PORTLAND, Maine — Entrepreneurs Joshua Ames and Nate Donovan first cooked up their combination coffee shop, speakeasy, literary hub and retail reading room business idea over brunch in 2021.
They got to work buying equipment, signed a five-year lease on Congress Street and spent nearly a year renovating the two-floor space. Ames and Donovan were almost ready to open Novel Book Bar & Cafe.
But it might not happen. Portland city officials have levied a $18,000 “impact fee” on the new operation and told the duo they can’t open until they pay up.
Ames and Donovan said they have sunk everything into their dream and don’t have the cash.
“We even asked if we could work out a payment plan,” Donovan said, standing in the space at 643 Congress St. with a pile of bookshelves waiting to go up behind him. “But they’re not lenient with that at all.”
In Portland, developers are required to pay impact fees calculated under a set schedule when they construct new buildings or develop older ones for new uses. The fees are meant to fund municipal infrastructure such as sewer and water, as well as accommodating added cars, bikes and pedestrians that new businesses and housing may attract to city streets and parks.
Donovan and Ames didn’t think they would be paying any impact fees when they took over their space a year ago because they weren’t big developers, just two friends opening a fancy coffee shop and bar. They were wrong.
Unknown to them, their landlord or the commercial real estate agent who brokered the lease deal, the previous tenant had been officially listed by the city as mostly an office but not a retailer. That is why Donovan and Ames are technically redeveloping and changing the use of the space, and thus liable for impact fees.
The storefront was most recently occupied by Bomb Diggity Arts, a program serving artists with intellectual disabilities. The operation had a small retail gallery facing Congress Street but was not classified as such with the city.
“Shame on us for not doing the research, I guess,” Donovan said.
Major developers are usually prepared to pay impact fees, which are common around the country, Helen Donaldson, director of special projects in Portland’s planning department, said. However, smaller or first-time entrepreneurs can sometimes be caught off guard.
“The fees are based on floor space and how many people might be driving or walking there,” Donaldson said. “The idea is to make the fees predictable.”
Donovan isn’t new to the business world. He has a master’s degree in business administration and another degree in finance. He also ran a successful construction outfit for several years. He said he knows what an impact fee is and would be happy to pay if he and his partner could afford it. But he was stunned by the amount, which he called unfair to new, small businesses like his.
Portland’s ever-churning and tumultuous restaurant scene meant banks weren’t willing to lend Donovan and Ames any money. They have used their own cash and taken out a personally guaranteed private loan to finance their business.
Without any other options left to raise money, the duo has reluctantly turned to online fundraising, asking their Instagram followers for help. In return for donations, Donovan and Ames are promising T-shirts, mugs, coasters and books after they open.
Started a month ago, the online fundraising total currently stands at $1,535. If they can’t reach their goal, Donovan said he and Ames may have to liquidate their 401(k)s, absorbing the substantial tax and early withdrawal penalties.
“If we don’t cough up $18,000 to this town, we’re not opening,” Donovan said. “If we had deep pockets, that’d be one thing, but we’re just two guys trying to open up a cool thing for the town.”
