2018-10-05 / Front Page

Crossroads moves into Phase 2

Public hearing to be set for Oct. 24
By Duke Harrington Staff Writer


Scarborough Library Director Nancy Crowell, right front, logs questions while Assistant Town Manager Larissa Crockett provides answers during a Sept. 24 workshop, held at the library, on a tax increment financing/credit enhancement agreement deal that would return up to 40 percent of property valuation from new development on the Scarborough Downs property to project developers for 20 years, followed by another 10 percent for a decade after that. (Duke Harrington photo) Scarborough Library Director Nancy Crowell, right front, logs questions while Assistant Town Manager Larissa Crockett provides answers during a Sept. 24 workshop, held at the library, on a tax increment financing/credit enhancement agreement deal that would return up to 40 percent of property valuation from new development on the Scarborough Downs property to project developers for 20 years, followed by another 10 percent for a decade after that. (Duke Harrington photo) The Crossroads Holdings redevelopment of Scarborough Downs has moved into its second phase as Scarborough officials circle in on a tax rebate deal to enable that construction.

According to town council chairman William Donovan, a final vote on creation of a Downtown Tax Increment Financing (TIF) District and an associated Credit Enhancement Agreement (CEA) for the Crossroads developers will not happen until after the Nov. 6 election.


Rocky Risbara, top right, co-owner of the Crossroads Holdings development firm that plans to remake the 500-acre Scarborough Downs property as a mixed use village center, fields a question from Juneberry Lane resident Ken Johnson, center, during a Sept. 24 workshop, held at the town library, on the tax increment financing/credit enhancement agreement deal that Risbara and his partners say is integral to success of the project. (Duke Harrington photo) Rocky Risbara, top right, co-owner of the Crossroads Holdings development firm that plans to remake the 500-acre Scarborough Downs property as a mixed use village center, fields a question from Juneberry Lane resident Ken Johnson, center, during a Sept. 24 workshop, held at the town library, on the tax increment financing/credit enhancement agreement deal that Risbara and his partners say is integral to success of the project. (Duke Harrington photo) “We have been and are holding public informational meetings just about every week this month,” Town Manager Tom Hall said on Wednesday, Oct. 3. “We are moving fast on this, but I feel confident that we are giving the public every opportunity to ask questions and be informed about every aspect of this project.”

Crossroads Holdings completed its purchase of the 500-acre Downs property in January, paying $6.7 million for what is now home to the Scarborough Downs harness racing facility and surrounding woods.

The company is a partnership of William, Marco, and Rocco Risbara of Risbara Bros. Construction, along with Peter and Richard Michaud.

A conceptual master plan for Phase 1 of the development got a nod from the planning board in April.

Phase 1 is slated to include 56 multi-family apartment units, 24 condominium units, and 24 duplex cottage units, along with a 12-bed memory care facility and 30 single family homes on 57 acres abutting Route 1 at Enterprise Drive and Sawyer Drive.

Rocco Risbara has said he expects to receive final approvals on that section of the property by the end of this month.

Phase 2 is on the north side of the Downs property, adjacent to Payne Road, a 148- acre swath being touted as the development “Innovation District.” It will be home to light industrial manufacturing, research facilities, and food and beverage production plants, among other uses.

“It’s all those kids of things there is really no space for in town of Scarborough in greater Portland,” said Dan Bacon, a former town planner for Scarborough and now a planning project manager at South Portland engineering firm Gorrill Palmer, for whom he is spearheading Crossroads presentations before the planning board.

According to Bacon, who spoke at Monday’s debut presentation of Phase 2 before the planning board, there is currently “just over a 1 percent vacancy rate for this type of space,” across greater Portland.

“So, we see this as a great opportunity to provide space that is very much in need,” Bacon said. “And we see it as a quality employment location with a great ROI (Return on Investment) for the community, that can be a significant tax revenue generator.”

Risbara has said his firm already has two technology companies on the line and has pushed timely creation of a Downtown TIF and CEA as integral to the project.

“We are in a situation now where we have to make a firm commitment to major users,” he told about 50 people gathered at the town library Sept. 24 to hear details of the TIF/ CEA proposal.

“That commitment says we will have a building ready for you to occupy by a certain date,” he said. “If we don’t start [construction] immediately, we cannot make that leap. We have a contractual obligation to those dates. If we don’t have participation from the town, we can’t take a chance on getting all of that infrastructure into the ground on that far end of the property.

“I’ve been saying, ‘Now, now, now,’ for two months. Well, now is now, folks. We have to sign these contracts or they’re gone,” Risbara said. “And if we lose them, we lose that entire light industrial part of the project. Immediately.”

