A view of lots where a 250-unit apartment development is proposed at the intersection of Leighton Road and Civic Center Drive in Augusta. Augusta Elks Club is seen at top left. Joe Phelan/Kennebec Journal Buy this Photo

AUGUSTA — City councilors expressed support for a tax break, larger than those the city typically grants, to help fund the proposed development of a new 250-unit apartment complex off Civic Center Drive.

Councilors said the project, by Massachusetts-based Saxon Partners, wouldn’t happen without a tax break and will bring much-needed housing and attract hundreds of desirable tenants, who’ll spend money locally, to Augusta.

The deal would return an estimated $312,000 a year in new property tax revenues expected to be generated by the project to the developer, with $134,000 a year going to the city. Over the 25-year span of the tax increment financing, or TIF, agreement, the developer would get back $7.8 million in taxes, while the city would receive $3.4 million.

The city’s standard TIF agreements usually return no more than 50% of new revenues generated by a project to the developer, an amount that Keith Luke, the city’s economic development director, said is generally revenue neutral, when the overall tax impacts are considered.

Saxon initially sought a TIF returning more than 77% of new revenues to it, but verbally agreed to a 70% return after negotiating with the city’s TIF Committee, which unanimously recommends the TIF be approved. The committee includes Mayor David Rollins as well as Ward 1 Councilor Linda Conti and At-Large Councilor Raegan LaRochelle.

Luke said Saxon officials said they’ve been unable to attract adequate private financing for the project, without the TIF, due to there not being a demonstrated market for this type of project in central Maine.

Councilors could vote on the proposal at their Nov. 5 meeting, at which time there will be a public hearing. But on Thursday night, most councilors spoke in favor of granting the TIF deal to the project.

The project is expected to cost about $30 million to build and be assessed, for tax purposes, at a value of least $21 million, Luke said.

It would be built on what is now undeveloped land off Civic Center Drive, across from the intersection with Leighton Road, near the Augusta Elks Club.

“If you have investors willing to put their nickels on the table, for a 250-unit building, at this time you’ve got to take it,” At-Large Councilor Marci Alexander said. “Any town in Maine would want it.”

The housing would be targeted at medical workers at the nearby MaineGeneral Medical Center hospital, and be 50% studio apartments and 50% one-bedroom units, according to James Bass, an Augusta attorney representing Saxon Partners on the project. The small size of the units, Saxon notes in its proposal to the city, would make them unlikely to attract families with children and thus not add to local educational costs.

The apartments would rent at market rates, and not be restricted to medical workers, and likely also attract state workers and other professionals in Augusta, proponents said.

“The thesis behind this project is to build modern, new, attractive, very efficient housing for medical staff,” Bass said, noting Saxon is also looking at Biddeford and Lewiston for similar projects near medical facilities. “That was really the draw, to Augusta, with MaineGeneral. But it’s not specific to health care workers. It’s for someone looking for new modern housing.

“As we’ve talked about, Augusta needs more housing, whether it’s workforce housing, affordable housing or market rate housing,” he added. “You look at the success downtown (of market rate housing), and its nonexistent vacancy rates. We think this is going to fill a need and be a positive in Augusta.”

Officials noted it would help address a lack of housing in Augusta, though it would not directly address a noted lack of affordable housing in the city. Coincidentally, councilors also discussed the need for affordable housing Thursday.

Rollins, Alexander and Bass said benefits the project will bring to the city include tenants who’ll pay an estimated $75,000 a year in excise taxes on their vehicles, $90,000 a year in sewer and water fees to the Greater Augusta Utility District, and tenants who’ll shop, dine and work at local businesses.

TIFs allow municipalities to shelter property taxes generated by new development within designated districts. Sheltering money through a TIF means it would not be added to the city’s total property valuation for state tax calculation purposes. Without that, as a municipality’s total property valuation increases, its state-provided revenue — such as aid for education and revenue sharing — decreases, and its county tax liability increases. New value sheltered in a TIF does not count toward a municipality’s property tax value, so its state aid funding is not cut until the TIF expires.

Company officials said the current property only generates about $13,000 a year in property taxes. Saxon’s proposal to the city says investors found the potential return on investment too low without the TIF, so it is unlikely to happen without it.

“Simply put, part of something is better than all of nothing,” Ward 2 Councilor Kevin Judkins said.

City councilors and the Planning Board previously approved a zone change to help make way for the development.

Luke noted the TIF agreement calls for specific timeframes to be met, or the deal could be terminated. They include breaking ground by Dec. 31, 2021, and being complete within 36 months.


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