SCARBOROUGH – With a March 12 deadline looming for the start of construction on a 260,000-square-foot commercial center, and no tenant in hand, New England Expedition II has asked to be excused from its contract zoning agreement with the town of Scarborough for development of the 32.65-acre Gateway Square, at the corner of Payne Road and Haigis Parkway.
On Feb. 6, attorney Rick Shinay, of Portland-based Drummond Woodsum, appeared before town councilors on behalf of the property owners to ask for “maximum flexibility” moving forward. That, said Shinay, meant waiving a requirement that at least 100,000 square feet of space be built out and ready for lease. That provision was added to the contract zone in March 2010, adding three years to a project that was already three years overdue at that point.
A contract zone is essentially a deed covenant written and enforced by a government entity.
The Gateway Square was originally conceived as a campus-style office complex and companion to the Gateway Shoppes, which houses Cabela’s and several other retail stores across Payne Road from the site. The original purpose of the contract zone was to guarantee the town a certain amount of development in exchange for allowing Cabela’s to exceed by 110,000 square feet a limit in place at the time of 20,000 square feet on retail stores in the Haigis Parkway zone. The limit has since been expanded to 80,000 square feet, with 150,000 square feet at the Haigis Parkway intersection with Payne Road.
At the time, it seemed like a good bet. Fairchild Semiconductor had signed on to make the site its world headquarters, and even broke ground in late 2008, but pulled out at the onset of the national recession. The company eventually bugged out completely, moving its corporate offices from South Portland to San Jose, Calif., in early 2011.
Shinay’s proposal is for the seventh amendment to the contract zone agreement since it was created in January 2007, this time waiving the minimum construction time limit.
“This is the seventh edition of the amendment and therein suggests the level of complexity and confusion that been associated with this since 2007,” said Town Manager Tom Hall. “Many, many things have happened since 2007, not the least of which alleviated that most fundamental issues [of building size limits] that gave rise to this agreement in the first place.”
“It is no longer a relevant or feasible target given the likelihood that development at The Gateway Square will proceed much differently than the development shown on the approved site plan,” wrote Shinay in a Jan. 16 letter to the council, in which he noted that if and when hammers start to swing, what goes up is liable to be so different from original hopes that New England Expedition will have to go before the Planning Board, regardless.
Although he did not give a dollar figure, Shinay argued before the council Feb. 6 that New England Expedition had kept good faith with the town by investing in clearing, grading, roads, utilities, storm drains and sewer lines.
“They’ve got everything there except a building and a tenant,” he said.
Since The Gateway Square separated from The Gateway Shoppes as New England Expedition II, it has stayed current on all taxes, insurance fees, sewer charges and loan payments, said Shinay.
The town has the lot assessed, with its improvements, at $4.9 million. Hall said the property owner has sunk “somewhere around $6 million” into the property, between site improvements and the $2.9 million purchase price.
Barry Feldman, president of New England Expedition parent company Feldco Development, said last week he still hopes to finish the project.
“The vision remains the same,” he said. “We want to build a first-class office campus. That was the original vision and that remains our intent. Unfortunately, with the economy the way it’s been the past three years, there are currently very few parties interested in brand-new construction.”
“Most companies in Maine are staying put or else moving into existing buildings,” said Feldman.
The Planning Board was scheduled to hold a public hearing on the contract zone amendment Tuesday evening, while the Town Council was set to hold its own hearing and a final vote Wednesday. Both meetings took place after the deadline for this week’s print edition of The Current.
However, based on comments at the Feb. 6 first reading, it appears the council is inclined to favor the request.
“I think there’s been some tremendous external economic factors beyond the control of the developer,” said Hall, “and the reasons for the agreement have been mooted and even reversed by subsequent council action.”
“It’s a reasonable request certainly, given the circumstances,” said Councilor Judy Roy. “But it’s certainly reason for us to think long and hard before we ever do another contract zone, because one can never anticipate financial circumstances such as we’ve been through.”
“I’ve been through all seven amendments and agree there’s probably no need for any more contract zones in the future,” said Chairman Ron Ahlquist.
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