Commercial Considerations

November 05, 2012 - Windham – On Nov. 6, Windham residents face a $62 million ballot question asking them to pay for a sewer system to drain North Windham and Windham Center of harmful nitrates that are affecting the aquifer in North Windham.

The environmental concern, reviewed last week, is one issue that a sewer would reportedly solve. The other main consideration in the debate is commercial development in North Windham, and, more specifically, the ability a sewer system would give to developers wanting to build more and larger commercial enterprises.

In the ground under the stores and parking lots in North Windham are all sizes of septic systems, some old and some brand new, stretching from the Raymond line to the routes 302 and 202 rotary. That stretch of Route 302 is the collection range for the proposed sewer that would require all businesses in the corridor to connect at their own expense within a year of the system being built.

Large tracts of seemingly buildable land in the heart of North Windham can’t be developed due to the presence of the underground wastewater systems. So, to combat this physical restriction, developers have long eyed a sewer to allow more types of commercial use and more dense development in an area already known as a shopping mecca.

Despite being a commercial hub where businesses want to locate, state plumbing codes limit what can be erected in North Windham. Septic system density rates must be taken into account when building or remodeling a commercial or residential structure. Sometimes, especially for a business with heavy water usage – such as a laundry or restaurant – the cost of a system is a deal breaker for prospective developers.

Limits on development is a real problem, says North Windham-based commercial real estate broker Larry Eliason, especially in a still-sagging economy.

“The restaurant chains that come and look at Windham, they have formulas for site acquisition and site development,” Eliason said. “They’ll have a boilerplate kind of design for the size of the facility, parking land area, etc. And at the edge of the plan it says, ‘out to sewer.’ And we’ll say, ‘Well, no, we don’t have public sewer, you’re going to have to builld a private septic system.’

“And a lot of times the cost of installing the system and the cost of acquiring more valuable commercial land for septic just kills the deal because it’s cost prohibitive. Throwing a large private septic system into that equation really puts a curve ball in there.”

Eliason isn’t the only one who talks openly about what’s limiting North Windham’s growth potential. Town councilors and staff discuss it, as do most business owners that could benefit from more economic activity.

“I definitely think it would enhance the desirability for larger businesses like hotels and larger restaurant chains to come to Windham,” said North Windham Shopping Plaza manager Dave Bryan, whose brother, Tim Bryan, owns the strip mall-styled plaza. “I think that’s what’s keeping a lot of hotels and restaurant chains out of the city, because there is the problem of sewage, and the larger the business the larger the leech field has to be. And you put in a hotel or something and that’s going to need a huge leech field.”

A sewer would allow several things to take place in North Windham, proponents say. Not only does it allow larger companies to move in, it would allow denser development on smaller lots meaning more businesses could crowd into the Route 302 corridor creating a more urban and pedestrian-focused environment. That would bolster and aid the town’s newly proposed 21st Century Downtown Plan, which calls for more dense development in North Windham, development that would likely only be possible with a sewer system.

“I certainly think that the sewer going up Route 302 could generate some new commercial business,” said Bob Yates, owner of Sears North Windham and a longtime Windham businessman. “You can take a 2-acre piece of property but without a sewer you might need 4 acres just for a leech field. So, it substantially would increase the amount of property you would need without a sewer.”

Tom Noonan, another real estate broker based in North Windham, says the sewer would no doubt increase business prospects in town.

“If you had sewer in North Windham, what that does is free up the density for more intensive development. The reason we don’t have more big chain restaurants coming into town is if you had a 180-seat restaurant, you have to have roughly 7 acres of land [for septic],” Noonan said. “The state requires you have 66.6 square feet of land for every gallon of flow rate. I call it the Mark of the Beast rule. So every seat requires 20 gallons of capacity for your septic. If you do 180 seats, then you’re going to run into huge acreage, which is unfeasible. The large capacity restaurants that are in [North Windham] are all grandfathered restaurants. There are no new ones because they couldn’t comply with the state plumbing code.”

Cost considerations

Despite likely prospering from a sewer since it could bring more real estate activity to the area, Noonan is opposed to the Town Council-supported project since it would be cost-prohibitive on taxpayers and business owners.

“Well, obviously sewer would be of great benefit, but this particular project is too costly, in my opinion. Absolutely [it would bring more business], but we won’t have anyone to sell to because they’ll all be broke paying the sewer bill,” Noonan said. “And if I wasn’t getting the sewer, I wouldn’t be too excited about paying for it.”

Yates, at Sears, and other business owners said Windham taxpayers, most of whom would see no direct benefit since they live away from the proposed sewer line, would bear the brunt of the project’s $62 million cost, but they’d also bear the benefit as well down the road.

