Concern is mounting in Biddeford that the sale of the Pepperell Mill Campus could lead to dramatic rent increases in the complex and impact market rates throughout downtown.
While the developers who are buying the campus say they have not decided on across-the-board rent increases, they have spoken publicly about their belief that the residential and commercial rents are 25 to 50 percent below market rates. Those comments stoked fear among tenants and community members that the 152 families and 150 small- and medium-sized businesses in the redeveloped historic textile mills could see significant increases in their rent at a time when affordable housing is in short supply and businesses are dealing with pressure from the pandemic.
“There is definitely a frenzy of concern from folks who are going to be impacted by these rent hikes,” said Maine House Speaker Ryan Fecteau of Biddeford, who noted that rent at the Pepperell Mill Campus is “a driver of what is considered market rent throughout downtown.”
After news of the pending sale of the sprawling downtown complex broke this week, local and state leaders began receiving calls and emails from people concerned about the impact of significant rent increases. The city’s legislative delegation and mayor requested to meet with buyers Chris Rhoades and Andrew Preston to better understand what may happen after the sale is finalized later this year. That meeting is expected to take place as early as next week.
Rhoades and Preston, partners in the Maine projects of Texas-based investment group Presidium, were behind the conversion of hundreds of military housing units to private housing at the former Naval Air Station Brunswick, now called Brunswick Landing. They also have purchased Portland’s iconic Time & Temperature Building and plan to convert it into a hotel and retail space.
“I think people are extremely concerned,” Mayor Alan Casavant said. “It doesn’t just center on the increases in the mill complex itself, but the ripple effect it could have throughout the community.”
The redevelopment of the former textile mills has long been touted by city officials as a key part of the downtown revitalization that Biddeford has enjoyed in recent years. The mill buildings are being sold by Doug Sanford, who bought some of the complex in 2004 and the rest in 2010 and converted some of the buildings into apartments and commercial spaces.
Rhoades and Preston expect the sale to close by mid-December. They say they hope to build on the conversion into apartments, offices and retail space that has been underway for the past 15 years.
Kristina Alving, head baker at the Jackrabbit Cafe in Biddeford’s Pepperell Mill Campus, makes chocolate brioche in the kitchen Friday. Shawn Patrick Ouellette/Staff Photographer
The buyers highlighted the success of the Pepperell Mill Campus in a video posted on the online real estate investment platform CrowdStreet.
INVESTMENT VIDEO DISCONCERTING
“We’re going to use best practices from Presidium and their established team to come in here and raise rents, do some capital improvements on the location,” Preston said. “We feel rents are 35 to 50 percent below market on the commercial and approximately 30 to 35 percent below market on the residential.”
Monthly rent on residential units on campus currently range from $1,200 for a studio to $2,400 for a luxury two-bedroom.
Andrew Preston and Chris Rhoades, right, photographed last year at the Time and Temperature Building in Portland, expect to close on their purchase of Biddeford’s Pepperell Mill Campus by mid-December. Derek Davis/Staff Photographer
Rhoades said this week that he and Preston commissioned a market study and determined that the current rents, both residential and commercial, are about 20 to 25 percent below the market rates. He said they will probably raise rents as tenants move out but haven’t made a decision on across-the-board rent hikes.
Matt Meza, house counsel for Presidium, said in a statement Friday that Presidium “is committed to continuing the remarkable legacy of Doug Sanford and his important work to revitalize downtown Biddeford.
“While we are unable to discuss specifics at this time, we look forward to meeting with local leaders in the near future to discuss our plans for the mill and how we can best positively contribute to downtown Biddeford’s renaissance,” he said.
Casavant said the statements in the developers’ video pitch to potential investors were “disconcerting” and raised questions about their intentions.
“Biddeford has come a long way and we’ve done so by nurturing small businesses and attracting people who see Biddeford as a desirable place,” he said. “I don’t want that jeopardized because people see it as a chance for profit. That’s not what Biddeford is about.”
City Councilor Amy Clearwater, whose ward includes the Pepperell Mill Campus, said she “could not believe what I was seeing” when she watched the video for investors.
“Affordable housing is one of the largest challenges facing our state and it is outrageous that investors could help our downtown price out over 150 renting families and 150 small businesses,” she said in a statement. “The pitch to hedge funds they’re advertising is that they can raise the rents in a substantial way to get a return on investment on the backs of our neighbors. I see that as tragically shortsighted for what our community needs and deserves.”
‘A PUNCH IN THE GUT’
Anna and Bowman Brown moved to the mill in early 2020 as they prepared to open their restaurants, Elda and Jackrabbit Café, in another building in the complex. They signed a 10-year lease for their commercial space, but residential leases must be renewed every year. Both were shocked when they heard about the potential for large rent increases.
“It felt like a punch in the gut,” Anna Brown said.
Because of their 10-year commercial lease, the Browns are unlikely to see an increase on that front in the near future. But they worry that a big increase in the cost of their housing could make it unaffordable to continue to live and work in the same place. Beyond that, they are concerned that rising rents could negatively impact recent progress in the city.
The redevelopment of the former Pepperell textile mills has long been touted by city officials as a key part of the downtown revitalization that Biddeford has enjoyed in recent years. Shawn Patrick Ouellette/Staff Photographer
“I don’t want the momentum to be squashed and halted for profit,” Anna Brown said. “I fear what such a drastic rent hike would do to that momentum.”
Bowman Brown said he already has heard from longtime residents and other business owners who plan to move out.
“If that’s their plan, to drive everyone out, it’s already working,” he said of the mill buyers.
Joe McKenney, co-owner of McKenney Photography, moved his studio out of the Pepperell Mill Campus at the beginning of the pandemic and is subleasing his space to a bookseller. He was considering moving back, but changed his mind because of the prospect of new owners and higher rents.
Now McKenney is concerned about what the sale could mean for other small-business owners.
“It’s a lot of overhead to absorb when you’re still in the throes of a global pandemic and sales aren’t what they used to be,” he said.
City Manager James Bennett said Friday that he is aware of the community concern. City staff has just started to look for ways to objectively measure potential changes at the mill complex and their possible impacts downtown.
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