AUGUSTA – City councilors approved a 90-year lease for the former Hodgkins Middle School so the Augusta Housing Authority can turn the vacant building into housing for low-income senior citizens.

The city will receive only $1 a year under the terms of the lease with the quasi-municipal housing authority. But by striking a deal with an entity which will try to redevelop the 56-year-old school with asbestos in parts of its floor and a leaky roof overhead, the city avoids the cost of maintaining, renovating, or demolishing it.

Councilors voted unanimously to approve the lease Thursday.

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.

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

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

City officials have said the roof has leaks, there is some mold on parts of the building and some asbestos flooring, common in buildings of that age, remains.

Resident Gina Turcotte, in a tense exchange with Mayor William Stokes over how much time she should be allowed to speak, said she agrees there is a need for more affordable housing for seniors in the city, but said Hodgkins is a not a safe building for that housing because of the presence of asbestos and mold in the old school.

Stephen Langsdorf, city attorney, said any such issues with the safety of the building would be remediated by the developer.

Bunker confirmed that, noting generally asbestos is completely removed from buildings for such projects, by environmental engineering firms who remove it and test to verify it has all been removed. He said most kinds of molds can be removed, as well, and testing would take place to make sure it is all gone, and the air is safe to breath.

“It is very highly regulated,” he said of asbestos. “Just about every old building has asbestos in it. It’s part of the deal.”

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.

City Manager William 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 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 tax credits unavailable to nonprofits.

In response to criticism from Turcotte the city would be making a profit from the venture, through the housing authority, Langsdorf said the “for profit” designation is simply a legal designation that would allow the housing authority to obtain state and federal tax credits for the project, and the city would not be engaged in any sort of profit-making venture.

“This is about the only way historic structures in Maine get rehabilitated,” Bridgeo said. “Without using state and federal tax credits, we’d be tearing down buildings like Old City Hall and the flatiron building.”

Bartlett said the Augusta Housing Authority is one of only a few housing authorities in Maine that doesn’t develop and own housing properties.

“We need to get it done,” Bartlett said. “It is time here, in Augusta, to expand some housing opportunities.”

Langsdorf said the proposed 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, and a lease for the Inn at City Hall, which Taylor has already developed into senior housing.

Bunker works with 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. Now the collaborative is converting the former Nathan Clifford School in Portland into 22 rental housing units. Both those projects, and several others in which Bunker was involved, used tax credits to help finance them.

He would work as a consultant to oversee 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, and sits on about 20 acres of land.

Ralph St. Pierre, assistant city manager and finance director, 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.

Bartlett, who became the Augusta Housing Authority’s new executive director in December, has said she wants to expand the authority’s role in providing affording housing in the area.

She said there is a shortage of affordable, safe housing in the city and the number of elderly residents is projected to increase, in Maine and in Augusta.

A rental housing market study done in 2013 for the old Cony flatiron building, which is also in the beginning stages of a project to convert it into senior citizen housing, indicated a need for additional rental units to accommodate a projected additional 192 renters over age 65 in Augusta between 2013 and 2018.

Hodgkins, tucked into a residential neighborhood on Malta Street, just off Cony Street, closed as a school at the end of the 2009 school year in a cost-cutting move. Students in grades seven and eight now attend classes at Cony High School.

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