SWH eyes taller buildings for workforce housing - 'going up instead of out'

Contract zoning's time has come - Part 2 of series on MDI's limited 'carrying capacity'

BAR HARBOR, June 11, 2025 - What if the owners of the Pathmaker Hotel had been allowed to build a taller building, in exchange for providing apartments for 20 working families on rents they could afford?

Instead of this on Cottage Street:

You could have had this:

Given that Bar Harbor has a high tolerance for stretching the boundaries of its zoning laws, why not turn that into an advantage in attacking intractable problems like the housing crisis?

I used the AI platform chatGPT to create the above image of a eight-story Pathmaker Hotel.

I actually believe it’s more resplendent than the current design and it blocks no one’s view.

One MDI town considering raising building height limits is Southwest Harbor, whose planning board is mulling a change to 60 feet from 40 feet for which it hopes to seek voter approval in November.

How did it come about?

“Well, they're talking about housing units. So if you go up, it's much easier than going out,” said code officer John Larson.

Acting Planning chair John Williams likes the idea but worried it would not get voter support - until he heard about “contract zoning.”

At least eight Maine towns - Kennebunk, South Portland, Scarborough, Brunswick, North Yarmouth, Rockport, Cape Elizabeth and Freeport - have employed “contract zoning,” a planning tool that allows municipalities and developers to negotiate specific land use arrangements that would not otherwise be allowed under existing zoning laws.

In March 2024, Kennebunk residents approved a contract zone for a 70-unit affordable senior housing project which will serve people 55 and older earning up to 60 percent of the area median income.

This project targeted two growing needs: affordable housing and senior housing. Critics expressed concern about increased density and traffic, but supporters saw it as a creative solution in a region struggling with housing affordability.

Contract zoning is a legal agreement between a municipality and a property owner or developer in which the municipality agrees to rezone a parcel of land in exchange for specific conditions or benefits.

Unlike “spot zoning,” which may change a parcel’s zoning without safeguards, contract zoning provides enforceable guarantees that the development will conform to agreed-upon conditions. This makes it attractive for towns trying to balance development with local priorities.

In Maine, contract zoning is legal under 30-A M.R.S. § 4352, which allows municipalities to adopt contract zoning provisions in their ordinances, subject to consistency with their comprehensive plans.

Contract zoning has an unexpected local champion in Bar Harbor, Ellen Dohmen, who recently stepped down after 25 years of service on the Planning Board and chairing the Appeals Board.

I asked her if she would have supported a building which exceeded the town’s height restriction.

“It depends on what it blocks,” she said, and then proceeded to give me a teach-in on “view shed” requirements.

“You can bargain the hard details of it, and find ways to figure it out.

‘We need options, and contract zoning might give us a kind of flexibility to answer our needs and maintain still our small town,” Dohmen said.

Every project will be sui generis and have its own requirements. For instance, a six-story building in Southwest Harbor would be possible only because it has the tallest ladder truck on the island - 120 feet. Bar Harbor’s 85-foot reach is the shortest but it has access to taller firetrucks from other towns through a mutual aid agreement.

Properties within 250 feet of the shoreline are off the table because the state governs height restrictions in shoreland zones.

“If you look at 250 feet, that isn’t that far back, so somebody can put up a really high building and block everybody,” said Williams, who owns the Drydock Inn, the highest building in town.

“Now, there are places in town where you could build a bigger building, and you wouldn't be affecting anybody. Most of the population is along Main Street, but once you go back deeper in, and even if you look on Google Earth, you see a lot of property back there.”

Williams said a perfect spot would be the land behind Next Level Sports Lounge on Main Street where a developer once proposed nine houses but did not pursue it.

For Bar Harbor, contract zoning would be an opportunity for the town to heal its wounds and begin to build bridges with the business community to attain a common goal. There are many opportunities to build up instead of out. In exchange the workforce housing doesn’t have to be part of the new construction. It could be staff housing already in existence transformed into year-round workforce housing.

Would parents who resisted the proposed hotel next to the school on Eden Street have a change of heart if all the units facing the school were occupied by teachers who paid an affordable rent, in exchange for the developer adding more floors?

The closing of the birthing unit at the hospital was a desperate call to action. Families are disappearing in our midst.

MDI town leaders continue their bi-annual feel-good meetings with no clear goals in sight. Sound bites and photo ops are not actionable.

The year-round community is collapsing. Time to try contract zoning and other ideas.

Here are some examples of “contract zoning” in other towns in Maine:

Brunswick: Mixed-Use Redevelopment and Downtown Growth

Brunswick has use contract zoning near Main Street, where a developer proposed a mixed-use residential and commercial project with higher density than normally allowed. In exchange, the developer agreed to provide enhanced landscaping, improve pedestrian access, and limit the height of buildings in sensitive areas. This type of contract zoning has helped Brunswick preserve its historic feel while still encouraging downtown revitalization.

South Portland: Industrial Transitions and Coastal Concerns

In South Portland, contract zoning has been used in some of the city's more industrial or transitional areas, including along the Western Avenue corridor. One project involved the rezoning of a former industrial site into a mixed-use residential and retail development.

The city required the developer to adhere to architectural standards, create public open space, and contribute to stormwater infrastructure. The use of contract zoning allowed South Portland to begin reshaping an underutilized area while ensuring that new development conformed with environmental goals and neighborhood concerns.

Scarborough: Balancing Growth with Community Values

Scarborough approved a contract zone to allow a developer to build a senior living facility in a residential zone that would not normally permit such density. In return, the town secured commitments to architectural style, traffic mitigation and the preservation of adjacent wetlands.

However, Scarborough’s use of contract zoning has also sparked contention. Some residents argue it undermines the predictability of land use regulations and creates a sense of “zoning for sale.” Others believe it is a practical way to adapt to changing demographics and economic realities.

Cape Elizabeth and the Affordable Housing Debate

In Cape Elizabeth, contract zoning became a flashpoint in the town’s contentious effort to build affordable housing. In 2022, the town council approved a contract zone for a 49-unit affordable housing project, citing the town’s unmet housing needs. The project was to be located on town-owned land and operated by The Szanton Company, a Portland-based developer of income-restricted apartments.

Opponents argued that the contract zone violated the town’s comprehensive plan and represented excessive density. A citizen petition forced a town-wide vote in 2023, which ultimately overturned the project. This case demonstrated how deeply divisive contract zoning can be, especially in wealthy, residential towns where changes to zoning are seen as threats to community character.

Contract zoning is not limited to large cities. Towns as small as North Yarmouth, Rockport and Freeport have considered or used contract zoning tools. Typically, these efforts involve balancing environmental protections with the need to grow the local tax base or address housing shortages.

Polluting our watersheds should not be part of the equation. (Read Part 1 of this series.) All the urban planning cliches aside - “gentle density” - strict protection of our watersheds should trump any new housing development.

The QSJ employed AI tools to publish this article.