WATERVILLE — A plan to build 18 more units at the St. Francis Apartments complex does not fit the city’s criteria for creating a tax increment financing district, a city panel decided Tuesday.

The TIF Advisory Committee, which makes recommendations to the City Council on whether to create TIF districts, decided it will look at changing the city’s TIF policy to include more housing-related criteria before voting on whether to recommend approval.

The developer of the second phase of the St. Francis Apartments project on Elm Street has told the panel that the project will not be built without the financing help from the city.

TIFs spur development by earmarking some of the increased property taxes that result from a project for further development or other projects that will boost a community’s economy. In some TIF programs, a designated project gets a break on property taxes produced through their investments, and revenue can also go to ongoing economic development programs.

St. Francis Apartments Inc., the corporation created by the Roman Catholic Diocese of Portland to develop the site of the former St. Francis de Sales Catholic Church for affordable housing for seniors, asked the TIF advisory committee to recommend the City Council approve a 15-year TIF for the additional 18 units at the site.

The first 40 units are due to be completed soon and are expected to open in October. A federal Housing and Urban Devleopment grant funded the first phase of the project, but that money is not available for the second phase, which was approved by the city’s Planning Board.

The TIF would use 50 percent of the property tax revenue created by the project to offset some operational costs for the new units.

The city’s TIF policy does not address using the districts for housing-related projects and was aimed mostly at commercial and industrial developments when it was adopted, said City Manager Michael Roy, a nonvoting member of the TIF Advisory Committee.

One of the criteria listed in the city’s policy for TIF districts is that the project improve a blighted area or a building in need of redevelopment or rehabilitation, or one that is in an area identified as a priority by the city. Another criterion is that it create jobs, particularly in manufacturing, or generate benefits to the community that exceed any potential for adverse effects on existing businesses.

At the committee’s next meeting, at 4 p.m. Monday, Sept. 8, members could could vote on whether to recommend the City Council approve the policy changes and create a TIF district for the 18 new St. Francis units.

Roy said the council could vote at its Sept. 16 meeting on changing the TIF policies and approving the TIF district.

Developers Collaborative, of Portland, was asked by St. Francis to serve as developer for the second phase of the project, and to investigate other funding possibilities to replace the expired HUD program. Developers Collaborative developed Gilman Place, an affordable-housing project in the former Gilman Street School, which many years ago was Waterville High School.

Kevin Bunker, of Developers Collaborative, said Sunday in an email that he is acting as a development consultant for St. Francis. If Developers Collaborative develops the 18 units, ownership of the second phase would be separate from the first 40 units. Both the 18- and 40-unit sections would still be controlled by the Diocesan Bureau of Housing, according to Bunker.

The 40 units are already in the city’s downtown TIF district, but there was no request made that the first 40 units be subject to TIF financing, according to Roy.

At Tuesday’s TIF committee meeting, member Erik Thomas, who also is a city councilor representing Ward 4, said if a TIF district is not created for the 18 units, the project will likely not be built.

Thomas said he wants to see revenue from TIFs used creatively, for projects such as improving blighted housing and providing incentives to help improve existing owner-occupied housing.

“There’s a huge need in this city to upgrade existing housing structures,” he said.

But member John O’Donnell, a city councilor who represents Ward 5, disagreed.

“I don’t know how we would use tax dollars to address privately owned, blighted properties,” he said.

Thomas and member Shannon Haines agreed that property tax revenue from the second phase of the St. Francis project could be used to improve housing in the city’s South End, for instance.

Thomas said the TIF for the 18 housing units would likely provide about $11,500 a year for the city. By not creating a TIF to help get them developed, Thomas said, the city would be giving up a chance for tax money that would not otherwise be available

But O’Donnell said the city has some responsibility to private landlords in the city, some of whom have criticized granting a TIF for a housing development.

“Eleven grand a year isn’t going to rebuild the South End, I’ll tell you that right now,” O’Donnell told Thomas.

Of the eight TIF districts in Waterville, only one is for housing — Gilman Place, and that was not HUD-subsidized.

Gilman Place was built as affordable housing and was associated with the Maine State Housing Authority, Roy said. Investors put money into the project and did not have to pay taxes on the funding because it was a form of TIF funding called a tax credit approval project, he said.

Other projects have used TIFs to provide income tax credits for investors.

The Hathaway Creative Center TIF, for instance, involved both state and federal credits, according to Roy.

The city’s other TIF Districts include:

• Kennedy Memorial Drive TIF — approved in 1992 to provide revenues for infrastructure improvements for the former Walmart site. It was amended in 1994 to fund the downtown job retention fund used to finance restructuring of The Concourse. Walmart has since moved to Waterville Commons.

• Chinet TIF — Approved in 2001, the district was adopted to provide a credit enhancement agreement between the city and the Chinet Co., now Huhtamaki, for revenue from personal property taxes. It is a 20-year TIF that financed upgrades to machinery during an investment period which ended in 2004-05.

• Airport Park TIF — Adopted to provide revenues used to create Century Drive and possible future extension of Airport Road.

* Mid-State Machine — Used to support expansion of Mid-State Machine Products into the former vacant Wyandotte Mill on West River Road.

Amy Calder — 861-9247

acalder@centralmaine.com

Twitter: @AmyCalder17