Last week, the Biddeford City Council approved a development agreement for the Riverdam building on Pearl Street, that could, after completion, look like this artist rendering. SUBMITTED IMAGE

BIDDEFORD — Redevelopment of the Riverdam Mill is in the offing, thanks to action taken by the Biddeford City Council earlier this month.

On May 7, the council voted to enter into a Joint Development Agreement with Draft Room LLC for development of the Riverdam Mill building. It also approved creation of the Riverdam Municipal Development Tax Increment Financing District. Both measures passed 7-2, with Councilors John McCurry and Robert Quattrone voting in opposition in both instances.

Under the Tax Increment Financing, or TIF, agreement, the council is granting a credit enhancement with to Draft Room to aid with development of Riverdam Mill, which has been described by city officials as one of the more problematic properties in the city’s mill district.

Plans call for Tom Watson, a principal of Draft Room who has an option to purchase the building from owner Stephen Goodrich, to build 71 residential rental units — 10 percent would be affordable units rented to those who earn up to 100 percent of the area median income — create more than 13,000 square feet of commercial space and to continue operations of Dirigo Brewing and Stonefort.

The TIF credit enhancement would shelter the increased value of the redevelopment of the property for 20 years, so that aid from the state for education and for the city’s general fund isn’t dramatically reduced and also so the city doesn’t have to pay a much larger share of the York County tax bill. “Because of the nuances within state law, nearly 50 percent of new taxes that are generated from new development is lost due to a tax shift,” Biddeford City Manager James Bennett said in a memo to Biddeford Mayor Alan Casavant and the Biddeford City Council dated March 29.

Over a period of 11 years, the credit enhancement would refund to the developers $1.9 million in property taxes that comes from the increased value of the property after redevelopment, money which would otherwise go to the city. The city would retain about $19,000 it currently collects in tax revenue for the property.

Bennett anticipates the value of the property to increase from $1 million — the current value — to about $10 million when the project is completed.

In addition to the current $19,378 in taxes per year that would go to the city’s general fund for the life of the TIF, more than $1.4 million of tax revenue produced during the 20 years by the new value from the project would go into the city’s TIF to pay for improvements in the downtown and mill district. The amount going to the city could be even higher “if the value of he building increases at a rate higher then we have projected,” Economic Development Mathew Eddy said in an email on Friday.

In Bennett’s memo, he said the credit enhancement is necessary to push the project forward. “Several different parties have made significant attempts to rehab this building and make the project(s) work financially. Each party eventually walked away. The City has had intimate knowledge of each party and their financial modeling. The only conclusion is that the market rents are not high enough for a rehab project to work. Left to the private market place, the building will remain much as you see it today.”

Councilor Mark Lessard echoed that sentiment during initial deliberations in April. “Over the past 10 years, interested parties have walked away from this particular site due to its structural issues, and it can take years for another proposal like this to come around again,” he said. “Investment begets investment, and we are in a really hot spot right now to be able to take advantage of these kinds of opportunities.”

In addition to the TIF, the council approved a joint development agreement between the city and Draft Room.

Under the joint development agreement, the city would provide $500,000 for the demolition of the southwest corner of the building and would be responsible for repairs and maintenance of the easements to the RiverWalk and a river retaining wall. Removing the corner of the building will allow for the walk to sit on the wall, not cantilever over the Saco River, Eddy said. It will also provide an area to create a new public space that will become part of the RiverWalk design.

In addition, not only would property be developed and bring new residents and businesses to the area, but also the city would receive easements for the further development of the RiverWalk including ADA access to the RiverWalk through elevators within the Riverdam building, in perpetuity. The owner would be responsible to maintain the elevators and access to them within the building, Eddy said.

 The RiverWalk project, which will open up public access to the river and provide necessary pedestrian connections through the downtown, is reliant on these easements in order to move forward, officials say.

“When I was a kid, growing up in Biddeford, I was never allowed to see the Falls on the Saco River. I did not even know that it existed. Today, because of the RiverWalk, we can see the Falls and enjoy the river’s beauty,” Mayor Alan Casavant said when the issue was first discussed in April. “This proposal allows the city to continue our plans for the river. It also allows the RiverWalk to become a focal point of all the new development and activity that we see in the downtown and mill district. The Riverdam developer has an excellent reputation, and with his partnership, we can open up more of the RiverWalk for all to enjoy.”

Not all on the City Council were in favor of the granting the credit enhancement to the developers.

Council President John McCurry, who along with Councilor Robert Quattrone voted against it, said in April that “a TIF is a great thing. It shelters the money. (But) it’s even better when we get all the money. At some point we have to be able to stop giving money to get people to invest.”

On May 7, he said he was against the TIF for the same reasons he expressed previously.

Although she wished the project would provide more than 10 percent affordable units, Councilor Amy Clearwater said in April she favored the credit enhancement because “bringing more people to this are right now has a catalyzing effect.”

On May 7, Councilor Michael Ready expressed that he also hoped that more than 10 percent of the units would be affordable units, but added “I guess it will do for now.”

Ready said he was pleased that the city would have the ability to ensure those units remained affordable. “We’ll have proof of that every year,” he said.

Councilor Michael Swanton also voted for the credit enhancement.

“It’s a shame to turn (the Riverdam building) into a vacant lot,” he said in April. “Vacant lots don’t pay taxes.”

Stephen Goodrich purchased the property at 24 Pearl St., in January 2009 for $500,000. It is currently assessed at $827,000.

Built in 1900, the 3 1/2 story building contains 65,500 square feet of living space and sits on about 1 acre of land, according to the city’s online assessment database.

— Associate Editor Dina Mendros can be contacted at 780-9014 or [email protected]

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