Sanford mill: Unpolished gem or albatross?
Risk, potential weighed as auction approaches
By TUX TURKEL, Staff Writer
November 8, 2009
Mark Patterson, co-owner of Patco Construction, walks through the Stenton Trust Mill complex in Sanford, which is being auctioned on Monday. Patterson said that without tax breaks, it would be tough to develop the mill into residences.
Gregory Rec/Staff Photographer
The fifth floor of the Stenton Trust Mill offers a view of Number One Pond and western York County. But the view may be outweighed by renovation costs and outstanding bills.
Gregory Rec/Staff Photographer
The Stenton Trust building was erected in 1922, when Sanford was a bustling textile town. Its workers produced Palm Beach cloth, a lightweight fabric used in suits.
Gregory Rec/Staff Photographer
SANFORD — From the fifth floor of the old Stenton Trust Mill, with Number One Pond below and the hills of western York County beyond, Mark Patterson could see the appeal. He could imagine urban-style loft condos in the vast, vacant textile mill, the kind that have been created or are under way elsewhere in Maine.
But then Patterson, co-owner of Patco Construction here, thought about the leaky roof. He pondered the crumbling masonry, environmental problems and grim market for the 294,000-square-foot mill complex, and it gave him pause.
"You'd be buying a liability," he said. "What do you do with this building?"
Patterson was touring one of Sanford's old mill buildings early last week, ahead of a foreclosure auction set for Monday. Officials hope the downtown landmark that played a key role in Sanford's industrial past can become a place to work and live in the 21st century. But despite its potential, the Stenton Trust Mill will be a tough project, and it's unclear whether an investor will come forward to take it on.
The anticipation in Sanford has been experienced over the past 30 years in almost every Maine downtown that has a river running through it.
The brick factories that began sprouting up along the water's edge during the 19th and early 20th centuries – first for textiles, then for shoes – were at the heart of their communities. As those industries faded away, business and community leaders searched for ways to keep these work places vital.
Today, millions of square feet have been refilled, with new enterprises, and sometimes housing. The Sparhawk Mill in Yarmouth. The Dana Warp Mill in Westbrook. The Farwell Mill in Lisbon. The Bates Mill complex in Lewiston.
Some major spaces are being transformed, including the Hathaway Mill in Waterville. But millions of vacant or underused square feet remain, and officials say finding new purposes for them is a process that will take decades.
"You have to be creative," said Michael Baran, who heads the state's Office of Community Development.
"You have this huge space. Not all of it can be housing and retail. So you need a good strategy for mixed-use development."
Existing federal tax credits, and a recent state law that offers a 25 percent credit for fixing historic buildings, are creating incentives, according to Kristen Cady, program director of the Maine Downtown Center, a development advocacy group.
Also helpful: The trends toward green-building and a renewed desire to live closer to work, as the population ages.
"A thriving downtown has mixed uses," Cady said. "And that's what a mill redevelopment generally brings to a downtown."
The Stenton Trust Mill complex, at first named for the Goodall Worsted Co., was built in 1922, when Sanford was a textile giant. Its workers produced the popular Palm Beach cloth, a lightweight fabric used in suits and sold worldwide.
It later became known as the Stenton Trust building, following the collapse of New England's textile industry. A succession of tenants have come and gone under its current ownership, a New Hampshire development company. The building now stands abandoned, without heat, power or water.
Savings Bank of Maine, which holds the mortgage, is trying to sell it at an absolute auction. That means there's no minimum price.
The complex is assessed by the town at $828,100, but developers say that's a questionable value. Any buyer also will immediately owe back taxes, sewer and water bills totaling $68,000.
Monday's auction will be another try for the bank. Past auctions were called off, including one set for a year ago.
Potential buyers had concerns about the status of environmental cleanup work for waste materials left by former tenants. Those concerns remain.
The town estimates it will cost at least $500,000 to finish the job. In the interim, developers who have experience in mill restorations, and those with just a fleeting interest in the property, have had time to consider the possibilities.
"It takes a unique spirit and an interesting business model to make these work," said Michael Carey, an account coordinator for Tranzon Auction Properties in Portland.
Carey looks to the mixed-use rehab being done in Biddeford's mill district as an example of what can happen here. Financing is tough, especially as markets recover from last year's meltdown.
But the timing could be right, he said, for investors who see real estate at a bottom and are optimistic about the future.
"In today's economy," Carey said, "the risk takers – but not the gamblers – are back."
Patterson isn't sure the risk is worthwhile. Just down the street is a cautionary tale. Gazing out the wall of windows, he can see 61 Washington St., a nearby mill building the town has taken by eminent domain. It's a fraction of the size of Stenton Trust, 65,000 square feet.
But the developer can't find a business to occupy 20,000 square feet on the ground floor, to help support the rehab.
A backup plan now calls for all housing, and some workforce/affordable units, which has disappointed some local officials.
"The size was manageable," said Rex Bell, co-founder of Northland Enterprises LLC, the Portland-based developer. "In spite of that, we couldn't find a commercial tenant."
Bell said he "ran some numbers" on the Stenton Trust Mill. It's a lot of space to fill, he said.
Bell said he's very supportive of the town's efforts to rehab the mill. Given the size, though, he thinks it will take an out-of-state business that needs 100,000 square feet and can benefit from the tax breaks and lower operating costs.
Even at a bargain purchase price, the formula must include environmental cleanup, renovations to make it rentable and the cost of carrying the property until it generates revenue. That will take deep pockets and patience, he said.
"It's going to be challenging to reposition that property," he said.
The challenges are familiar to Doug Sanford, the developer of the North Dam mill in Biddeford. It has taken four years to fill half of the 360,000-square-foot complex, which was in better shape than the Stenton Trust buildings.
Today there are 62 small businesses and 50 housing units, and approvals to create 40 more.
Biddeford's mills have advantages that have helped fill the space, Sanford said.
They're near Portland, by the coast, on the Amtrak rail line and by a growing college. The town of Sanford doesn't have these advantages.
But that's the reality the town is facing. It has more than 1 million square feet of mill space and three-quarters is vacant, according to Mark Green, the town manager.
Revitalizing the Stetson Trust Mill is a key to the town's long-range development plans for the downtown.
"It's a challenge, but we're up for it," he said. "We know we're in for a 20-year climb."
As the auction nears, Green has two concerns. First: The mill will be sold to another buyer who lacks the money to follow through. Second: He hasn't received one phone call from a prospective buyer.
"I'm concerned there will be no bidders," he said.
In addition to 61 Washington St., the town has taken an adjacent mill by eminent domain, the so-called Aero-Fab property.
It will be used as parking. He doubts the town has the resources to take the Stetson Trust Mill, as well.
All these factors were obvious to Patterson as he stood by the tall windows and thought about young, urban professionals living there, looking across his city.
As a Sanford native, he'd love to see the downtown mills alive again. But this one seems to need so much work.
And the tax credits that underlie these deals, he said, are hard to sell now, although the mill is in a Pine Tree Zone and eligible for various discounts.
"In Biddeford-Saco, the concept does work," he said. "But are there enough urban dwellers, enough jobs, in the Sanford area?"
Staff Writer Tux Turkel can be contacted at 791-6462 or at:
tturkel@pressherald.com
