AUGUSTA — City councilors expressed support for tax increment financing agreements meant to help two major projects in Augusta by returning some of the property tax revenue they would generate to the owners.

Councilors said the tax breaks for Performance Foodservice — Northcenter and Richard Parkhurst’s project at 275-287 Water St. will help create new jobs, keep a growing company in Augusta, and revitalize the downtown by saving a prominent building that probably would have been demolished if Parkhurst hadn’t stepped in.

Both the proposals would be “revenue neutral” for the city because the tax revenue they generate would be sheltered, so they would not diminish state revenue sharing and aid to schools, according to Ralph St. Pierre, finance director and assistant city manager.

One of the proposed agreements would help local developer Parkhurst bring 275-287 Water St., the former Farrell’s building, up to code and renovate it into new retail space on the lower floor and apartments on the upper floors. Parkhurst plans to invest about $1.6 million in the building to create 12 apartments, most of them market-rate, on the upper floors; retail, including a restaurant on the Water Street level; and a yoga studio on the lowest level.

Parkhurst bought the 36,000-square-foot building, which overlooks the Kennebec River, last October, after the city’s code enforcement office shut the building down because of safety code violations.

City Manager William Bridgeo said if the building hadn’t been sold, it probably would have had to be demolished, at the city’s expense, because it was in such rough condition and its previous owner didn’t have enough money to fix it.

Mayor David Rollins noted the project will increase the taxable value of the building while also bringing residents and businesses to the downtown.

“It’s a really incredible deal for taxpayers,” Rollins said. “That building was shut down, and Dick (Parkhurst) stepped forward to take this thing out of the doldrums.”

Parkhurst said bankers told him, pointedly, if the city won’t provide a TIF for the building, the bank would not provide financing for it, either.

He said even with the TIF, the project is “barely affordable.” But he said the 16 to 20 residents and three or four businesses it would bring would help the downtown, where he and his family own other rental properties.

In June, Wyatt Shorey and Steven Dumas plan to open a new 45-seat restaurant, Otto’s by the River, in the Water Street-level space in the building previously occupied by Gagliano’s Italian Bistro.

The proposed 30-year TIF agreement would return 100 percent of the taxes on the increased value of the building for the first five years of the agreement, decreasing to 75 percent for years six through eight, 50 percent in years nine through 12, and 25 percent in years 13 through 15, for a total reimbursement to the developer of $320,000.

The city would retain all revenue generated from the development in the final 15 years of the agreement, an estimated $640,000, probably using it to fund future fire station construction and renovation and for firefighter apparatus.

The other proposed TIF praised by councilors Thursday was a 30-year agreement to help Performance Foodservice — Northcenter food distributor build a 55,000-square-foot frozen food storage facility and expand parking at its Dalton Road warehouse.

Company officials said the $15.8 million project is needed because the business, which employs about 360 workers, about 200 of them at the Augusta facility, is out of space at its 140,000-square-foot building. Company officials have said the average pay for those employees is about $62,000 a year.

Asked by At-Large Councilor Marci Alexander whether the expansion would mean more jobs, Greg Piper, president of the company, said it would, though he didn’t provide a specific projection. He said the company grew from 200 employees to 360 employees in the last 16 years and he expected growth, with the expansion, would continue at a rate “pretty close to that.”

“It is encouraging to see that kind of growth here in Augusta, and the jobs you are producing,” Ward 2 Councilor Darek Grant said. The proposed TIF would return 100 percent of the taxes paid on the increased value of the property to Performance Foodservice in the first three years, 75 percent in years four and five, 50 percent in years six through eight, 40 percent in years nine through 12, and 30 percent in years 13 to 20. The total reimbursement to the company would be $594,000.

The city’s share of revenue would total $1.19 million and, like the other TIF agreements, the agreement would provide funds for fire station construction and renovation and firefighting apparatus.

The company began in 1963 as a division of Joseph Kirschner and by 1970 had five employees. It moved to its Dalton Road site in 1975 with a 12,000-square-foot building. It expanded there in 1984, 1988, 1995 and 2000, when it reached its present 140,000-square-foot building size.

The city changed the zoning of the area to the north of the site, to allow the company to build a new parking lot, so it could expand by adding the cold storage building on the former parking lot site.

Both proposed TIFs will be up for a vote by councilors June 2.

Keith Edwards — 621-5647

kedwards@centralmaine.com

Twitter: @kedwardskj

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