When Joe and Sue Salisbury bought the Daily Grind in Westbrook last year, they started watching open storefronts and thinking about expansion.
Then they heard Maine Medical Center had bought One Riverfront Plaza and planned to move 500 employees to the vacant office just across the Presumpscot River from their coffee drive-thru.
They knew it was time. The Daily Grind will open a sit-down shop next door to the drive-thru, which will stay open.
“When that building sold, we knew that Maine Med was going to be there for the long term, and we really needed to jump on this opportunity quickly,” Sue Salisbury said.
Since Maine Medical Center’s announcement, City Administrator Jerre Bryant said his office has received an uptick in calls from small-business owners like the Salisburys who are considering opening or expanding in Westbrook.
One Riverfront Plaza is the largest office building in downtown Westbrook and is assessed at more than $20 million. As a nonprofit, Maine Medical Center will not pay property taxes. Still, Westbrook officials say they are already seeing signs that the economic development benefits from the sale will be to the city’s advantage.
“In an ideal world, would it be a tax-paying entity?” Bryant said. “Of course. But in total, it’s a real positive impact.”
One Riverfront Plaza opened in 2004 with 134,000 square feet of high-end office space.
To encourage economic development downtown, the city created a tax-increment finance district, or TIF, for the building. That meant the owner would pay only a portion of the property taxes owed each year. In fiscal year 2017, city records show that payment was less than $80,000.
TIF districts have a limited lifespan, however, and this one will expire at the end of 2022. At that time, the property tax bill for One Riverfront Plaza would have increased by about $300,000 annually.
But the building has been vacant for almost two years.
Disability RMS, a disability insurance provider and one of Westbrook’s largest employers, left for South Portland when its lease expired in January 2016. The building’s owner, a New Jersey investment firm called Pendleton Westbrook SPE LLC, was in financial trouble. By August 2016, U.S. Bank filed a lawsuit against Pendleton over nonpayment of the $20 million mortgage. The building was listed for sale this spring. Maine Medical Center bought it for $9.2 million, less than half its assessed value, in June. The city was not a party to the deal.
Now the office building will become one of 120 tax-exempt properties in Westbrook.
Those parcels are wide-ranging in value and use. They include railroad lines, government buildings like the post office and property owned by the Portland Water District. Others are churches, cemeteries, private schools, fraternal organizations and nonprofits like the Animal Refuge League.
Together these properties were valued at slightly more than $90 million in 2016, which equaled less than 5 percent of the city’s total valuation.
In Portland, by comparison, more than 1,300 of roughly 24,000 real estate accounts are tax-exempt. They have a combined value of $1.9 billion, which equals 26 percent of the city’s taxable real estate this year. Maine Medical Center alone has 59 tax-exempt parcels with a combined value of $266 million.
In some towns or cities, nonprofits make payments in lieu of taxes, or PILOTs. For example, the Westbrook Housing Authority paid about $4.7 million to the city last year for four housing complexes, and Portland received a total of $640,000 last year from 10 organizations with PILOTs. However, Maine Medical Center does not have any PILOT agreements on any of its properties in the state.
Clay Holtzman, director of communications and public affairs at Maine Medical Center, said the 500 information services jobs moving to One Riverfront Plaza are permanent and high-paying. The benefits for the local community outweigh the lost tax revenue, he said.
“I think 500 people year-over-year working in Westbrook could generate that $80,000 in terms of consumer activity,” Holtzman said. “I think that’s a fair case that it would be bigger than $80,000.”
He also noted Maine Medical Center will lease an adjacent 540-space parking garage from the city. That lease costs $13,770 a month, or $165,240 per year.
“We think this is going to be an economic catalyst for downtown Westbrook,” Holtzman said.
The TIF established 15 years ago won’t ever pay out for the city, but Bryant said there are benefits beyond the municipal balance sheet.
“Economically, it’s a real driver,” Bryant said.
Local elected officials and business people seem to agree.
Mayor Mike Sanphy said he’s heard from several merchants who are excited about the influx of customers.
“It’s going to give downtown a shot in the arm,” Sanphy said.
Abigail Cioffi, executive director of the Downtown Westbrook Coalition, said restaurants in particular see the potential for a lunchtime rush from One Riverfront Plaza. She is hopeful the move will draw more retail to the downtown area as well, like Lavish Earth, a holistic business and crystals store that just moved to 820 Main St. And she expects another announcement about a new business in the city center, but wouldn’t share more details yet.
“That built-in clientele (from Maine Medical Center) definitely helped push over this future business owner’s confidence in opening in the downtown,” Cioffi said.
In the meantime, the Daily Grind will open its sit-down shop at 820 Main St. The menu will expand to add soups and paninis to its current offering of breakfast sandwiches, fruit cups and coffee. The Salisburys hope to add evening hours with wine and beer in the future. The drive-thru, which is located immediately next door, will stay open.
“It’s definitely going to fill a need,” Sue Salisbury said.
When the Salisburys purchased the drive-thru from the former owner last year, he told them the departure of Disability RMS hurt the business. Now, they are looking forward to opening their shop in October, just in time for Maine Medical Center employees to arrive by the end of the year.
“It all came together as the perfect time to do this,” Salisbury said.
Megan Doyle can be contacted at 791-6327 or at:
mdoyle@pressherald.com
Twitter: megan_e_doyle
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