Developers are requesting a contract zone in order to redevelop the former Rich Tool & Die buildings in South Windham.

A Portland developer is requesting that the Windham Town Council designate a contract zone on the old Rich Tool & Die Mill property on Mallison Falls Road in South Windham to accommodate the development of a 110-unit residential community.

The 5.26-acre site is zoned Village Commercial and would allow about 74 dwellings on the property due to density restrictions, said Planning Director Ben Smith. According to the developer, Hardypond Construction, a 74-unit project would be a losing investment, since it would not sufficiently cover the significant costs of environmental remediation and redevelopment.

The contract zone, which was conditionally recommended in a unanimous vote by the Planning Board Monday and would be Windham’s third contract zone, would increase residential density to allow for 110 units, reduce rear property line setbacks from 20 feet to zero, increase the building height limit from 35 to 43 feet, reduce sight distance standards, reduce storm water flooding standards, and reduce parking space setbacks and size standards.

The site is just across the Presumpscot River from the Little Falls section of Gorham. Gorham Town Planner Tom Poirier on Wednesday described the development site as about 200 feet from Gorham. The Gorham Planning Department sent out a notice of this week’s meeting in Windham, but Poirier said his office would not likely be involved unless the proposal would alter the road.

If the Windham Town Council approves the contract zone at its July 28 meeting, Hardypond would still need to obtain site plan and subdivision approval from the Planning Board, according to Smith.

“You can think of the contract zone process as establishing the rules for the game,” he said.

If the council approves the contract zone, Hardypond plans to invest about $12 million in re-developing the four existing structures on the site and constructing two new apartment buildings, as well as other improvements, according to Frank Carr, the firm’s director of business development.

The existing mill building would become a 48-unit apartment complex, the machine shop a three-unit apartment building, and the boiler house a four-unit apartment building, while the two new buildings would contain 54 units.

According to Carr, the multi-family units will be available for rent at market rate, with about 30 percent of the units priced as “affordable” under the Maine State Housing guidelines.

“It’s very attractive for the up-and-coming millennial that wants to get out of the urban areas and move toward more of a recreational and suburban setting,” Carr said.

“Our market study shows there’s a demand for this,” he added.

Hardypond plans to start construction this fall, and open the re-developed mill building next summer, according to Carr. The goal is to open the entire complex, which will be completed in phases, in 2017, he said. The company also hopes to build a small kayak and canoe launch and recreational area for public use on the Presumpscot River.

The proposed contract zone would allow Hardypond to overcome several other hurdles to the redevelopment project. The contract zone would reduce storm water flooding standards, as part of the site is located within the mapped flood plain of the Presumpscot. The proposed contract zone would also remove minimum sight distance requirements, given that the opposing driveway entrances to the property on Mallison Falls Road are located next to a granite overhead bridge abutment for the Mountain Division Trail that blocks the sight of oncoming traffic.

The developer is seeking to have the site listed on the National Registry of Historic Places, as well, Carr said. The first sawmill was constructed on the site in 1746. The brick buildings on site today were built in 1891, after three major floods and a fire destroyed a succession of 18th- and 19th-century sawmills. The site was subsequently converted into a woolen mill, and, for a short period in the mid-1930s, a cardboard storage center. During World War II, the Steel Products Corp. produced block and tackle on the site for the war effort.

Following the war, the property was successively owned by Baker Ice Machine Co., American Wheelabrator & Equipment Co., and the Rich Tool & Die Co. In 1998, Buker Enterprises acquired the former mill site. Hardypond has signed a contract to acquire the site, assuming the contract zone is approved.

According to Smith, a new contract zone must be consistent with the town’s comprehensive plan. The “Vision for the Future of Windham” set forth in the comprehensive plan calls for the town to “retain and protect our rural character, scenic vistas, natural features and environment by maintaining a critical balance between preservation and development.” In a letter to Smith on behalf of Hardypond, analysts employed by the environmental consulting firm Fay, Spofford & Thorndike wrote that the zone complies with the comprehensive plan’s vision statement.

“This project aims to achieve this vision through moderate density redevelopment of a former historical industrial complex to provide residential apartment units,” the letter reads. “The new units will improve the diversity of the current housing stock available to the town, encouraging centralized growth, thus preserving alternative greenfield sites, and combating urban sprawl. The development will preserve the historic mill building, which is an integral part of the town’s industrial heritage, and use it as a centerpiece for a new multi-family residential community at the heart of South Windham.”

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