Partnership with Bank of Maine puts focus on Gardiner's downtown

Take a walk with Nate Rudy through Gardiner's downtown district and you'll begin to see how an economic and community developer's mind works. At each empty storefront, he stops, quickly cites the available square footage and identifies the former tenant. In his next breath, he offers ready ideas about an ideal tenant for that very space. In every empty storefront, Rudy sees opportunity.

“This building has 6,000 square feet available for leasing on the first floor,” he says of a storefront on Water Street next to the Johnson Hall Performing Arts Center and across from ArtDogs. “Bull Moose Music would be perfect for this location. If I could pick a business out of the sky to locate here it would be them.”

What the Brunswick-based business would offer Gardiner, Rudy says, is a place that would attract young people downtown to buy music CDs and vinyl records, DVD movies, video games and books … not to mention their parents who might be looking for the latest remastered Led Zeppelin album. With nine retail stores in Maine and two in New Hampshire, the business model is tested and true — a perfect complement, Rudy says, to the diverse boutique stores in downtown Gardiner.

“How do you create downtown centers that invite young people to communicate with each other, contribute to the local economy and feel involved with their community?” he asks, having already given his three-word answer to the question: Bull Moose Music.

A new program launched in March makes Rudy's musings more than just wishful thinking. The Gardiner Growth Initiative — a partnership between the city, The Bank of Maine, Gardiner Main Street and the Gardiner Board of Trade — puts an array of incentives into his tool kit that are designed to encourage established and growing businesses to locate in the city's historic downtown district. They include a forgivable loan program to cover fit-up costs, city tax rebates for qualified projects and landlords offering free rent for up to a year for long-term leases.

Although startups are not absolutely excluded from the program, Rudy says the primary focus is on attracting successful Maine businesses to Gardiner, which is located a little more than five miles from Interstate 295 and serves as a convenient gateway to both central Maine and the greater Augusta-Waterville population of more than 100,000 people.

Frosty's comes to Gardiner

The initiative already has achieved some early success. Rudy points to a vacant building at 347 Water St. on the corner next to the landmark A-1 Diner, with frontage guaranteed to capture the attention of commuters traveling along Route 201. “Frosty's is going into that building,” he says.

Frosty's has been the go-to doughnut shop on Brunswick's Maine Street since 1965. Now owned by Nels and Shelby Omdal, the husband-and-wife team has taken the brand to new levels since their 2012 acquisition of the business. They've opened additional retail doughnut shops in Bath and Freeport and have expanded into wholesale sales through the Hannaford supermarket chain. [See related story on Page 22.]

Patrick Wright, who's in his third year as executive director of Gardiner Main Street, didn't wait for the Omdals to discover Gardiner on their own. He actively courted them, using the new Gardiner Growth Initiative as a strong incentive to capture their interest.

“We're certainly not ruling out chain stores, but when you look at the big picture and what makes for a successful downtown, Frosty's tells a better story than Dunkin' Donuts,” he says. “It's authentic. Tourism is an important component of Maine's economy. I do think an independently owned doughnut business will score better with tourists, who are interested in a shop's uniqueness and how well it embodies the Maine brand.”

Shelby Omdal says while she and her husband were intrigued by Wright's sales pitch, they traveled to Gardiner on four straight Mondays to observe for themselves the downtown's traffic and commuting patterns. They observed that Gardiner had very similar demographics to Bath and Brunswick, where their doughnut shops were thriving, and decided the proposed location was “a great match for our business.”

Even so, she says, the financial incentives are what sealed the deal.

“We're a small business that's growing rapidly,” she says. “Cash flow is always critical. The Gardiner Growth Initiative's financial incentives were critical. Without them we wouldn't be going to Gardiner.”

The banker's perspective

John Everets, chairman and CEO of The Bank of Maine, says the Gardiner Growth Initiative isn't a giveaway program.

He says it grew out of the bank's “Six Sigma” approach to strategic planning, which uses data to define, measure, analyze and improve projects having very targeted goals. A plan to help successful Maine businesses expand into Gardiner, he says, emerged from those sessions as a key way the bank could both strengthen its home community and help its downtown recover from the lingering effects of the 2008 recession. He says the bank found receptive partners in city government, Gardiner Main Street and the Gardiner Board of Trade, with representatives of each joining the bank in two years of planning and developing a program to recruit established businesses successful in other communities that might be looking to expand to another location.

“If you have a successful retail business, say, in two other locations, and you want to have a third location, what this program says is that Gardiner should be in the forefront of your list of prospects,” Everets says. “The city has lots of parking, which is what a successful retail business needs; it has highly competitive cost-of-occupancy rates; and capital is available to help them get set up.”

Under the program launched in late March, businesses whose proposals have been accepted would benefit from a $175,000 deferred, forgivable loan program for loans of up to $50,000 per business for building improvements, fitting up of commercial space, business equipment and other fixed assets needed to prepare the space for tenancy. For a loan to be forgiven, a business must remain in downtown Gardiner for five years. The Bank of Maine has put up $125,000 and the Gardiner Board of Trade $50,000 for the program. Other elements include:

• A micro-grant of up to $10,000 for working capital and inventory, provided by the Gardiner Board of Trade.