As currently envisioned, the CEA would return 40 percent of the taxable value of all new construction on the Downs portion of the new Downtown TIF District to the Crossroads partners. The full TIF district is slated to run of the Route 1 corridor to include the town office/schools campus and the Oak Hill business district.

The 40 percent return to the developers would be locked in for the first 10 years of the 30-year TIF.

Risbara has said his firm will roll those returns back into the site to fund future construction of roads and utility lines needed for each subsequent phase of development. The Phase I residential development, for example, would help pay for the infrastructure needed to build the Phase II light industry sites.

To ensure that happens, the CEA deal would change as time goes on in the 30- year agreement. In years 11-15, the return rate to Crossroads could drop to 25 percent if certain development targets are not met, including construction by year 10 of at least 600,000 square feet of non-residential space

After Year 15, the return rate could again drop to 25 percent if Crossroads has not by then built 900,000 square feet of non-residential and finished infrastructure necessary for planned development.

However, developers can get a “bonus reimbursement” of 10 percent of TIF revenues between years 20-30, up to a maximum of $2 million per year, if the project has achieved “desired development.”

To qualify, goals to be met by year 20 would include creation of at least $615 million in new taxable property value, including at least 1.2 million square feet on non-residential space, while having already reached a maximum cap of $55 million returned at the previous 40 percent rate.

The $615 million figure for the bonus could be reduced to a $500 million hurdle if the town does not move forward on plans for a community center and associated Main Street area are not already under way.

Under the deal as it now stands, the developers would only have to save space in the development for a community center and downtown area for four years.

If he town has not moved forward with plans by then, the developers would be free to use that area as they choose.

However, at any rate, the entire Downs parcel would be limited to 750 single-family homes, this in hopes of driving more development to commercial and industrial uses, along with residential apartments in those mixed use areas, and ot help preserve open space.

In its projections, the Crossroads partners have said they anticipate full build-out of the Downs at year 30 of the TIF to include 1,986 housing units (including apartments, duplex buildings, and senior housing on top of the cap on single-family homes), 1.15 million square feet of commercial space, and 775,000 of manufacturing space.

The Scarborough Economic Development Corporation has predicted that all of that new development will spawn between 2,260 and 3,350 jobs in town.

According to numbers released by Crossroads, the full tax revenue of all the planned construction will add up to $615 million in 2018 dollars. A town projection is more conservative, at $581 million, and that includes new excise taxes as well as property taxes. It also anticipates an average 3 percent annual growth in the town tax rate.

The same estimate foresees $81 million in new tax dollars created by the Downs development going to the Crossroads group, with $500 million kept by the town.

Even after an anticipated $234 million in increased cost to the town to serve those new properties on the Downs lot — spent on things such as police officers, firefighters and teachers — the town would still end up banking $266 million more than it would in taxes on the property sits today, it says.

Still, not everyone is enamored of the TIF/ CEA deal.

“(Residents) should not be left with the impression that all the relevant financial details have been released,” said Steve Hanly, spokesman for grassroots advocacy group SMARTaxes, in an Oct. 2 email. “When I spoke with (councilor) Peter Hayes this morning, he still had not seen the detailed expense projections associated with the Downs project — costs of new students, new police/fire, etc. These amounts and the assumptions upon which they are based are absolutely critical to a full understanding of the financial impact of the TIF/CEA.”

For much of its economic forecasting, the town relied on an analysis of market conditions prepared by New York-based Camoin Associates.

In an independent assessment of those projections by Brinn Consulting of Cape Elizabeth, dated Sept. 19, Steven Brinn wrote that Camoin’s work was “based on relevant assumptions (with) sound methodology and analysis,” and that “the resulting recommendations and conclusions, are logical and supportable, particularly in years 0-10 of the study period.”

Brinn cautioned that “Years 11-plus, or Phase 3, account for the lion’s share of the build out” which, “in most every sector . . . assume larger footprints built in years 11- plus than in years 0-10 combined.

“If the town’s net present value in the preferred scenario only becomes highly positive because of the build out assumptions in years 11 onward, it becomes more uncertain for the town because the trend data and extrapolations become less predictable that far out in time,” Brinn wrote.

Additional public Q&A sessions on the TIF/CEA proposal have been scheduled for 6 p.m. on Tuesday, Oct. 9 at Dunstan Fire Station, and at 1 p.m. on Monday, Oct. 15, at town hall in Council Chamber A.

At its Oct. 3 meeting — which took place after the deadline for this week’s Leader — town council was scheduled to vote on setting a formal public hearing on the TIF/ CEA deal for Wednesday, Oct. 24.

Correction: A story in the Sept. 28 Leader should have said that a council TIF vote will take place after the November election

Staff Writer Duke Harrington can be reached at news@scarboroughleader.com.

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