Peter Michaud and other developers at The Downs are eager to get to work on the first phase of the town center. Drew Johnson / The Forecaster
Scarborough’s recent grappling with its growth management ordinance, or GMO, has residents and even some town councilors confused. The Downs has requested three different exemptions from the GMO since October 2021.
“I think it’s fair to say we were kind of at an impasse,” Town Manager Tom Hall told The Forecaster in an interview earlier this month. “They were looking to come up with, initially, a system to kind of run the table; to bring them through full build-out. I don’t think that was met with much level of comfort from the councilors.”
The town has since gotten a better understanding of the developers’ situation, he said.
Here’s a look at that situation and a general rundown of the GMO’s origins and its impact.
The old GMO
The GMO came into effect in 2001 following a big growth spurt in the late 1990s. Under the GMO, there was a complicated formula for the number of permits allowed per year as well as a separate reserve pool of permits.
“One bedroom would require half a permit, two bedrooms only two-thirds per permit,” Council Chairperson John Cloutier explained in an interview with The Forecaster earlier this month. “It was based on the cost to serve these different types (of units).”
While breaking units into fractions of permits was somewhat confusing, Cloutier said, it worked until the winter of 2020, when the town ran out of the yearly allotment of permits for the first time. “It was in December, so it wasn’t huge,” Cloutier said, but just five weeks into the next year, the town ran out of all of its 2021 permits.
The reason for the sudden draining of permits was due to multiple factors. One was that The Downs was ramping up production on its multi-phased downtown development that includes a mix of industrial, commercial and residential use. Another was the lack of housing in Greater Portland, spawning more multi-unit developments in town – rather than the naturally slow-paced construction of individual, single-family homes.
“The market was getting really hot,” Cloutier added. “Developers were like, ‘Well, jeez, I don’t know if I’m going to be able to get a permit at the end of the year, I better pull it now.’”
The new GMO
The council passed a new GMO in May 2021, setting a total of 144 residential building permits to be allocated per year. It came into effect in June of that year.
The cap of 144 is derived from a state regulation that allows a town to have a GMO but requires them to allocate at least 110% of its 10-year average of building permits given. For Scarborough, that is 144.
Developers are each allowed up to 20% of those 144 permits, however, developers in a designated growth area, which The Downs is, are allowed up to 30% of the permits, equaling 43 units. Building permits for affordable housing are exempt from the GMO.
“One of the changes we made with the new GMO is, you can’t pull the growth permit until you’re ready to pull the building permit,” Cloutier said, adding that it helped close the “loophole” that allowed developers to take out a flurry of permits at the beginning of the year. “But there were some consequences to it: If you’re a small developer, it creates more risk for them because they have to have their architectural plans ready to go, and they don’t know if they’re going to be able to build it.”
The lag time from their initial exemption request in October 2021 to where they are today “has definitely had an effect,” on The Downs, Peter Michaud, managing partner at Crossroads Holdings, said in an interview last week. “No question about it.” Crossroads Holdings is the developing company at The Downs.
Developers at The Downs were given 104 permits under the revised GMO, which expired at the end of 2021. This year, they were limited to 43; too few to complete a single multi-use, multi-family building planned for the initial phase of the town center.
“When we put one of those building up in a downtown, that could have as many as – just that one building – 50 units,” Michaud said, and they need dense, mixed-use buildings to support businesses to make a town center viable.
Developers also expect the wait to build will negatively impact the project financially starting next year. From approval to being fully constructed and ready for occupants, Michaud said, the whole building process takes 18 to 24 months. He predicts 60 to 70 units ready for occupants by the end of 2023, compared to 120 this year.
Meanwhile, the developers are reserving space in the town center for a community center and potential new school building, as well as helping execute a traffic improvement plan. The traffic improvement plan is a collaboration between the town, the developers, and the Maine DOT, with improvements taking place along Route 1 and Payne Road. Much of the improvements are in the form of adaptive traffic lights as well as addressing walkability and safety at 37 intersections.
“We’re doing more than just kind of fixing the problems we create,” Development Director Dan Bacon told The Forecaster in an interview earlier this month. “We’re fixing problems that haven’t been fixed by others because other development projects have paid in (traffic impact fees) and then expected improvements to be done, but the town didn’t have enough money.”
The ‘disconnect’
The town manager said he has grown to recognize the pinch the developers have been put in.
“To secure financing, they need the upfront assurance that they’ve got the permits available to them before they commit the resources,” Hall said. “That’s been a big disconnect between the town and the developers – us fully appreciating the cycle of development; the sort of risk that they must assume to get a project moving.”
But while the developers’ concerns are relevant, so are the concerns residents have about the pace of growth in the town, Hall said.
“It may manifest itself in the fact that they have to circle the parking lot at Hannaford to find a space,” he said, “or they can’t find a parking space at the beach, or they’re going to wait for another cycle at the light to get through. To the average resident, it’s those sorts of things that are tangible.”
Part of the reason developers are frustrated with the lack of permits is that they are trying to execute the town’s comprehensive plan, which calls for a downtown consisting of roughly 2,000 units to be developed over 20 years.
“The comp plan is the centerpiece for this whole deal,” Michaud said. “When you really come down to it, and we did our master plan, which was approved by the Town Council and Planning Board, the plan called for 2,000 dwelling units over 20 years.”
Hall agrees.
“There’s 20 years of documented evidence on the town side that this is our vision,” he said. “They’re just the ones that are executing it.”
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