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February 5, 2007
Second act | Kevin Mattson makes Harper's Development a statewide power
By Douglas Rooks
Eight years ago, Kevin Mattson's life had hit bottom. He'd come to the end of a foray into politics after serving as chief of staff for the Senate majority leader in the Maine Legislature, and as chairman of the state's Democratic Party, a year he calls "the most difficult of my entire life." His marriage had ended in divorce, and he found himself living in an empty apartment with no money in the bank. "I even lost my dog," he says, with a hint of humor. At 30 years of age, he had to figure out how to start his life over.
Mattson decided he should go into commercial real estate. He had experience in construction trades, and he knew how to size up a building for its assets and liabilities. He came up with a plan for a development company and sought the backing of Severin Beliveau, one of the state's premier lawyer-lobbyists who specialized in Democratic political causes and served many business clients as well.
Mattson met with Beliveau and pitched him on the plan for his company. "Severin said, 'yes,' just like that," Mattson recalls of the meeting in 1999. "He doesn't spend a lot of time making up his mind."
To Beliveau, it wasn't a difficult decision. "Kevin had ability, he had presence," he says. "No one can leave a room without liking him, even if they disagree with what he's saying." Beliveau knew there was a need for a firm like the one Mattson had in mind. "I'd represented a lot of clients who did deals like these," Beliveau says. "Our difference was that we were willing to plan long-term, and structure our investments that way. A lot of developers need to get a cash return quickly. That's not our focus."
The name for the firm was decided just as quickly. When Beliveau asked him what the company would be called, Mattson looked around the room.
His eyes lighted on a copy of Harper's magazine, the venerable monthly that has long devoted itself to left-of-center causes. "That's how Harper's Development came into being," Mattson says.
Over the last seven-plus years, Harper's has grown rapidly both in the size of its portfolio and in the scale of projects it's willing to undertake. Its very first building was a well-located four-story office building in Hallowell, at the corner of Water and Winthrop streets in the heart of downtown. The classic dark-brick commercial building, with numerous 19th century details, had long housed bank offices, the last of them a Key Bank branch. (The first floor is now occupied by Hattie's Chowder House, which features the old bank vault behind its cash register.) In the real estate bust of the early 1990s, the building's mortgage was foreclosed, and it came up for sale again just as Harper's Development was looking for properties to buy and renovate. Harper's made its move and closed the deal. Today, the building houses the state Public Advocate's office and various professional agencies, totaling more than 100 employees.
Harper's has continued that pattern ever since. "We find that some developers are willing to bid more than the income from a property can generate, betting that prices will continue to rise," Beliveau says.
Harper's, for the most part, has opted for a more conservative approach, and so far it's working. "We're on the right track," he says. "We only do deals we know we can make work."
Harper's projects are getting bigger and bolder, too. They include the purchase and renovation of the old Digital Equipment Corporation plant in Augusta; four years after Harper's bought it, the 300,000-square-foot facility is fully leased, and lots on the surrounding "campus" ˆnow known as the Central Maine Commerce Center ˆ are being sold to tenants. Harper's is currently seeking final approval to renovate 500,000 sq. ft. in the Saco Island complex in Saco, and is taking on the 215,000-square-foot Vishay-Sprague facility in Sanford, redubbed the Sanford Commerce Center. The market value of properties owned by the four Harper's partners, or by individual partners in other ownership arrangements, totals roughly $75 million.
Not a bad second act for a former down-and-out political operative.
Cozying up to risk
Building is in Mattson's genes. His father, C.B. Mattson, grew up in Aroostook County ˆ the Mattson clan is tightly bound to New Sweden, a settlement that was at one point comprised entirely of Scandinavian immigrants ˆ and moved to Augusta in search of work. He bought a building, renovated and sold it, and decided to start his own contracting business. It took off when he won one of the state's first Section 8 housing grants, named for the federal program that builds subsidized housing for low- and moderate-income families.
