AUGUSTA — The city manager recommends offering $300,000 in city money as a “challenge grant” to help spur fundraising for a $6 million proposal to renovate and reopen the privately owned Colonial Theater.

William Bridgeo, in a recommendation expected to be discussed Thursday at a City Council meeting, said the offer of money would be contingent on enough money being raised from other sources to pay for the entire $6 million project. He said a restored theater could help return prosperity to the city’s downtown and a show of financial commitment to the project by the city could help private fundraising efforts.

“I am personally convinced that downtown Augusta is poised to enjoy a renaissance that will put it on a par with a handful of New England cities that will, in the years to come, result in a financially healthy and vibrant status,” Bridgeo said in his weekly memo to councilors. “Downtown housing is coming; waterfront development is coming; and more citywide commercial expansion is coming. To me, the long hoped for saving of the theater and the stimulus it will generate is the one big thing that Augusta can do to keep the momentum accelerating.”

Bridgeo said Tuesday $300,000 would equal 5 percent of the total project cost. He said the $300,000 could come from money essentially left over and unspent in the recent $11 million expansion and renovation of Lithgow Public Library. He said the library project came in under budget, and $300,000 is expected to be left over from it, even if, as proposed, $80,000 is kept in the library account for any remaining issues with the project that might come up.

He said the money could help prompt private donations for the restoration of the derelict, vacant Water Street theater. Before voters approved borrowing $8 million for the Lithgow project, the city put up $500,000, which helped spur private fundraising efforts by showing the city was committed to the project.

“A significant number of major gift donors waited to see whether the city was going to be an active participant in the fund-raising effort before they made their commitment” to Lithgow, Bridgeo said. “Now, the Colonial Theater people are getting the same inquiry.”

Bridgeo said communities — including Rockland and Bar Harbor in Maine, Northampton, Massachusetts, and Burlington, Vermont — that have invested in arts venues like the Colonial Theater have become more vital communities.

City councilors set, during a goal-setting process at the start of the year, a goal of supporting efforts of a nonprofit group that owns the Colonial Theater.

Richard Parkhurst, a leader of Augusta Colonial Theater, is scheduled to give councilors an update on efforts to raise money and restore the theater at their 6:30 p.m. meeting Thursday, in the council chamber at Augusta City Center.

Councilors also are scheduled discuss a proposed new downtown development incentive program. It would be funded with $50,000 in city reserve money in an account originally established to help retain and attract jobs in the city. It would include three components: a small business loan program in a partnership with Kennebec Savings Bank, a grant program to encourage the development of downtown housing, and a building permit fee waiver program in which the city would waive building permit and inspection fees for improvements to multi-family housing units citywide, for one year.

Councilors are also scheduled to:

• hear a presentation on the Maine Coastal Reentry Center Garden Project;

• discuss an impaired driving enforcement program;

• discuss an underage drinking task force grant opportunity; and

• discuss adding a “Complete Streets” policy.

Keith Edwards — 621-5647

[email protected]

Twitter: @kedwardskj