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April 3, 2017 | last updated April 5, 2017 11:41 am
Focus: Real estate / Construction / Design

Eastport's $9M project transforming vacant cannery into mixed-use hub

Photo / Peter Van Allen
Photo / Peter Van Allen
Jonathan Arnold, a Kansas City developer with an affinity for Maine, redeveloped the Mill at Dover-Foxcroft (pictured here). He now has his sights on a former sardine cannery in Eastport.
Photo / robert godfrey / Old Sow publishing
The American Can, building in Eastport, as it looked in 2004.
Rendering / comeau mackenzie architects
15 Sea Street, which is expected to open by summer 2018, will include a hotel, apartments, meeting space, retail and other amenities.
Photo / Peter Van Allen
The cafe at the Mill at Dover-Foxcroft.

A plan to invest $9 million to transform an old sardine cannery into a hotel, residential units, retail and event space in Eastport is on track.

Developer Jonathan Arnold of the Kansas City-based Arnold Development Group and Linda Godfrey, an Eastport resident who is one of the owners of the property, said 15 Sea Street is still expected to open in June 2018. The plan was first introduced in January.

The former American Can Co. building, which has been vacant for a number of years, is already undergoing interior preparations, though the bulk of the construction remains, says Godfrey, who is part of the partnership Dirigamus LLC. She says she's already had numerous inquiries about the residential and retail units, as well as hotel stays.

"Quite a bit is already happening," Godfrey says. "There's a lot energy around the project."

Once open, 15 Sea Street will have 26 hotel rooms, 16 residential units, event space with seating for up to 104 people, a wine bar, catering kitchen, gathering space and a concourse for exhibits. The concept architect is Peter MacKenzie of Comeau MacKenzie in Saint John, New Brunswick.

The 15 Sea Street redevelopment would also serve as shot in the arm for a city that, like many places in Maine, has shown progress in reinventing itself, despite limited population growth and its location at the extreme end of Maine and the United States. The latter is both a challenge, being at the end of the road, and a selling point, surrounded as it is by water and views of Campobello Island in Canada.

The developer's unique connection to Maine

Arnold, who was contacted by Godfrey and her group after his redevelopment of the Mill at Dover-Foxcroft, oversees a firm with significant reach in its hometown of Kansas City.

Arnold Development Group is developing Second and Delaware, a $70 million, 330,000-square-foot complex with 276 housing units in the city's River Market neighborhood. It is an urban in-fill project that will provide residential units in a walkable neighborhood. It is also the largest passive house-certified structure in the world, and will consume 90% less energy than comparable buildings in the area, Arnold said. Twenty percent of housing is reserved for workforce housing, meaning at affordable rents. When it opens this summer, it will have rooftop gardens, EV charging stations, triple glazed windows and other features.

He has shown he can find funding for projects in both Kansas City and Maine. Berkshire Hathaway, the investment group run by Warren Buffett, has invested in Arnold's projects.

Connection to Maine runs deep

Arnold grew up in Westchester County, N.Y., outside New York City. As a kid, he went to a wilderness camp that was based on Deer Isle and had a site in the North Woods — which shaped his appreciation of both Maine's woods and the coast. His parents now live in Topsham. At a meeting with Mainebiz at the café at the Mill at Dover-Foxcroft, he says he and his wife Erin talk about living here one day.

"Eventually, we'll move here," he says. "It's the combination of the people and the landscape, the lack of unnecessary busy-ness."

What Maine has, and what it needs

Arnold Development invested $9 million in the Mill at Dover-Foxcroft.

The mill, on the Piscataquis River, was not unlike a lot of mills you'd see in Lewiston and Auburn or Saco and Biddeford, though in this area wood was more abundant than brick so that was the dominant construction material. Arnold heard the property was available after Moosehead Manufacturing Co. Inc. closed its plant there. The mill has weathered floods, including the historic April 1987 flood, when the river came up to the second level. By the time it came on the market, the siding was rotting, windows were broken, the heating system was antiquated. At 60,000 square feet, there weren't a lot of takers willing to take on a renovation of that magnitude.

High water and rotted siding are not the only challenges. Piscataquis County has a high poverty level and just 16,843 people to shoulder the local economy. The median household income is $37,495 and 19.1% of the population lives in poverty, according to the U.S. Census.

