Council discusses abandoning performance guarantees
WINDHAM
2/8/2010

By Emily Parkhurst

Potential developers in Windham must bond the money for their entire project before digging the first hole in order to adhere to existing ordinances. This process, called performance guarantees, is a common municipal requirement and is considered protection for the town to prevent developers from abandoning projects before they are completed. But Susan Duchaine of Design Dwellings in Gorham wants Windham to consider changing its requirement.

''In most situations, in every situation in Windham, you're required to bond everything up front. Huge bond amounts cost money,'' she said during Tuesday evening's Town Council workshop.

Duchaine, whose 24-year-old company has worked on developments such as Meadowlands in Gorham and Windham Hill Terrace in Windham, went on to explain that requiring developers to have this kind of money upfront before they even know if their project is marketable can cause them to walk away or consider building in another town. Gorham, where Duchaine's business is located, eliminated its performance guarantees years ago and, Duchaine said, has seen growth as a result.

''If there's nothing at risk for the town, you should be bending over backwards for developers,'' she said.

Planning Director Brooks More was also present at the workshop and offered his opinion of the performance guarantees.

''It's about balance,'' he said. ''It's about protection for taxpayers and for the taxpayer who wants to develop land.''

More said that many regulations are written for worst-case scenarios where developers walk away in the midst of a project and leave the town with unfinished roads to maintain and fire and safety hazards.

''The cost (of getting a performance guarantee) is about one-to-three percent of the total project,'' More said.

Town Manager Tony Plante offered the example of a Chute Road development, which has been stalled, and may be abandoned, due to bankruptcy.

''I think we all know Chute Road is broke. Something bigger went wrong there,'' said Council Chairman Bill Tracy.

Tracy suggested the council consider changing the requirement to guarantees for phases of development rather than the whole project all at once.

''How far do we let a developer go? We could let them clear brush...but not build infrastructure like sidewalks,'' he said.

Councilor Matthew Noel expressed concern that the town's performance guarantees may be preventing growth at a time when the town should be encouraging it.

''I want our town to grow. I want something done because of the economic times we're in,'' he said.

More asked the council to consider that during economic down times, the town was at a greater risk if it eliminated performance guarantees.

''I understand the desire to spur economic development and jobs, but just understand that in these economic times, your risks are greater. From our perspective the balance is where it should be,'' he said.

However, Duchaine maintains that in a difficult economy developers will not be able to justify bonding $1 million projects when they can easily go to another town and get started for several hundred thousand in basic infrastructure costs. In a later interview, she explained this is particularly true of projects that were begun and then stalled when the recession began.

''I have looked at three or four (stalled projects) for sale, but I'm not interested in coming in and bonding a big project,'' she said. ''I'm looking at other towns instead.''

Duchaine emphasized that even if developers abandoned projects, the town would then have the infrastructure for future development when the economy improves.

''If they're willing to invest in infrastructure, let them,'' she said.