The owners of Portland’s Time & Temperature Building are reconsidering their plans to convert it into a luxury hotel – weighing whether rising construction costs, staffing shortages, and financing struggles call for a new course.

Regardless of the final decision, it likely will be years before Portland sees the now-vacant building occupied and in use.

TT Maine Venture LLC, which owns the building, now has until January 2026 to start work after getting OKs from city planning officials to delay the project.

“In the wake of the pandemic, the global market is experiencing unparalleled shifts due to international supply chain disruptions, escalating labor costs, and a scarcity of skilled labor,” developer Chris Rhoades said in a statement. “These significant changes have prompted us to halt our construction activities on the Time and Temperature Hotel.”

Rhoades and business partner, Drew Preston, originally moved forward in 2021 with plans to convert one of Portland’s most iconic buildings into a 186-room luxury hotel with a rooftop bar, restaurant, retail stores, banquet, and meeting rooms. They hoped at the time to begin work in the fall of 2021 and have the hotel up and running by the end of 2023.

But in the year and a half, since the project was approved by the city planning board, the company has twice requested extensions to its permit, in August 2022 and May 2023.

Christine Grimando, Portland’s director of planning and urban development, said other developers are having similar struggles.

“We do hear from a lot of people building and developing in the city, and the state even, that the costs are very high and challenging right now,” Grimando said.

The costs for private construction, materials, components, and equipment are up anywhere from 8% to 11% from this time last year, according to data from the U.S. Bureau of Labor Statistics. That comes on top of what was already a 15% to 22% increase from 2021 to 2022. All the while, developers are struggling to hire workers – and they come at a higher price.

“The surge in subcontracting costs, fueled by numerous local projects, necessitates a period of careful consideration of all potential scenarios and outcomes,” Rhoades said.

It’s also costly to maintain a large, vacant building – especially a famous one like the Time & Temperature building that has badly deteriorated over the years. Ongoing expenses include security, upkeep, landscaping, heating, and real estate taxes. And covering those costs is, of course, harder when the property isn’t generating income.

“Projects are killed every single day because people can’t absorb the holding costs required in the city of Portland,” said Josh Soley, president of Maine Realty Advisors, a commercial real estate broker.

The Time and Temperature Building has long been a defining feature of Portland’s skyline. The 14-story tower at 477 Congress Street, one of the tallest buildings in Maine, first opened in 1924. Back then, when it was known as the Chapman Building, it had ornate architecture, upscale shops, a glassed-in mezzanine, and balconies illuminated by a massive skylight. The building has been home to a bank, Maine’s first arcade, the state’s prototype for a modern shopping mall, and, most recently, an office building.

It’s well-known and well-loved for its 9-foot-high, nearly 60-year-old digital sign that can be spotted from miles away. The sign displays the time, temperature, city information, and the “CALL JOE” advertisement for the law offices of Joe Bornstein, the late personal injury lawyer whose ads made him a household name in the state.

But after years of neglect, the building went into foreclosure in 2016 amid fire safety violations, issues with management, and worsening conditions.

TT Maine Venture purchased it for $9.8 million at a foreclosure auction in 2018.

At the time, Rhoades and Preston vowed to bring the building back to its “glory days.” They announced plans for the luxury hotel and then some in 2021. The 2022 launch then became a 2023 launch. Now, the 2023 launch has become a 2026 deadline just to start work. If they don’t, Grimando said, they will have to reapply and acquire updated permitting.

It’s unclear how much financing troubles have contributed to the delays. Rhoades declined to discuss how estimates for the project have changed, why the timeline for financing has stalled, and when the company expects to start construction. He did say that the project does not currently have any investors, though the plan is to utilize the state’s historic tax credit.

MAJOR CHANGES WOULD REQUIRE REVIEW

When TT Maine Venture does start work, the redevelopment plan might be entirely different.

Depending on the scope and scale of any changes, Grimando said, the project could need to go back to the planning board for review.

Amendments to approved plans are categorized as major or minor – with major amendments requiring review by the board and minor amendments reviewed by staff. An introduction of a new use that wasn’t part of the original approval also would need to be reviewed by the board, Grimando said.

She said the city hasn’t received a new application for the building, so it’s hard to say for now what specific changes in city approvals would be needed.

Rhoades said TT Maine Venture is starting to “reassess our current position” and consider alternatives.

“We are evaluating all options,” he said. “The zoning allows for most any type of commercial or residential use.”

Gregory Boulos, with commercial real estate firm The Boulos Company, says developers and residents alike are waiting to see what happens next.

“I think everybody’s curious as to what they’re ultimately going to do with the building,” he said. “I just know that ultimately, when it’s finished, it’s going to be an exciting project.”

Staff Writer Rachel Ohm contributed to this report.

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