But Arnold sees potential to create a hub of activity, creating an inn, a café, event space, 22 apartments and 22,000 square feet devoted to business tenants.

Taking Mainebiz on a tour, Arnold showed off a building that combines old with new: The building retains the huge windows and feeling of space from the old site. There are weathered, wooden sliding doors, used more now as decoration. But the building also has strong broadband service, meeting rooms, a substantial space for servers, a fitness area and the aforementioned café.

The tour of the building went behind the scenes to see the old and new power systems. Arnold fearlessly walks through a dark, wet sub-basement into the mill's ancient power plant — giant cogs, driven by the river that in turn drove the machinery in the mill. A later adaptation added a primitive circuit box, with wires going in all directions. Upstairs, on the second floor, Arnold proudly showed off an energy efficient heating system, installed by LG Business Solutions, that uses river water for the heating and cooling system.

Bolstered by cheap rents, most of the commercial and residential units are filled. Arnold is looking for an operator for a restaurant space.

"Maine has the climate and affordability. If we strengthen the middle class, there will be an upward spiral," Arnold says.

Using sustainability to find specific investors

Arnold created the Sustainable City Fund LLC to finance the mill's makeover as well as the work in Eastport. He also hopes to do other ground-up residential development in southern Maine (with locations to be determined). He said the fund has a range of investors, from high-net worth individuals to foundations to pension funds.

"It's an investment vehicle for things people can feel proud of," he says. "It combines investment and philanthropy."

The efforts dovetail with work the company is doing in Kansas City.

Arnold says the company adheres to lean construction principles — optimizing the whole, removal of waste, continuous improvement, generation of value focus on process and flow, according to criteria laid out by the Arlington, Va.-based Lean Construction Institute.

Dover-Foxcroft was a natural for this type of redevelopment, he says.

"It has two hardware stores, a movie theater. It's a vibrant town," he says, though the area was not without its skeptics. "There were people who said, 'They're never going to do this.'"

For the mill redevelopment, Arnold development received historic tax credits and Tax Increment Financing. Arnold worked with town leaders, CEI and the Maine Community Foundation's impact investment arm.

Arnold may be "from away," if that means anything anymore, but he has quickly adapted to the way of doing business in Maine.

"How'd you get connected with CEI?" he's asked.

"We just called them," he says.

Meanwhile, in Eastport

Three hours away from Dover-Foxcroft, the Eastport project, 15 Sea Street, had a similar word-of-mouth origin.

In 2012, Arnold was invited to speak at the GrowSmart Maine Summit, at the invitation of Executive Director Nancy Smith.

At the conference, Eastport's city manager at the time, Jon Southern, and Hugh French of the Tides Institute & Museum of Art talked about Eastport's efforts to redevelop. Eastport was featured in a video.

At that point, there had been no action on the Eastport building. It dates to 1908 and was where the Continental Brand sardines were packed into their distinctive roll key-opening cans. The site became known as the American Can building, though the structure outlasted the city's sardine industry, which peaked in the 1950s. By 2004, the building was nearly vacant. Dirigamus purchased the dormant building more than a decade ago. Dirigamus is led by three partners: Godfrey, Meg McGarvey and Nancy Asante.

Arnold saw the video about Eastport, but the roots of 15 Sea Street were in the call Godfrey and her group made to Arnold some time after.

"They said, 'We've been looking for a developer,'" Arnold recalls.

In Maine style, Godfrey called up Arnold and invited him to Eastport. Arnold and his wife Erin and their three sons ended up spending a week in Eastport over the city's busiest weekend, July 4th.

"He had a chance to see Eastport," Godfrey says. "So now they know our ethics, our vision, our dreams and what we can be in Eastport … They got a real feel of the energy here, the community here."

"They put us up," Arnold says. "We saw it was a strong community. We had the opportunity to [redevelop] one of the last buildings. It's so prominent, overlooking the ocean. It's an honor to come in and add to the work Eastport is already doing."

Lora Whelan, who leads Eastport's effort to attract new residents, says 15 Sea Street could become "a major anchor in the downtown."

"That would be significant," she adds. "Right now we do not have too many people who live in the downtown. Building a downtown population would be of benefit to the restaurants, shops and arts-and-cultural organizations."

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