants to convert the historic Kennebec Arsenal to housing ˆ a complex that has sat vacant for 30 years. Saco Island LLC will no doubt emphasize the similarities.
Spencer said that all aspects of the plan are negotiable, though Mattson also emphasized that changes have to be affordable for the developers. "The numbers have to work," he said.
One of the reasons for the "big bang" of the project's design ˆ which could see an army of 2,000 workers descend on the site ˆ is that the equity investors need to see a return within five years. Mattson has been traveling the country looking to sign up such investors, and says he's succeeding. He declined to say who has signed on, or how much has been raised, but said that he is within striking distance of raising sufficient capital. "This has to be an equity project. No one wants to loan money for this kind of venture," he said.
Yet no one who alights on the train station platform, which directly faces Building No. 4, can fail to see the site's potential, said Spencer. "Right now, this is a hole in one of the fastest-growing areas in Maine," he said. "If redevelopment is going to happen, it's going to happen now."
But Spencer added that this is probably the last chance for the buildings to be reused. "If this doesn't succeed, they'll probably have to be torn down," he said.
Johnston, who tends to be an optimist, didn't disagree with that assessment, and noted that losing the buildings would be a huge setback. "Sure, it's hard to reclaim them, but this is our history. This is why Saco is here," Johnston said. "If we can bring them back, we can generate a level of prosperity we haven't seen for more than a hundred years."
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