“I understand a lot of the townsfolk that are nowhere near Route 302 having to help in paying for the bill, and I would assume if the sewer went through initially the cost would be up, but as business moved in, that should lower the mil rate because of the expanded tax base,” Yates said.

Not only do sewer proponents say the sewer allows for more businesses to come to town, those businesses would be worth more, and the additional commercial taxation would benefit residential taxpayers, those who are effectively paying for the proposal, says Gary Crosby, owner of Sebago Plaza across from Norway Savings Bank.

“It’s not like I want to pay more taxes, but when you put in a sewer system, it makes the property more valuable and when property is more valuable, the town will go up on my tax bill, which relieves the burden of the residential tax bill. And every time a business pays more taxes, it’s less that the residents have to pay,” Crosby said.

Heavy water users

Most businesses in town are 2,000 to 3,000-square-foot storefronts or offices that generate little more sewerage than a typical residential home would. The major water users are laundry facilities and food processors, such as supermarkets.

Busy Bee Laundry, owned by George Bartlett, would be greatly impacted by having to pay a sewer bill. Bartlett has had his struggles with septic systems, paying $140,000 about a decade ago to improve detergent-related pollution seepage into the groundwater and another $32,000 last year when heavy summer use caused his septic tank to overflow. Bartlett says the septic system is set for another 10 years now, but that he almost went into bankruptcy twice to make the fixes. A sewer system, which he figures would cost him $20,000 to $25,000 a year in sewer rate fees alone, would likely break him.

“$20,000 to $25,000? That’s not affordable. I put in a septic system for $30,000 and it’s good for 10 years. $3,000 a year, fine, but I can’t afford $20,000 a year,” Bartlett said. “That’s a huge percentage of my annual gross, I mean that’s a huge percentage. It would probably put me out of business. Let’s put it that way. Knowing me, it wouldn’t put me out of business, because I would fight the hell out of it.”

At a public forum last week on the sewer, a member of the public asked what could be done for businesses like Bartlett’s that would incur heavy sewer fees. Council Chairman Scott Hayman, a strong supporter of the sewer, said folks like Bartlett could increase his rates. When asked if he would indeed do so, Bartlett said he could but that would likely drive customers away to lower-cost laundries.

“Raise my rates? Yeah, but the problem with that is, people will go down to Westbrook or Raymond where they’re not charging as much,” Bartlett said.

Benefits

The underlying tension that the sewer proposal reveals is the extent to which residents should bankroll commercial projects. There are several points of view, ranging from some who believe the sewer is an infrastructure investment worthy of taxpayer support to others who say the town government is in an unholy alliance with business concerns in town.

Eliason is among those who believe the town’s taxpayers, who will pay the bulk of the costs, should look at the referendum as a needed investment.

“A lot of people are looking at what it’s going to cost me, personally. But I look at it as an investment in infrastructure in our town,” Eliason said. “We’re way overdue for it. And it sounds like people agree it needs to be done, they’re struggling with the way the costs are structured. And I guess what they’re missing is how much new business it will attract and how much it will help diversify the tax base in Windham, especially the commercial tax base.”

Patrick Corey, a sewer critic who authored nosewer.com as an alternative to the town’s windhamsewerproject.org informational website, has strong words for councilors who he says are foisting the project onto taxpayers already burdened by their tax bills and financial situations.

“This is really a discussion about crony capitalism versus free market capitalism. The crony capitalist approach relies heavily on relationships between businesses and municipal government. Our council has decided to show favoritism to the business community by putting a majority of costs on Windham’s residents who derive no direct benefit from the system,” Corey said. “A free market approach would put 100 percent of the costs on the connected businesses because they are best able to pass costs onto all who patronize the system. This includes folks in surrounding communities and from away. We aren’t necessarily saying businesses should foot 100 percent of the bill, only that the council could have picked a much smaller number between zero and 60 percent for taxpayer subsidization.”

Corey is also worried for small businesses that can’t afford to pay sewer-related taxes and fees, such as Busy Bee.

“We believe that even for small businesses, the proposed system is completely unaffordable. That if this passes, it will actually drive small businesses and those with high water usage out of town,” Corey said.

Asked why the businesses couldn’t pony up more for the project, which would cost $62 million when interest is factored in, Eliason said, “When you throw that at a business, it would have such a substantial impact that it’s cost prohibitive. If you’ve got to have the investment in the community, as a taxpayer, I’ll digest some as a taxpayer and pay my fair share. But for me, I’m in commercial real estate, and it’s probably perceived as self-serving, but I’m looking at it as well as where are my kids who are in college right now going to go to work?”

