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Photo / Rebecca Milliken
265 Cottage Road in South Portland is back on the market after plans for a boutique hotel by Northland Enterprises were derailed by the COVID-19 pandemic.
After two years of preparation, the plan by Northland Enterprises to develop the former Sisters of Mercy convent on Meetinghouse Hill in South Portland was close — so close — to becoming a reality in March.
The Portland development company had worked with neighbors and the city since 2018 on development of the 8,600-square-foot, 18-room house on 0.91 acres into a hotel.
Northland had also partnered with Migis Hotel Group, which operates seven small high-end hotels in Maine and two in Massachusetts, including the Black Point Inn in Scarborough, The Sparhawk in Ogunquit and The Inn at Ocean's Edge in Lincolnville.
Much of the past two years was spent trying to get the house, built in the 1860s, designated as historic. When that didn't pan out because of extensive early-20th century renovations, the plan was rejiggered. Rooms were added to make up for the cost that otherwise would have been covered with historic preservation tax credits.
The plan was set to go to the South Portland Planning Board at the end of March, with an eye toward the hotel's opening in April 2021.
"Then all of this happened," said Josh Benthien, Northland CEO.
Benthien had hoped to close on the building, owned by 364 Broadway LLC, soon. But, with the future of the economy, and lodging in particular, uncertain, the bank wasn't sure about financing. The owners had bought the property from the Sisters of Mercy in June 2018.
They'd been patient, but Benthien didn't want to keep them on the hook indefinitely.
Now the stately house is back on the market, listed by the Real Estate Store, of Scarborough, for $649,000.
Northland hadn't developed a hotel before — its properties include the renovated Sanford Mill, on Washington Street in Sanford, and Century Plaza in West Bayside, among others. But the big old white house sitting back from Cottage Road on a wide green lawn was enticing.
The location is hard to beat. It's within walking distance of a number of restaurants, as well as Willard Square and Willard Beach, and about a mile from Fort Williams Park in Cape Elizabeth.
South Portland had cracked down on short-term rentals, like Airbnb, making the future success of a small hotel more likely in the area, Benthien said.
The city also last year passed an adaptive use zoning exception that allows old homes to be redeveloped commercially in zones where they originally would've had to remain single-family homes.
A year ago, the South Portland City Council approved a recommendation by the city's Arts and Historic Preservation Committee to allow the property, and others like it, to be redeveloped.
An April 2019 report to the city council from City Planner Tex Haeuser said South Portland had more than 400 houses that "contain resources built in the 19th century or earlier," but fewer than 30 had been formally designated historic through the 2012 Comprehensive Plan Update.
"The city of South Portland currently provides no incentives, and contrarily, has no requirement to preserve historic resources," the report said. "It can be very expensive to rehabilitate older structures, and is often more cost effective for a property owner to demolish the existing building than to invest in the necessary upgrades."
The 265 Cottage Road property was cited as an example of the importance of allowing older large single-family homes to be redeveloped. The house is in a Residential District A Zone, which allows single-family houses, and limited governmental and nonprofit uses.
"The property was up for sale last fall and many potential buyers expressed interest in reusing the existing building, but all of the desired uses would not be allowed in any circumstance under the current zoning ordinance," Haueser said in the report. "The conclusion from these conversations was that ultimately one of two routes would be taken. The building would likely remain vacant and continue to decay indefinitely; [or] the property would be subdivided and the existing building likely demolished."
The house at 265 Cottage Road was built by Capt. David Boyd around the time of the Civil War. His son Albert became owner in 1877, and between 1900 and 1905 extensively renovated the house, extending the third floor, adding square footage and a portico with pillars on the front.
The house remained a single-family home until it was sold for a convent in the middle of last century. The nuns moved out a few years ago and the Diocese of Portland sold the property in 2018.
Benthien, who lives nearby, drove by it often. He felt drawn to the old, empty house.
Northland hadn't developed any hotels. "Our philosophy is to know what we don't know, and we don't know hotels," he said.
So, the company partnered with Migis, which leases and operates boutique hotels.
"We really wanted the right team in place," Benthien said.
Peter Twachtman, Migis chief operating officer and managing partner, told The Forecaster last year the the partnership with Northland would work well. "They get it, they are here for the long haul," he said. "It mirrors what our company does well.
"Our combined approach is, we see a wonderful building with a unique structure that needs to be something other than the single-family home it currently is.”
Benthien said his firm spent a lot of time working with neighbors and making sure there was buy-in before going ahead with plans.
"The city and neighbors were amazing in South Portland," he said. He said he is proud that they were able to get everyone on board before going to the planning board with a site plan.
Northland would have been able to push the construction schedule out another year or so, but they hadn't closed on the property when the pandemic hit. While the lender had been cooperative and proactive, the uncertainty of what will happen with the state's lodging industry was a concern.
"One of the things we're aware of is that the current owner has been extremely patient and cooperative as we've gone through this," he said. The pandemic issues were going to add even more time. "If it's six months later and we can't close, we've cause him six months of nothing happening with the property."
The listing for 265 Cottage Road went back up 10 days ago.
Since the COVID-19 outbreak, Benthien has been working with Northland's tenants.
He was a recent panelist in a Maine Real Estate and Developer Association forum on leasing during a pandemic, and stressed working individually with tenants, both residential and commercial, taking their financial situation into account.
At the Sanford mill, the 36 apartments have been 100% occupied since Northland opened it in 2013 after a five-year redevelopment. Payment plans during the pandemic have been managed with all the tenants, Benthien said. Things are being worked out with commercial tenants at the company's 330,000 square feet of commercial property in Portland, and other residential properties as well.
"Every month is a new challenge," he said. But he said that tenants, both residential and commercial, have cooperated and are working hard at keeping things balanced. "They've been great, but everyone's scrambling."
Construction of a 79,000-square-foot industrial building in Gorham for Harvey Performance Co. is going slowly because of safety and social distancing measures, but it's still moving along. Landry/French Construction is the contractor on the building at 49 Raceway Drive, which was scheduled to be finished in early June. It will likely be July or later before it's done, Benthien said.
He hasn't totally given up on 265 Cottage Road. If the opportunity were to arise when the future of hotel development is more clear, he'd definitely revisit the project.
"We had so much time, and money and energy invested," he said.
Good!! That house is among small residential homes (no one talked to me and my place looks unto there yard/driveway and house.) They want weddings and other functions so they can make money while ruining the value and quite nature of our neighborhood. How would you like large constant social gatherings 15 feet from your yard?
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