Portland’s regional bus system is considering an unusual proposal that would give the developer of a Westbrook complex access to millions in tax-free bond money and potentially increase transit ridership and revenue.
Greater Portland Metro is reviewing a long-term lease of new streets, sidewalks and other transportation infrastructure planned in Rock Row, a sprawling retail, entertainment and residential development envisioned on the site of a former quarry.
Waterstone Properties Group, the Needham, Massachusetts, company behind the proposal, needs a public or nonprofit agency to lease its planned road system to get $16.3 million in tax-exempt bonds it has requested through the Finance Authority of Maine.
Waterstone would pay Metro to lease its property and the bus service would help design a future transportation network in the 66-acre development.
“The compensation is good for Metro and good for taxpayers, but our whole goal is that this development going forward is going to be as multimodal and transit-oriented as possible,” Metro General Manager Greg Jordan said. “That’s our mission and what we are working toward.”
Metro’s board of directors has not voted on the proposal and it is still being vetted by Metro staff and its attorney.
The commercial development, bordered by Main Street, Larrabee Road and Interstate 95, could become a transit center for Metro buses to Westbrook and Gorham, an envisioned commuter bus service on the Interstate 95 corridor and even a passenger rail link, Jordan said.
“A transit hub at this site could make a lot of sense,” he said.
A 60-year lease would cover a road connecting Main Street and Larrabee Road, plus sidewalks, utilities and landscaping, according to a draft agreement. It could be expanded as the development grows.
Waterstone would be responsible for all maintenance, repairs and liability on its property, according to the draft.
A Waterstone representative did not reply to interview requests Thursday.
The development received city approval as a shopping plaza in 2016. It has since morphed into a mixed-use center with a food and beer hall, 750 apartments, offices, a movie theater, shopping and walking trails.
Phase One of the project, a shopping mall with a Market Basket supermarket as an anchor tenant, was approved by the Westbrook Planning Board in September. Waterstone has yet to file plans for other parts of the development, city planner Jennie Franceschi said.
The company has applied for tax-exempt bonds through the Finance Authority of Maine to pay for infrastructure on and around its property, including improvements to two nearby interstate exits, according to a notice to issue the bonds published this week.
Issuing bonds for a private development like this is new for FAME, said Chris Roney, the agency’s general counsel.
“This is the first one we’ve done, a public part of a private development,” he said. “That part is somewhat unique, but certainly permitted under our statute.”
As a quasi-governmental agency, FAME acts as a pass-through for nonprofits like hospitals and universities that want to access tax-exempt public bonds to pay for new buildings and other improvements.
“Neither the state of Maine nor FAME is at risk,” Roney said. “Whoever buys the bonds is providing money through us to the borrower and getting paid back from the borrower – we are only passing along the federal tax benefit.”
Public bonds have lower interest rates, so are cheaper financing than private borrowing, which could make it attractive for a project of Rock Row’s scale.
To receive that benefit, the borrower has to prove it qualifies under federal tax law, Roney said.
“I can’t tell you why their proposal is structured that way, but if it is it would have to qualify under federal tax law to make it work,” he said.
Waterstone also would get back half of the increased property value it creates through the development to spend on infrastructure improvements through a tax increment financing district approved by Westbrook.
The TIF deal is worth about $9 million over 25 years, Economic Development Director Daniel Stevenson said.
The other half will be used for economic development in Westbrook, particularly its downtown, Stevenson said.
Peter McGuire can be contacted at 791-6325 or at:
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