2015-01-23 / Front Page

Arundel cottages on the fast track

By Duke Harrington
Staff Writer

Crews from Gorham-based R. J. Grondin and Sons work Monday to prepare a 159-acre site between Route 1 and Mountain Road in Arundel that, over the next decade, will transform into a $68 million gated community featuring 259 seasonal cottages. 
(Duke Harringtonphoto) Crews from Gorham-based R. J. Grondin and Sons work Monday to prepare a 159-acre site between Route 1 and Mountain Road in Arundel that, over the next decade, will transform into a $68 million gated community featuring 259 seasonal cottages. (Duke Harringtonphoto) ARUNDEL — Work has begun in earnest on Arundel- Kennebunkport Seasonal Cottages, a 259-unit gated community to be built out over the next decade on 294 acres at 1976 Portland Road (Route 1) in Arundel.

The development was made possible by a special town meeting vote last July to authorize a tax increment financing (TIF) district and development program. Voters also recently extended the definition of what constitutes a seasonal cottage from a maximum of six months of residency to eight months.

However, some unseasonably warm weather has impeded progress somewhat.

“We had to stop, the skid steers kept getting stuck in the mud,” developer Joe Paolini said at the Jan. 8 meeting of the Arundel Planning Board.

At that session, the board unanimously approved a new phasing plan for the $68 million project.

According to Rick Licht of Gray-based Licht Environmental Design, the development is to be built in five phases over seven years. The first phase would include cottages 1-11 and about $1.54 million in infrastructure costs, including water, sewer and streets. That would be followed by “Phase 1B,” or construction of cottages 12-31 and the site’s community center. The second phase will then include cottages 32-63, bringing infrastructure costs to more than $5.5 million.

“For a private project, even though there is a public partnership with the TIF deal, the project is cost-prohibitive to provide a 100 percent bond,” said Licht.

A bond serves as a guarantee, should a developer abandon an approved development, such as a new street in a housing subdivision, that it will get completed to town standards, using money set aside for that purpose.

What Licht and Paolini proposed instead was a rolling 90-day performance guarantee, under which Paolini would replenish a fund on every 75th day with estimated construction costs for the next 90 days.

“It’s a very safe process, where there’s always money capitalizing the performance guarantee in a three-month look out,” said Licht. “The reason for this is so the applicant does not have to put out an atrocious amount of money for a long-term project done in multiple phases.”

“We don’t want to tie up millions of dollars while we are doing some work, but not all of it,” Paolini said.

“So, the major difference between this and what we approved before is that we were doing it phase-by-phase,” said planning board Chairman Richard Ganong.

“Right, we’re sub-phasing it now, if you will,” Paolini said.

The new plan also was a hit with Phil Grondin, of Gorham-based R. H. Grondin & Sons, which has begun site preparation work.

“This is a process that gives us a lot of comfort going into development, knowing that as we do our job, we get paid,” he said.

“What concerns me is to make sure, if something goes wrong, we have the funds available,” said planning board member John derKinderen. “If you should go belly up, is there enough there to stabilize the site?”

“I don’t want to just stabilize it, I want it to be complete,” said Town Planner Tad Redway. “This is a little different than any project we’ve ever been involved in, because it’s multi-year, but, secondly, we are a partner in this. We’re a player. As a partner, we want to make sure everything is done right.”

Redway said the new phasing system essentially works as a stabilization fund to top off any portions of the project underway, should Paolini bail out, by making sure there’s always enough money on hand to finish the next 90 days worth of work, rather than letting the site lay fallow while creditors pick it over, if it comes to that.

“And we’re probably going to err on the side of caution for what work we think we’re going to be able to do in that 90 days,” Grondin said.

Under questioning from the board, Redway said the town has no particular liability for the project, should it get abandoned before completion.

“The only liability we have is that any TIF value we’ve captured, we have to use for the designated purpose,” he said. “There’s no other financial liability.”

Meanwhile, Paolini said he is anxious to get the infrastructure built out as fast as possible, so that he can begin building and selling site cottages.

“This is a really up-front heavy building project, so we’re really moving to get it done,” he said.

The cottages are expected to range in size from 850 to 1,350 square feet.

As part of the TIF deal, the town will retain 25 percent of the new property value generated by the seasonal cottage complex in its general fund. The remaining 75 percent of new taxable value will be split between the developer and the town, with 67 percent (up to an annual maximum of $10.1 million) returned to fund the cost of construction and 33 percent used by the town to address other infrastructure needs spurred by the growth spurt, such as police, roads and schools.

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