Soon, C.B. Mattson was one of Maine's most respected builders of multi-family housing, projects the company often manages as well. Kevin's older brother, Todd ˆ who, like most of the family, is a moderate Republican ˆ has taken over management of the C.B. Mattson company.
Mattson says it's a great advantage to have worked on his family's construction crew, "to tear down walls, pound nails and figure out how to build something in the least time at the lowest cost." He says that experience is a big advantage in bidding on projects whose scope would daunt even many big-time real estate firms. "I don't know how a lawyer could do this," he says. "The whole challenge is figuring out how to make the numbers work, and you can't know that if you can't get down into the nuts and bolts of the equation."
Through the early years of Harper's, in a slack real estate market in Maine, the projects were fairly small. In 2000, Harper's took on a nearly derelict four-story building in downtown Winthrop that the town acquired for taxes and sold to Harper's for $1. Despite its condition, the building held great potential; it's the first building visible coming down Squire Hill into downtown, and it includes parking and recreational access to an adjacent stream. Today, following an $800,000 renovation, the building is fully occupied and produces a modest income for Harper's. "We're just starting to see a return," says Beliveau. "That's why we plan for the long term."
Harper's added two additional investing partners ˆ John Orestis, a Lewiston-area developer who specializes in housing, signed on in 1999, and Chris Harte, scion of the Harte-Hanks newspaper company, joined in 2001 ˆ and as the company grew, Mattson began thinking bigger. Beliveau may emphasize minimizing short-term risk, but for Mattson, risk is still what the real estate business is fundamentally about. So when the former Digital Equipment plant in Augusta ˆ the area's last major manufacturing plant ˆ became available in 2002, not long after its purchase by Sanmina-SCI, Mattson was intrigued. The city's economic development director openly worried about the prospect of filling so much empty space ˆ 300,000 sq. ft. ˆ but Mattson was undeterred. Harper's bought the Digital building for $4.5 million in 2003 with the idea of attracting an assortment of light-manufacturing companies to the property.
Mattson is frank about what happened next. "We spent hundreds of hours and thousands of dollars trying to get tenants," he says, but no one showed up, the result of a down market for manufacturers. As a last resort, Harper's ended up bidding in 2004 for the Maine Department of Public Safety, which was looking for a new headquarters to consolidate several offices and to build a statewide emergency dispatch center. Even though the state wanted only 15% of the Digital building's available space, Mattson decided to make an offer, and was the low bidder.
Mattson insists it was economics, not his affinity for Maine's Democratic administration, that won Harper's the contract. "We bid two dollars a foot below the prevailing rate for the department of safety project," he says. "No one else was even close."
It was a huge gamble ˆ the building needed new systems and the anchor tenant wanted only a fraction of the available space ˆ but it quickly paid off. The building is now fully leased; the state's Department of Labor has also consolidated its operations at the site and is the property's last major tenant.
In the last two years, Harper's has taken on projects that dwarf even the Digital building. It has been granted a $35 million tax break on a $100 million project to restore 500,000 sq. ft. of the Saco Island mill complex in Saco, a sprawling 19th-century complex totaling more than 2 million sq. ft. Harper's plan calls for renovating the old buildings for mixed use, as well as new construction of a nearby riverfront condo-marina complex. Pending city approval in March, work on the project could begin in September. Harper's hopes to complete the job in five years, with most of the work scheduled for the next three years.
Supporters of the Saco project say it could buttress the revival of the city, which currently owns most of the island property after a previous renovation effort failed, as well as revive the fortunes of neighboring Biddeford, with its languishing downtown. "This is the last chance we have to save the mills. That's why it's worth the $35 million we're offering," says Mark Johnston, mayor of Saco. He acknowledges that the tax increment financing structure places most of the risk on Harper's, and praises Mattson and his partners for taking on a project many other developers have considered and rejected. "New life is going to be born here," Johnston says. "People will be amazed when they see the results."