Councilor Tommy Gleason, who voted in the minority against approving the sewer referendum, said Windham residents won’t realize any benefit from the sewer, since any promised tax relief in the form of high commercial taxation often doesn’t yield lower residential taxes.

“The residents are subsidizing the businesses. Now, I think a business should make all the money they can and somebody get as rich as they want, but not on my dime. You can’t get rich with me giving you money and I get nothing out of it,” he said.

Crosby, the owner of Sebago Plaza, agrees that businesses would ultimately gain from the sewer and would funnel those gains back to the town in the form of increased business taxes and more jobs.

“Unless the [connection fees and sewer rates] are just horrendous, it’d be worth it, because of the flexibility it allows you with the property,” he said. “Like right now, I couldn’t really have two high-water users in Sebago Plaza. I have to pay attention when people want to rent from me how much water they want to use. But if you have town sewer, then that’s not an issue anymore. So it limits who you can rent to.”

In the middle

Most in town agree that a sewer would benefit the aquifer and new business development. They differ on whether the costs are worth it, and if those costs will be a burden to existing businesses and residents.

Bartlett, of Busy Bee, who said Windham should have installed a system decades ago, says the town should shelve its sewer plans for a later day when federal money is available.

“Sewer has been a great idea for 20 years and everybody sat on their you-know-what and didn’t do anything about it. And frankly, if they had done what they should have done 20 years ago, we wouldn’t be in this position now,” Bartlett said.

“So now we have a new Town Council that says, we’re going to make this thing happen. But the problem is they don’t listen to the experts. The Town Council is supposed to be business-oriented, so I thought, great, we’re going to make something happen. But who in the world would take a proposal to spend 40, 50, 60 million dollars to voters in a time like this when the economy is down, and there’s no federal funds available. If they had done this four years ago when all that stimulus money was available, we could have 80 or 90 percent, possibly 100 percent, paid for by the feds. This is absolutely crazy, it doesn’t make sense. The finances are not doable at this time.”

Corey says he’s been criticized as a naysayer for opposing the project. He says he and others who are against the proposal are not against a sewer but that the proposal as funded is unrealistic of financial realities.

“Our leadership would like voters to believe that those who do not support the outrageous proposal believe in doing nothing. This just isn’t the case. We believe that when the council arrived at a financial model that wouldn’t work without an overabundance of taxpayer subsidization, they should have returned to the drawing board to examine alternatives,” Corey said.

Noonan says the measure won’t pass so the town will have to figure out alternatives anyway.

“I would be surprised if it passes. There are too many people being asked to support something they won’t derive any direct benefit for. Sewer would be a great benefit to the community, but there needs to be a better economic answer to the one proposed,” he said.

For years, Noonan has advocated the introduction of subsurface treatment systems that are similar to sewer systems in that it takes effluent from a wide area of properties but drains into one centralized leech field. Maine-based Septi-Tech manufactures systems that can handle up to 175,000 gallons a day. Through bacterial breakdown of the sewage, the system can yield nitrate-free effluent that would reduce nutrient-loading in the aquifer.

“There have been advances in technology that I think would make it reasonable to consider a subsurface treatment system that would be a fraction of the cost of running a line all the way down to Westbrook,” Noonan said. “There are towns that have sewer systems that go into leech fields, like Norway. And they have pre-treatment plants now so that what’s going into the leeching fields has been treated before it gets there. And that would be a much less costly alternative in my opinion.”

According to Barry Sheff of Woodard & Curran, the town’s consultant on the sewer system, the subsurface method was an alternative but the council nixed it since it couldn’t easily handle additional future development and because it wouldn’t deal with other pollutants such as pharmaceutical and personal care products (two pollutants that could be added to the federal watch list). A connection from North Windham to the Portland Water District sewage treatment facility in Westbrook would remove all pollution, Sheff said.

Eliason also has looked into the subsurface treatment option.

“That might be an alternative, but I’m not an engineer, and I know Bridgton has a quasi-public sewer system and it goes to leech fields … and the system is maxed out. But there may be some other technology and there may be some other ways to treat it,” he said.

Whatever town leaders do in the wake of Nov. 6’s vote, Bartlett hopes they more thoroughly examine all the alternatives and funding options. His business relies on it.

“It is a huge deal for me. I’m in favor of the sewer. I agree with the concept, I disagree completely with the timing,” Bartlett said. “The council should look for other funding formulas. Right now, every three to five years if you go back through history, the federal government comes up with some sort of a program that helps to pay for projects like these. Most recently it was the stimulus. The key is to make sure it’s shovel ready and then act when the money becomes available.”

John Balentine, Lake Region Weekly, November 2012


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