AUGUSTA — The developer responsible for converting a former computer manufacturing site into the office park known as the Central Maine Commerce Center will now turn his attention to the city’s soon-to-close hospital properties.
Kevin Mattson has inked a deal to buy MaineGeneral Medical Center’s East Chestnut Street hospital and related properties for $2.5 million. The property will be bought by Augusta East Redevelopment Corp., a subsidiary of Mattson Development.
Mattson sees offices in place of a hospital.
“It won’t be a medical facility,” Mattson said. He said he will probably do to the property what he did to the former Digital plant on Civic Center Drive. “We’ll use the shell and repurpose it. A lot of it will be office space.”
Chuck Hays, president and chief executive officer of MaineGeneral Medical Center, said hospital officials signed the agreement Friday with Augusta East Redevelopment Corp. The hospital previously tried to market the East Chestnut Street hospital and ancillary buildings, as well as its 88-acre Seton campus in Waterville through a three-day online auction, but no bidders met the minimum $2.6 million by auction end Oct. 25.
MaineGeneral is consolidating its operations into a regional hospital that’s under construction in north Augusta.
Hays said Mattson will pay $2.5 million for the Augusta property. The closing is anticipated to take place in February.
The hospital continues to market the Seton property commercially.
“We’re pretty excited,” Hays said. “The other beauty is it gets a huge property back on the property tax rolls for the east side.”
Augusta City Manager William Bridgeo praised the deal on Friday.
“I believe it is just a terrific opportunity for all the parties, the hospital, the prospective developers and the city,” he said. “It’s been clear to the mayor and the council and city staff that ever since the hospital began constructing its new building that there was there was going to be a significant challenge involved in finding an occupant for the old building.”
He said there was nothing more discouraging than imagining the hospital property empty.
Mattson described the Augusta hospital site, because it’s large, near downtown and on the Kennebec River, as remarkable.
He said redevelopment efforts will be different from the commerce center project because it is in an established neighborhood. The former Digital manufacturing plant, later Sanmina-SCI, on Civic Center Drive is in a large open area away from residential property.
“We want to be transparent to people who are affected,” Mattson said. “We will work closely with neighborhood groups. I think they’ll be happy about the lack of sirens.”
The Augusta site spans more than 19 acres, and includes the seven-story hospital, parking lots, three houses and a building that once housed Augusta General School of Nursing and is now used for offices. Some of the property borders the Kennebec River and the former Augusta Mental Health Institute campus.
The agreement calls for the hospital to pay $1 million to lease back the property for a year until the new hospital opens, meaning it should net $1.5 million from the deal — an unanticipated bonus.
“In all of our financial analysis, we assumed we would get no money back,” Hays said.
MaineGeneral Medical Center is building a $312 million, 192-bed hospital near Interstate 95 designed to combine the in-patient functions of its Augusta site as well as the hospital at the Thayer campus in Waterville.
The regional hospital is scheduled to open a year from now. Thayer will remain open as an outpatient hospital and is scheduled for a $10 million renovation that will include a 24-hour emergency department.
Bridgeo said Mattson and Bill Dowling, Mattson’s chief operating officer and a former mayor of Augusta, have a strong track record with the city.
“Who would have thought when they took a chance on that vacant SCI building that in seven or eight years it would become the thriving campus it is now? There are thousands of jobs out there and an awful lot of tax revenue,” Bridgeo said.
He said Mattson approached him about a tax increment financing package for the hospital redevelopment, and that the City Council would hold preliminary discussions in executive session because they involve proprietary financial information.
Mattson said a tax increment financing setup, in which property tax money is funneled back to the developer for a limited about of time, pays for itself. He pointed to the commerce center valued at $10 million when Mattson and partners bought it in 2003, which had a TIF deal.
“Now it has a $50 million valuation with all those different buildings and is paying three times the taxes,” he said. “None of that would be possible without paying for some of infrastructure via tax increment financing.”
He predicted the hospital redevelopment will end up being a $30 million or $40 million project.
Mattson said the project requires a zoning change as well as Planning Board approval. He said he also intends to consult the city’s plans for east side redevelopment.
“This is a big, big piece of that east side redevelopment,” Mattson said.
Betty Adams — 621-5631