Equally ambitious is the Harper's plan for the 215,000-square-foot Vishay-Sprague plant in Sanford, which Harper's bought for $200,000 in 2005 and rechristened the Sanford Commerce Center. Harper's plan is similar to what it did with the Digital plant in Augusta: renovate the facility and rent it to an assortment of light-industrial tenants. Town officials see the effort as potentially spearheading a revival of Sanford's long-dormant downtown. Harper's is gutting the building and seeking tenants through the winter months.
Space glut
Despite his outspoken commitment to progressive causes, Mattson is clearly comfortable in the world of business deal-making. He is frank about his decision to switch from professional politics to real estate: "I was always interested in getting things done, and we just weren't doing that."
Mattson gets things done, while managing to strike a distinctly different pose compared to most developers. While many Maine real estate firms were outraged that the state's new vernal pools regulations might put as much as one-third of the state off limits to development, Mattson welcomed them. "It's all marginal land they're building on," he says. "We ought to be redeveloping our core centers, rebuilding what we've lost through economic change and physical decay."
He estimates that there are an additional 20-30 million sq. ft. of existing space in much the same condition as the Saco Island and Sanford mills. "But much of it doesn't have good access, or enough parking," Mattson says. "If we want it to happen, we're going to have to do more than talk."
What he thinks needs to be done is to maintain an emphasis on so-called "smart growth" principles that favor redevelopment rather than penalizing it. Mattson believes Maine should adopt a uniform code for historic buildings, as New Jersey did, that could spur a boom in the old mills. He also urges the state to provide more than TIF financing. "TIFs aren't a great tool, frankly," he says, "but they're all we have, so we use them."
The evangelistic tone of some of Mattson's comments belies his basic sunny nature, energetic optimism and infectious sense of humor.
"This is a business for dreamers, but dreamers who also manage to build their dreams," he says. "You can't do it if you worry a lot, don't like risks or can't stand dealing with people." He says that too many developers are "angry Republicans" who resent planning boards and code officers as interfering with their ideas. "We haven't had that experience with Maine officials," he says. "These are basically good people doing their jobs. We may have disagreements, but we know how to work them out."
Beliveau takes obvious pride in the success of his protégé. "Kevin has all the talent it takes to be successful in this business," he says.
"But what makes him unique is that nobody seems to have a bad word to say about him. Nobody."
Mattson decided he should go into commercial real estate. He had experience in construction trades, and he knew how to size up a building for its assets and liabilities. He came up with a plan for a development company and sought the backing of Severin Beliveau, one of the state's premier lawyer-lobbyists who specialized in Democratic political causes and served many business clients as well.
Mattson met with Beliveau and pitched him on the plan for his company. "Severin said, 'yes,' just like that," Mattson recalls of the meeting in 1999. "He doesn't spend a lot of time making up his mind."
To Beliveau, it wasn't a difficult decision. "Kevin had ability, he had presence," he says. "No one can leave a room without liking him, even if they disagree with what he's saying." Beliveau knew there was a need for a firm like the one Mattson had in mind. "I'd represented a lot of clients who did deals like these," Beliveau says. "Our difference was that we were willing to plan long-term, and structure our investments that way. A lot of developers need to get a cash return quickly. That's not our focus."
The name for the firm was decided just as quickly. When Beliveau asked him what the company would be called, Mattson looked around the room.
His eyes lighted on a copy of Harper's magazine, the venerable monthly that has long devoted itself to left-of-center causes. "That's how Harper's Development came into being," Mattson says.
Over the last seven-plus years, Harper's has grown rapidly both in the size of its portfolio and in the scale of projects it's willing to undertake. Its very first building was a well-located four-story office building in Hallowell, at the corner of Water and Winthrop streets in the heart of downtown. The classic dark-brick commercial building, with numerous 19th century details, had long housed bank offices, the last of them a Key Bank branch. (The first floor is now occupied by Hattie's Chowder House, which features the old bank vault behind its cash register.) In the real estate bust of the early 1990s, the building's mortgage was foreclosed, and it came up for sale again just as Harper's Development was looking for properties to buy and renovate. Harper's made its move and closed the deal. Today, the building houses the state Public Advocate's office and various professional agencies, totaling more than 100 employees.
