At a special meeting Dec. 3, the Newcastle Planning Board granted a 30-day extension to Mattson Development to satisfy the terms of a conditional approval for the Newcastle Harbor House project.
The extension is the second since the original Oct. 21 vote to grant conditional approval for the project.
The conditions include the provision of a letter from the Dept. of Transportation approving the placement of two handicapped parking spots on Main Street in front of the site and, more importantly, the establishment of a performance guarantee.
According to Newcastle Town Administrator Ron Grenier, a performance guarantee will allow the town to complete the exterior of the project if Mattson Development fails to do so within a given time frame.
In a Dec. 2 phone interview, Kevin Mattson, President of Mattson Development, sought to explain the delays. “It’s obviously been a difficult project,” Mattson said.
Mattson Development and representatives of The First bank met with Peter Drum, the attorney for the town of Newcastle, Nov. 30 in an effort to reach an agreement on the performance guarantee, Mattson said.
Following the meeting, Mattson thought the parties had an agreement in place. Later, however, Drum called Mattson and told him the town wanted a different kind of performance guarantee – an “irrevocable letter of credit.”
Mattson said he agreed that a letter of credit is “the cleanest way” to provide a performance guarantee. The company will need additional time, however, to secure the letter of credit, he said.
Drum offered a somewhat different account of the delay. Newcastle initially gave Mattson Development two choices to satisfy the requirement for a performance guarantee – a performance bond, or a letter of credit.
In a performance bond, Drum explained, an insurance company carries the risk and, if the developer is unable or unwilling to finish the project, the insurance company will step in and complete it.
A letter of credit, meanwhile, is essentially a line of credit for the developer. If the developer doesn’t finish the project within a time frame agreed upon by both parties, the town can use the remainder of the credit to complete the project or demolish the incomplete structure.
“A letter of credit gives you very good credit that the project will be finished,” Drum said.
Drum said he met with Mattson and Steve Poland, an officer for The First, on Nov. 19, the Friday before Thanksgiving. Mattson was willing to provide a letter of credit, but his bank, The First, “did not want to issue a letter of credit because they already issued a loan,” Drum said.
Mattson and The First offered an alternative, Drum said, but after consideration, “my analysis was that it wasn’t sufficient to protect the town,” he said.
Despite the confusion, Drum said Mattson and Mattson Development Chief Operating Officer Bob Martin have been “working in good faith” to reach an agreement.
In a related matter, Mattson said he “just paid the taxes” for the two Mattson Development properties in Newcastle – the Newcastle Harbor House site and the Newcastle Square building at 52 Main Street.
The company’s unpaid taxes from 2009 were in a lien process – the legal process that precedes foreclosure. Grenier confirmed the receipt of a check for “approximately $13,000.”
Mattson Development remains late on their tax bill for the first six months of 2010, Grenier said, but the town will not consider the company delinquent until March 31, 2011, when the bill for the second six months of 2010 is due.
Responding to concerns about the removal of steel beams from the freestanding elevator shaft at the Harbor House site, Mattson said the design for the Harbor House is “totally different” than the design for the residential building the structure was originally built for.
Overall, Mattson described the company’s relationship with Newcastle as positive, despite the lien and the concerns of town officials. “We are working very well together,” he said.
“My goal is to have the town view [the Newcastle Harbor House project] as a positive development,” Mattson said. “We’re trying to turn around something that has been a negative thing for a long time.”
Mattson called Drum, the town’s lead in negotiations for the performance guarantee, “very professional.”
“He’s been very fair,” Mattson said. “He just wants to make sure it’s right.”
A much more significant challenge to the project may be an appeal from an abutter, Ralph Deoring. “It’s going to be an enormous and significant delay,” Mattson said. “We’ll have to sit on the [building] permit while the appeal runs its course.”
Grenier confirmed the receipt of an appeal filed Nov. 22 by Damariscotta attorney David Levesque on Deoring’s behalf. The Newcastle Board of Appeals will meet Wed., Dec. 22 at 3 p.m. to hear the appeal.
The letter addresses “five or six matters, some of which have been raised before in a previous suit which [Deoring] filed with the Maine Supreme Court and lost,” Grenier said. The issues, among other things, concern an easement dispute and process issues relating to the Newcastle Planning Board’s consideration of the permit.
Matthew Stilphen contributed reporting to this article.
