Top, Shipyard Brewing Co. co-founder Fred Forsley, center, is joined by developer Nathan Bateman and Portland Economic Development Director Greg Mitchell Monday for the announcement of $18.4 million in new development in the city. Below are renderings of the two buildings announced. (BDN photos by Troy R. Bennett)
Fred Forsley is best known as the co-founder of Shipyard Brewing Co., the largest and most widely recognized player in Maine’s now exploding craft beer industry.
Shipyard is now the 15th largest microbrewery in America, producing 80,000-plus barrels of ale every year. But in the early 1990s, it was an ambitious startup beginning to experience more demand than it could keep up with at its small brew pub in Kennebunk.
Forsley and his team secured a tax increment financing (commonly referred to by the acronym TIF) deal with the city of Portland, allowing his brewing operation to expand into a former foundry site near the downtown in 1994.
At a news conference Monday, Forsley announced two new nearby projects in the city worth a total of $18.4 million, and described the development as a direct descendant of that first tax deal the city offered his company more than two decades ago.
“This area of town, 21 years ago was an abandoned factory with a fence around it,” Forsley told reporters at Shipyard headquarters Monday afternoon. “This TIF has led to 110 jobs just in Portland, and 800 across the state of Maine.”
Here’s how TIFs generally work, for the uninitiated:
A developer builds or renovates a property, adding taxable value to it. The municipality continues to receive the property taxes from the property it had been receiving before it was built upon or renovated, but agrees to let the developer keep some or all of the new additional property tax revenues above and beyond that previous amount, as a form of financial reward for having invested in the property.
In the case of Shipyard, the company kept 90 percent of the additional property tax payments for five years, then 50 percent of the taxes for five years after that.
Developers and city officials trumpeted plans for a new building at 16 Middle Street today in Portland. The $11.5 million project will include retail space on the first floor and office space on floors 2-5. (BDN photo by Troy R. Bennett)
By the time that TIF had expired, Shipyard had gotten its footing and Forsley’s team was stable enough to make another deal. About a decade ago, he carved off portions of Shipyard property for the Ocean Gateway parking garage — which he also helped fund and secure a new 15-year TIF deal for — and then subsequently a Marriott hotel.
Those additions to the neighborhood then helped set the stage — in the form of beautification, traffic and capacity — for the projects he announced Monday, Forsley said.
The two buildings, at 185 Fore St. and 16 Middle St., will not require any TIF help.
“16 Middle would absolutely not be possible without the parking garage,” said Nathan Bateman, one of three Batemans behind Bateman Partners, LLC, a development group working with Forsley on the projects.
So, if you’re scoring at home, the TIF helped build Shipyard, which created the necessity and interest in a parking garage, which created the vehicle capacity for a hotel and, now, two new buildings.
Forsley said the dilapidated factory of the early 1990s generated about $12,000 in property tax revenue for Portland annually. His thriving Shipyard campus now pays about $100,000 in property taxes, and he said adding the two new buildings will put that yearly bill up around $300,000.
“These two projects will complete this municipal block,” Greg Mitchell, the city’s director of economic development, said Monday. “This area in Portland was in desperate need of private sector investment.”
About those buildings. Each will be approximately five stories, with 185 Fore St. boasting eight luxury condominiums on the upper floors and the already established Nine Stones spa on the first.
(Those condos will go for between $400,000 and $1 million apiece, and four of them are already leased out.)
By contrast, 16 Middle St. represents what the developers are calling the “first new Class A office space” in the downtown in years, with retail/commercial space on the first floor as well.
Forsley and Bateman have Planning Board approvals for both buildings; 185 Fore St. is under construction and is on pace to be open for occupancy by this time next year, while groundbreaking for 16 Middle St. is tentatively scheduled for April 1, with completion in March of 2017.
And none of it would have happened if the city hadn’t been willing to give Forsley and his partners some tax breaks more than 20 years ago, the Shipyard co-founder said.
Tax increment financing is often derided as a too-generous government giveback that puts more money in the pockets of private developers at the expense of public needs, when those developers could’ve profitably funded their projects without the help.
To be clear, there are cases where that happens, and not every tax deal is a clear victory for the municipality. Sometimes a city or town gives up revenue with hopes that a developer will create more jobs with the extra money, and sometimes that city or town doesn’t get everything it bargained for.
But sometimes, Forsley, Mitchell and Bateman argued Monday, such a deal starts a chain of events that turns $12,000 in property tax revenue into more than $300,000 annually, plus hundreds of jobs.
Developers and city officials trumpeted plans for a new building at 185 Fore Street today in Portland. The $6.9 million project is slated to have first floor retails space and eight condos ranging in price from $400,000 to $1 million. (BDN photo by Troy R. Bennett)
