2014-05-16 / Community

Board moves forward on TIF proposal

Plan would allow for seasonal cottage development between Route 1 and Mountain Road
By Alex Acquisto
Staff Writer

ARUNDEL — The board of selectmen approved moving forward with the fi- nal stages of the town’s application for the Arundel Cottage Preserve Tax Increment Financing District (TIF) at its Monday meeting.

Creation of the 25-year TIF district would allow for the development of the seasonal Arundel Kennebunkport Cottage Preserve Resort on 160 acres between Route 1 and Mountain Road in Arundel.

The Massachusetts-based development team, REM Development, led by Joe Paolini, has proposed the construction of 260 seasonal cottages during the next 10 years.

The value of each is estimated to average $220,000. The estimated cost of construction for the 260 units is nearly $54.4 million.

According to a document drafted for the development program, “The development will provide economic benefit to the town by expanding its tax base, increasing employment opportunities, and further providing economic development activities that will facilitate additional commercial development. The district will increase private investment and jobs in the town directly through the development of seasonal resort units.”

An additional 9.2-acre parcel within the district, about 40,000 square feet, is proposed to be developed as commercial business or retail space, at a cost of $4 million.

The town anticipates the TIF will lead to an increase in captured value of adjacent land, which will help fund municipal infrastructural renovations such as a revolving business loan program and the possible construction of a sanitary sewer from Route 1 to the Kennebunk River.

The TIF is estimated to generate a captured assessed value of 75 percent, which will be divided between the town’s portion of the development plan (33 percent of newly-generated taxes) and the remaining percentage will go to the developer, via a credit enhancement agreement.

Town Manager Todd Shea reported that application fees and legal fees are considerably more expensive than the town previously thought.

The application for the TIF, along with credit enhancement agreement, will likely cost the town between $10,000 and $20,000, Shea told the board.

Further, Paolini and his team do not wish to fund a portion of the legal fees for the TIF district.

“His investment team is not interested in paying legal fees on the town’s end,” Shea said.

The funds invested for legal fees as part of the credit enhancement negotiations will likely be reimbursed once the value is confirmed in the district and it starts to generate income. However, with the town funding all of it, if Paolini and his team decide to back out as developers, the money will come out of the municipal fund.

“Can we put something in writing that says, if you back out of this development you have to pay half (of the legal fees)?” asked Selectman Jason Nedeau.

Shea agreed to approach Paolini with the idea.

A public hearing is scheduled for 6 p.m. Wednesday, June 11 at Mildred L. Day School.

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