6/6/2006 - Tuesday, June 6, 2006

By KELLEY BOUCHARD, Portland Press Herald Writer

Copyright © 2006 Blethen Maine Newspapers Inc.


A student housing project planned for Marginal Way will get a $1.2 million tax break over 10 years even though some Portland city councilors say it won't have enough parking and many college students won't be able to afford the rents.

The council approved a total $6 million worth of property tax breaks Monday night for the multifaceted development planned for three acres of city land at Marginal Way and Preble Street Extension.

The parcel is at the edge of the up-and-coming Bayside neighborhood, right next to Interstate 295.

The deal includes a $4.8 million tax break over 15 years for an eight-story office building with street-level retail and a 430-space parking garage.

The developer, Theodore West of Cape Elizabeth, built the AAA Building at the same intersection.

Supporters said the tax breaks are necessary because the developers expanded their projects to meet city officials' demands for more parking.

As a result, their construction costs increased, largely because the site is a filled portion of Back Cove and requires massive pilings to be sunk nearly 150 feet below ground.

"The building is actually deeper than it is tall," said Greg Shinberg, West's spokesman.

The deal means the developers will receive rebates equal to 50 percent of the property taxes paid over the term of their individual agreements, said Jack Lufkin, Portland's economic development director.

The council agreed last fall to sell the city land for $1 million to West's company, Capital LLC, and its partner, Realty Resources Chartered of Rockport, which plans to build the student housing.

The sale agreement called for a tax break to be negotiated to help pay for the parking garage.

With little discussion Monday night, the council voted 6-1 to grant a tax break for the 72,000-square-foot, $19.4 million office building, with Councilor William Gorham opposed.

The council haggled some before voting 5-2 on the student housing tax break.

The housing will consist of two four-story buildings with 105 four-bedroom apartments and a 120-space, ground-level parking deck. When first proposed, it included no on-site parking.

Councilor Cheryl Leeman said she opposed financial support for the student housing because the developer has no agreement for guaranteed tenants with the University of Southern Maine, Southern Maine Community College or the Maine College of Art.

Joseph Cloutier, president of Realty Resources Chartered, said his $25 million project is aimed at attracting 4 percent to 5 percent of the college students living in Portland.

He said apartments in his project will rent for about $3,000 per month - about $750 per student.

Gorham questioned whether college students would be willing or able to pay that price.

"We're being asked to give a (tax break) to high-end housing," Gorham said before voting in opposition. "We're being asked to give away $1 million to a project that's going to fail."

Supporters said that if the student housing plan fails, the building will be converted to regular housing and the tax break will become invalid.

They said the project will answer a need for student housing and free up other apartments in the city.

They also said they expect the $6 million tax break to promote greater development interest in Bayside, including six acres of city land on Somerset Street that's up for sale.

"My hope is this will (encourage) others to jump into Bayside," said Councilor Edward Suslovic.

Both projects are expected to begin Planning Board review soon. The student housing is expected to open in August 2007, and the office building must be ready for its lead tenant by January 2008, Lufkin said.

Staff Writer Kelley Bouchard can be contacted at 791-6328 or at:

kbouchard@pressherald.com