AUGUSTA — A proposal to lease the former Hodgkins Middle School building for 90 years to the Augusta Housing Authority, so it can be converted into housing for low-income senior citizens, goes to city councilors for approval Thursday.

The deal would bring the city a token annual payment of only $1, but it would come with a host of other benefits, city officials said.

“The building is just a liability to the city and sits in a residential neighborhood, so the potential for reuse is limited,” said Ralph St. Pierre, assistant city manager and finance director. “So this is an ideal situation to unload it. Senior housing is an identified need. So the community gains (by there being more housing for senior citizens) and the city gains by letting go of a liability. The cost to tear down the building would be a lot.”

The school has been vacant and unheated since it closed in 2009.

The Augusta Housing Authority, working with developer Kevin Bunker, who has experience converting former schools into housing, hopes to turn the former classrooms into 34 to 41 apartments.

City councilors on May 1 authorized City Manager William Bridgeo to negotiate a deal with the Augusta Housing Authority, and the resulting proposed contract is up for council approval.

Bridgeo said the city worked quickly on the proposal because the housing authority needs a contract in place in time to meet upcoming Maine State Housing Authority deadlines to get financing for the project this year.

The contract notes the housing authority, not the city, would be responsible for maintaining the building and solving any problems that arise.

City officials have noted the building’s roof has leaks, there is asbestos in the floor, mold is present in some areas, and other damage may have occurred, as it stood unheated in recent years.

“They get it as is, where is, and they rehabilitate it all,” St. Pierre said Tuesday.

Amanda Bartlett, the housing authority’s executive director, said the agency plans to use federal and state historic preservation tax credits and low-income housing tax credits from the state housing authority to help pay for the project.

St. Pierre and Bridgeo said the city also could consider granting a tax increment financing package to help fund the project, thus allowing the authority to keep some or all of the property taxes it would pay on the building.

The housing authority is a quasi-municipal nonprofit organization, and thus it normally wouldn’t be required to pay property taxes; but it might form a for-profit company to be able to take advantage of financing options unavailable to nonprofits.

St. Pierre said the proposed lease is similar to a 49-year lease between the city and Housing Initiatives of New England for the former Cony flatiron building, which Cynthia Taylor, president of that organization, is working to convert to senior citizen housing.

Bunker, who told city councilors this would be the third housing authority he has worked with on housing projects, works with the Developers Collaborative in Portland. His previous work includes converting the former Gilman Street School, once Waterville’s high school, into Gilman Place, a 35-unit apartment building that opened in 2011. He would work as a consultant to the project and receive a portion of the developer’s fee.

Bunker estimated the project could go to the Planning Board for approval this July, and construction could begin in July 2015 and be complete in May 2016.

The 30,575-square-foot former Hodgkins building was built in 1958. It is on about 20 acres in a residential neighborhood on Malta Street, just off Cony Street.

St. Pierre said the lease would include the building and about 6 acres, with the city retaining a right of way to ballfields next to the building.

City councilors are scheduled to consider the proposed lease at their meeting, which begins at 6:30 p.m. in council chambers at Augusta City Center.

Councilors are also scheduled to:

• consider authorizing a beer-and-wine tent for the Kennebec Valley YMCA’s 100th birthday celebration June 13 at the city’s Capital Park and a beer garden for Augusta Fest on Aug. 2 at Waterfront Park;

• consider authorizing Bridgeo to allow night work by Greater Augusta Utility District crews cleaning catch basins and doing other work on district infrastructure, and by natural gas company crews installing gas lines in the city, and

• after the adjournment of the council business meeting, meet in a budget workshop to continue their work on the proposed city budget.

Keith Edwards – 621-5647 | kedwards@centralmaine.com | Twitter: @kedwardskj