Harper's has continued that pattern ever since. "We find that some developers are willing to bid more than the income from a property can generate, betting that prices will continue to rise," Beliveau says.
Harper's, for the most part, has opted for a more conservative approach, and so far it's working. "We're on the right track," he says. "We only do deals we know we can make work."
Harper's projects are getting bigger and bolder, too. They include the purchase and renovation of the old Digital Equipment Corporation plant in Augusta; four years after Harper's bought it, the 300,000-square-foot facility is fully leased, and lots on the surrounding "campus" ˆnow known as the Central Maine Commerce Center ˆ are being sold to tenants. Harper's is currently seeking final approval to renovate 500,000 sq. ft. in the Saco Island complex in Saco, and is taking on the 215,000-square-foot Vishay-Sprague facility in Sanford, redubbed the Sanford Commerce Center. The market value of properties owned by the four Harper's partners, or by individual partners in other ownership arrangements, totals roughly $75 million.
Not a bad second act for a former down-and-out political operative.
Cozying up to risk
Building is in Mattson's genes. His father, C.B. Mattson, grew up in Aroostook County ˆ the Mattson clan is tightly bound to New Sweden, a settlement that was at one point comprised entirely of Scandinavian immigrants ˆ and moved to Augusta in search of work. He bought a building, renovated and sold it, and decided to start his own contracting business. It took off when he won one of the state's first Section 8 housing grants, named for the federal program that builds subsidized housing for low- and moderate-income families.
Soon, C.B. Mattson was one of Maine's most respected builders of multi-family housing, projects the company often manages as well. Kevin's older brother, Todd ˆ who, like most of the family, is a moderate Republican ˆ has taken over management of the C.B. Mattson company.
Mattson says it's a great advantage to have worked on his family's construction crew, "to tear down walls, pound nails and figure out how to build something in the least time at the lowest cost." He says that experience is a big advantage in bidding on projects whose scope would daunt even many big-time real estate firms. "I don't know how a lawyer could do this," he says. "The whole challenge is figuring out how to make the numbers work, and you can't know that if you can't get down into the nuts and bolts of the equation."
Through the early years of Harper's, in a slack real estate market in Maine, the projects were fairly small. In 2000, Harper's took on a nearly derelict four-story building in downtown Winthrop that the town acquired for taxes and sold to Harper's for $1. Despite its condition, the building held great potential; it's the first building visible coming down Squire Hill into downtown, and it includes parking and recreational access to an adjacent stream. Today, following an $800,000 renovation, the building is fully occupied and produces a modest income for Harper's. "We're just starting to see a return," says Beliveau. "That's why we plan for the long term."
Harper's added two additional investing partners ˆ John Orestis, a Lewiston-area developer who specializes in housing, signed on in 1999, and Chris Harte, scion of the Harte-Hanks newspaper company, joined in 2001 ˆ and as the company grew, Mattson began thinking bigger. Beliveau may emphasize minimizing short-term risk, but for Mattson, risk is still what the real estate business is fundamentally about. So when the former Digital Equipment plant in Augusta ˆ the area's last major manufacturing plant ˆ became available in 2002, not long after its purchase by Sanmina-SCI, Mattson was intrigued. The city's economic development director openly worried about the prospect of filling so much empty space ˆ 300,000 sq. ft. ˆ but Mattson was undeterred. Harper's bought the Digital building for $4.5 million in 2003 with the idea of attracting an assortment of light-manufacturing companies to the property.
Mattson is frank about what happened next. "We spent hundreds of hours and thousands of dollars trying to get tenants," he says, but no one showed up, the result of a down market for manufacturers. As a last resort, Harper's ended up bidding in 2004 for the Maine Department of Public Safety, which was looking for a new headquarters to consolidate several offices and to build a statewide emergency dispatch center. Even though the state wanted only 15% of the Digital building's available space, Mattson decided to make an offer, and was the low bidder.
