GARDINER — To support a developer’s plan to build affordable housing on blighted property the city owns, the Gardiner City Council will consider creating a new tax increment financing district and approving a credit enhancement agreement for the developer at this week’s meeting.

Developers Collaborative, which is developing a medical arts building at 1 Summer St., has an option on two other Summer Street properties and plans to develop housing on them. To make both projects work, representatives from Developers Collaborative have said they need a 30-year credit enhancement agreement to be eligible for the tax credits they require.

“In order for the housing projects to happen, they need to receive the tax credits from Maine State Housing,” Gardiner City Manager Scott Morelli said. “One of the several ways a project gets points (in the review process) is scoring how much the community is willing to participate in tax breaks. The developer was clear he would need a significant tax return for this to happen, and this is one of the ways to get those points.”

City officials say the properties — three of the four former T.W. Dick Co. properties that the city has acquired — are in the existing Downtown TIF District, which has 15 years left. They are recommending that the properties be removed from the existing TIF district and that a new affordable-housing TIF district be created, with half of the sheltered tax revenue going to the city and half to the developers.

Generally speaking, TIFs often are used to give tax breaks to developers, returning a portion of the new tax revenue from the development to the developer. Municipalities also may collect a portion of the new tax revenue to pay for projects allowed under the terms of the TIF district.

Because affordable-housing TIFs are restrictive, city officials propose that half the taxes received on the new value be applied to Gardiner’s share of School Administrative District 11’s educational assessment as well as to road improvements on Summer Street.

Two credit enhancement agreements, the mechanism needed to return a portion of tax revenue to the developers, also are being considered. One is for the senior housing project and one is for the workforce housing project. The total development cost for the Summer Street Senior Apartments is estimated at $4.4 million, expected to be financed in large part by $406,313 in Low Income Housing Tax Credits that are expected to yield more than $3.8 million. The total development cost for the Summer Street Workforce Apartments is estimated at $2.6 million, to be financed mostly through $237,356 in Low Income Housing Tax Credits that are expected to yield about $2.25 million.

A public hearing on both the proposed TIF district and the credit enhancement agreement has been scheduled for Wednesday, following a public hearing and consideration of the four-way stop at the intersection of Water and Church streets.

The council also is expected to:

• consider renewing and amending the expired Downtown Credit Enhancement Program to encourage development of upper floors in downtown Gardiner,

• consider sending an amendment to the adaptive reuse overlay district created for the Lost Orchard Brewing Company to a first reading after a public hearing,

• consider voting for Senate District 14 representatives to the Maine Municipal Association’s Legislative Policy Committee, and

• consider appointing representatives to the Kennebec Valley Council of Governments general assembly.

The council is scheduled to meet at 6 p.m. Wednesday in its chamber at 6 Church St.

Jessica Lowell — 621-5632

[email protected]

Twitter: @JLowellKJ