An approved development in Ellsworth that would result in more than 100 apartments being built off the city’s busy High Street corridor is facing delays because of financing constraints.
Last year, W.L. Properties got approval from the city to build 27 buildings, each with four to eight apartments, on an undeveloped 121-acre property off Eastward Lane, behind Ellsworth Candlepin Bowling. As part of that approval, the company had to provide proof of financial capacity from a bank to ensure that the project would be completed.
Since then, banks have told Scott Pelletier, the owner of the company, that they cannot give him one loan that would cover the full cost of the project, according to Shelly Lizotte, a Bangor architect and representative for the project.
“They were at their limit for funding this type of project,” Lizotte told Ellsworth officials. “They didn’t have the ability to loan as much as he needed for the entire project all at once.”
The difficulty in securing financing for the project, which would be one of the largest developments in the city, could be a sign that Ellsworth’s housing boom is slowing. The city has been growing quickly in recent decades, and as housing has become scarce and costs have risen throughout Maine, Ellsworth has encouraged development to draw new residents who may have difficulty finding housing in other coastal communities where development has faced pushback.
Lizotte told city officials that Pelletier is still hoping to complete the project, but is looking to get city approval to break it into phases that might be easier to finance one step at a time. In a recent discussion with the Ellsworth Planning Board, she asked if the city might consider accepting a revised documentation from Pelletier about financing the development.
Tim Pease, a lawyer who advises the Planning Board, said some banks likely would be willing to finance the project in phases, rather than for the full development cost. As part of that approach, the city would have to provide documentation to the bank when each phase is completed that shows that a certificate of occupancy has been issued for the number of units built in that phase. The bank then would approve and issue a loan for the next phase of the project, Pease said.
Pease said he is “not surprised” that W.L. Properties has had to revisit how it will get the loans necessary to build all the units it was approved to build in 2024.
“Lenders are tightening their belts the last few months across the board,” Pease told the board. “Maybe the best course is to dial it back a little bit.”
Some members of the board wondered aloud if it would make sense to subdivide the 121-acre property into multiple lots, and then to independently approve Pelletier’s phased proposals for each lot.
This idea was quickly dismissed, however, as members of the board and Lizotte noted that it could result in patchwork private development if, for whatever reason, Pelletier decided to sell off a subdivided lot instead of building on it. This likely would create infrastructure problems as the road, water and sewer lines built by Pelletier would all be privately owned, instead of being owned and maintained by the city.
Lizotte told city officials that Pelletier would keep talking with potential lenders to see if they could come up with a concrete phased financing plan for the city to consider in the coming months.
“I think, ideally, it would be best to keep it as one lot,” John DeLeo, chairman of the Planning Board, told Lizotte. “We certainly don’t want to see this project go away.”