Mattson insists it was economics, not his affinity for Maine's Democratic administration, that won Harper's the contract. "We bid two dollars a foot below the prevailing rate for the department of safety project," he says. "No one else was even close."
It was a huge gamble ˆ the building needed new systems and the anchor tenant wanted only a fraction of the available space ˆ but it quickly paid off. The building is now fully leased; the state's Department of Labor has also consolidated its operations at the site and is the property's last major tenant.
In the last two years, Harper's has taken on projects that dwarf even the Digital building. It has been granted a $35 million tax break on a $100 million project to restore 500,000 sq. ft. of the Saco Island mill complex in Saco, a sprawling 19th-century complex totaling more than 2 million sq. ft. Harper's plan calls for renovating the old buildings for mixed use, as well as new construction of a nearby riverfront condo-marina complex. Pending city approval in March, work on the project could begin in September. Harper's hopes to complete the job in five years, with most of the work scheduled for the next three years.
Supporters of the Saco project say it could buttress the revival of the city, which currently owns most of the island property after a previous renovation effort failed, as well as revive the fortunes of neighboring Biddeford, with its languishing downtown. "This is the last chance we have to save the mills. That's why it's worth the $35 million we're offering," says Mark Johnston, mayor of Saco. He acknowledges that the tax increment financing structure places most of the risk on Harper's, and praises Mattson and his partners for taking on a project many other developers have considered and rejected. "New life is going to be born here," Johnston says. "People will be amazed when they see the results."
Equally ambitious is the Harper's plan for the 215,000-square-foot Vishay-Sprague plant in Sanford, which Harper's bought for $200,000 in 2005 and rechristened the Sanford Commerce Center. Harper's plan is similar to what it did with the Digital plant in Augusta: renovate the facility and rent it to an assortment of light-industrial tenants. Town officials see the effort as potentially spearheading a revival of Sanford's long-dormant downtown. Harper's is gutting the building and seeking tenants through the winter months.
Space glut
Despite his outspoken commitment to progressive causes, Mattson is clearly comfortable in the world of business deal-making. He is frank about his decision to switch from professional politics to real estate: "I was always interested in getting things done, and we just weren't doing that."
Mattson gets things done, while managing to strike a distinctly different pose compared to most developers. While many Maine real estate firms were outraged that the state's new vernal pools regulations might put as much as one-third of the state off limits to development, Mattson welcomed them. "It's all marginal land they're building on," he says. "We ought to be redeveloping our core centers, rebuilding what we've lost through economic change and physical decay."
He estimates that there are an additional 20-30 million sq. ft. of existing space in much the same condition as the Saco Island and Sanford mills. "But much of it doesn't have good access, or enough parking," Mattson says. "If we want it to happen, we're going to have to do more than talk."
What he thinks needs to be done is to maintain an emphasis on so-called "smart growth" principles that favor redevelopment rather than penalizing it. Mattson believes Maine should adopt a uniform code for historic buildings, as New Jersey did, that could spur a boom in the old mills. He also urges the state to provide more than TIF financing. "TIFs aren't a great tool, frankly," he says, "but they're all we have, so we use them."
The evangelistic tone of some of Mattson's comments belies his basic sunny nature, energetic optimism and infectious sense of humor.
"This is a business for dreamers, but dreamers who also manage to build their dreams," he says. "You can't do it if you worry a lot, don't like risks or can't stand dealing with people." He says that too many developers are "angry Republicans" who resent planning boards and code officers as interfering with their ideas. "We haven't had that experience with Maine officials," he says. "These are basically good people doing their jobs. We may have disagreements, but we know how to work them out."
Beliveau takes obvious pride in the success of his protégé. "Kevin has all the talent it takes to be successful in this business," he says.
"But what makes him unique is that nobody seems to have a bad word to say about him. Nobody."
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