A proposal to build 42 units of low-income senior housing near the VA Maine Healthcare Systems-Togus campus in Chelsea is being put on hold after the organization failed to secure the needed funding.

The town manager, however, said the postponement will be helpful to find more about the effect of the development on the town and its services.

The proposal from Volunteers of America Northern New England, the regional affiliate of a national nonprofit organization, includes the construction of an apartment building and a cluster of one- and two-bedroom cabins on federal property south of the Togus National Cemetery. The housing would be available to seniors, with first priority given to veterans, said Julia Woodcock, vice president of new development for the organization.

Woodcock said a marketing study by the organization found 840 people in the Chelsea area would qualify for the housing.

Volunteers of America Northern New England requested the town submit an application on behalf of the organization for Community Development Block Grant funds from the Maine Department of Economic and Community Development to pay for $1 million in infrastructure costs. Woodcock said only municipalities can apply for the funds, and the organization would have hired a consultant to write the grant.

The town held a public hearing last month about the proposal.

The need for the grant disappeared earlier this month. The organization found out it hadn’t been awarded low-income housing tax credits from the Maine State Housing Authority that would have allowed them to secure $7.2 million in private funding to pay for the projects.

The CDBG money was dependent on securing the tax credits, Woodcock said. The organization will consider whether it’s possible to improve on the proposal, which scored the lowest of 15 application, and plan on resubmitting it next year, she said. The organization may look into other funding options if it’s unlikely the project will be awarded the tax credits, Woodcock said.

The town still remains uneasy about the proposal, though, according to Town Manager Scott Tilton. He said town officials and residents are concerned the people living in the housing would seek general assistance funds from the town, unpaid ambulance fees incurred by residents there could be billed to the town and school-aged children might move into the development.

The proposed development won’t add to the town’s tax base, because it’s a nonprofit organization on federal land, Tilton said, so town officials don’t want it to increase the cost of town services.

He said other people are concerned there could be safety risks if veterans with mental health issues are living close to Chelsea Elementary School.

Woodcock said people at the organization’s other housing developments usually don’t seek general assistance money because the developments have services like food pantries available to residents, but she couldn’t guarantee it wouldn’t happen.

She said it’s an issue the two parties could work out if the organization submits another application for the tax credits next year.

Woodcock said no children live in any of the organization’s 400 similar housing units, and Togus has agreed to provide police and fire services to the proposed development.

Tilton said another concern is the town could be liable for the grant if the project isn’t completed, but Woodcock said that isn’t a problem because the organization would secure a performance bond as insurance.

Paul Koenig — 207-621-5663 pkoenig@centralmaine.com Twitter: @paul_koenig