The Right Equation for Responsible Development: Spotlight on Southgate, Scarborough

In a multi-part series, exclusive to the Maine Real Estate Insider, we’ll provide an up-close look at the most notable commercial development projects of the past year that are helping to fuel Maine’s economy in terms of investment and job creation.  MEREDA is proud to recognize responsible development based upon criteria including environmental sustainability, economic impact, energy efficiency, difficulty of the development, uniqueness, social impact and job creation.

Our 2019 Top 7 recipients include:

62 Spring Street, Auburn, Anew Development / Auburn Housing
Founders Place Campus, Bangor, Bangor Savings Bank / CJ Developers
Cape Arundel Cottage Preserve, Arundel, Arundel-Kennebunkport Cottage Preserve, LLC
WEX Global Corporate Headquarters, Portland, Jonathan S. Cohen – 0 Hancock Street, LLC
Hannaford Center, Hampden, Good Shepherd Food Bank
Southgate, Scarborough, Avesta Housing
Station Square, Gorham, Great Falls Construction

MEREDA’s Board intended to honor the award winners at the 35th Anniversary Gala. Originally scheduled for the end of March 2020, the Gala was postponed indefinitely due to COVID-19. Though they may have their formal award delayed, these projects have only gained practical significance as they serve their communities–especially under additional strain and stress of these unprecedented times.  We look forward to formally recognizing these recipients at a future MEREDA event.

Please join us this week in celebrating Southgate in Scarborough.

MEREDA:  Describe the building and project.

Avesta Housing:  Southgate Apartments represents an exceptional example of historic preservation to meet the affordable housing needs of a community. Southgate is located at Dunston’s Corner in Scarborough and offers 38 much-needed affordable apartments for low-income families. The development consists of two separate buildings: a new 30-unit apartment building and the rehabilitation of a separate historic Federal Style brick farmhouse into eight apartments.

Prior to construction, the historic farmhouse was in serious disrepair. Over the past 200+ years the farmhouse had seen a variety of uses including a farm and country retreat, a restaurant and inn, and rental housing. As a result of these varied uses, the property had undergone multiple reconfigurations leading to significant deterioration rendering most of the units uninhabitable by modern building codes.

The new building is separate from this historic building. It was designed in a vocabulary that is reminiscent of an old barn to complement the historic farmhouse but with a contemporary entrance so as not to compete with the original historic structure.

Southgate’s expert development team included: Avesta Housing, developer and owner; Goduti-Thomas Architects, architect; Benchmark Construction, general contractor.

In addition to the development team, key partners included the Town of Scarborough, the Scarborough Housing Alliance, MaineHousing, the Maine State Historic Preservation Office, Boston Capital, Bangor Savings Bank, Federal Home Loan Bank of Boston, Federal Home Loan Bank of Atlanta, NeighborWorks America, and Community Housing Capital.

MEREDA:  What was the impetus for this project? 

Avesta Housing:  As gentrification continues to put pressure on local labor markets, it is vital that we provide safe, decent, and affordable housing for our workforce. For years, the Town of Scarborough has recognized the need for affordable housing in their community and has been actively encouraging new opportunities to create housing for a diverse range of incomes. Because of this project, 38 households will be able to stay in their communities, access quality schools, and be in close proximity to a variety of employment opportunities.

Avesta’s Southgate development project has breathed new life into an important Maine landmark. The original farmhouse was constructed in 1805 by Robert Southgate. It is an important part of Scarborough’s cultural heritage and one of the Town’s oldest surviving structures.  Currently listed on the National Register of Historic Places, the farmhouse offers one of the best examples of preserved Federal Style brick farmhouses in New England.

MEREDA:  That sounds like quite a process.  How long were you in the planning stages before construction started?

Avesta Housing:  After coming up short in several tax credit applications, Southgate finally received funding in 2017 (three years after purchase). During that time, construction costs rose significantly and additional layers of funding subsidies were necessary. Southgate represents a unique and lengthy mix of financial sources, including a TIF from the Town of Scarborough, a grant from the Scarborough Housing Alliance, Low Income Housing Tax Credits, Federal and State Historic Tax Credits, and AHP funding from the Federal Home Loan Bank of Boston. Southgate also received funds from the Federal Home Loan Bank of Atlanta.

MEREDA:  Tell us about the most challenging aspect of getting this project completed.

Avesta Housing:  The varying and intricate design of the historic building required high attention to detail. Given the ongoing labor shortages in the construction trades, it was often challenging to find skilled labor that could complete the work both on time and within the allotted budget. Unlike other more uniformly designed historic rehabs, such as schools and mill buildings, no two rooms were alike. While this adds to the elegance of the final product, it also presents challenges during construction.  An example of this was the replacement and refurbishment of the building’s historic windows. In total, the historic building has 44 windows comprised of 15 distinct window types.

MEREDA:  Something unexpected you learned along the way was….

Avesta Housing:  Southgate was Avesta’s first development in Scarborough. Each community we work in has different visions, resources, and challenges for creating affordable housing. Working with Town officials and the Scarborough Housing Alliance was a wonderful experience. Without their support this project would not have been possible. The Town went above and beyond to ensure that the project would meet the needs of the community while remaining proactive and flexible as issues arose. Our relationship with the Town was something we didn’t have before the start of this project but is something we look forward to continuing as we build more affordable homes in Maine.

MEREDA:  Now that it’s complete, what feature of the project do you think makes it the most notable? 

Avesta Housing:  By preserving one of the original Federal Style agricultural estates in Maine, Southgate has protected a cultural resource and connection to our past that was in jeopardy of being lost. In order to maintain the project’s feasibility during escalating construction prices, Avesta had to pursue a unique variety of funding sources. To the best of our knowledge, this project is the first in Maine to be awarded subsidy from two Federal Home Loan Banks for a single project.

In addition, 20% of Southgate apartments are preserved for households who have previously experienced or are at risk for homelessness. To help this population and our other residents succeed, Avesta is committed to provide services to foster greater financial awareness and self-sufficiency. These efforts include offering our residents free credit counseling, fraud avoidance, and homeownership courses. By supporting vulnerable populations and giving residents the tools to improve their own financial literacy, Southgate can contribute as a stabilizing force to our local economy and communities.