• Free rent provided by several landlords. For businesses enrolled in the initiative, the participating landlords are offering six months' free rent for a tenant signing a three-year lease and 12 months for a five-year lease.

• Pledges from large Gardiner businesses with more than 700 employees to support new downtown businesses.

• A tax rebate under a Tax Increment Financing program created by the city for specific types of infrastructure improvements to downtown buildings.

Everets says the bank's hopes for a return on its investment are based on the long-term expectation that retail businesses that have been helped by the program and stay for the requisite five years will be likely to have loyalty to The Bank of Maine for their additional lending needs. They're also based on the principle that a “rising tide floats all boats.”

“We are one of the largest real estate owners and occupiers of real estate in Gardiner,” he says. “We are one of the largest employers. We have the largest bank in Gardiner. … We see the Gardiner Growth Initiative as something that will improve the quality of life for our employees and customers. With the capital investment we have throughout Gardiner, we are one of the beneficiaries as well.”

Diversity is the key

Both Rudy and Wright say The Bank of Maine's data-based approach to strategic planning is a key element of the Gardiner Growth Initiative. The focus on well-established Maine businesses, for example, is based on a retail leakage study that provided benchmarks for comparing the city's mix of downtown businesses in relation to its population and other demographic information against national averages.

Using that data, the initiative's core planning group met with the city's Economic Restructuring Committee and came up with 10 target businesses that would add diversity and strengthen the downtown's mix of businesses: Hospitality/hotel; marina; specialty clothing, foods and retail; seafood and ethnic cuisine; family entertainment or museum; restaurant/night spot with entertainment space; medical services or elder care; home furnishings; sporting goods or outdoor recreation; higher education; and professional services.

With that list in hand, Wright says, the planning group did some brainstorming to identify Maine businesses that met the program's requirements and might be ready for expansion.

“We're looking for businesses that are established, have a clear track record of being successful and are looking to expand beyond their current location,” Wright says. “We're not looking to poach businesses away from the communities they're already located in.”

Rudy also tapped students enrolled in the University of Maine at Augusta's new professional architectural degree program to create renderings and proposals for specific downtown locations. One student, for example, envisioned an inter-modal transportation facility near the waterfront park between the Kennebec River and the historic Kennebec and Portland Railway tracks. Several of the completed projects, not all of them related to the downtown initiative, were the centerpiece of Gardiner's display table at the Maine Real Estate & Development Association's May 20 conference in Portland.

“It would be crazy for me not to partner with UMA,” Rudy says.

Gregory Buzzell, a Maine native and a veteran who has just graduated from UMA's architecture program, undertook a project that analyzed the city's flood plain in relation to historical high-water events along the Kennebec River as well as a rendering and proposal for a mental health facility on a prospective site a mile and a half from downtown Gardiner.

“I understand the need for having a place that supports what is a disadvantaged population,” he says of the latter project, noting that his work could be used by the city to secure funding from governmental or other sources for his proposed facility.

Rudy says diversity is the key to having not only a vibrant downtown, but also a thriving community. Downtown Gardiner's small boutique shops need foot traffic to survive, he says, and that essential ingredient is enhanced by having strong cultural or entertainment venues such as the Johnson Hall Performing Arts Center, great restaurants that people will drive to from other locations and large employers such as E.J. Prescott that encourage their workers to support local businesses.

“For me, any functioning ecosystem, whether it's a trout riffle or the Amazon River Basin, it's going to have a mix of contributors of all different shapes and sizes. If they're in balance, everything thrives. The whole idea behind the Gardiner Growth Initiative is to build resilience and sustainability into the mix of downtown businesses so that we become a stronger community as a whole.”

Although the new initiative focuses on downtown Gardiner, Rudy says it's only one element of the city's overall economic growth efforts. Johnson Hall's independent efforts to expand into its vacant second and third floors would more than triple the seating capacity of the 150-year-old opera house and improve its ability to bring in performers that would draw even more visitors into the downtown. The pre-permitted Libby Hill business park is another element. Each piece of the economic puzzle, he says, is linked to another.

“It's not just enough for the CEO to want to locate in our business park,” he says. “The CEO's husband and her family need to believe this is a community where they can grow, have fun and become a part of. Once we've built upon and expanded that culture of small businesses that are finding success downtown, the 100-, 200-, 300-worker businesses will find that attractive and want to locate here. That's the model we are pursuing.”

Both Rudy and Wright are confident the new initiative will succeed, citing the positive results of similar programs undertaken in Biddeford and Damariscotta.

“I would love to see all the money out the door — with decisions on five or six businesses we feel really good about — by the end of the year,” Wright says. “That's a very ambitious goal. But I think we need to pursue ambitious goals. It doesn't happen by accident. It takes a lot of intentionality. It's half science, half art — and a little bit of luck.”