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 file Buy this Photo

AUGUSTA — City councilors approved a tax break which over 30 years could return $7.8 million in tax revenues on the proposed new development of a 250-unit market rate housing complex off Civic Center Drive to the developer.

Councilors, who have previously expressed support for the proposal, said the development will help address a lack of housing in the city while bringing 250 people, and their money, to Augusta to boost the local economy. Even with the tax break, they said, the project will still provide much more in revenues than the currently undeveloped property does now.

Following a public hearing at which no members of the public spoke up about the project, councilors approved the tax increment financing agreement in a 7-0 vote Thursday.

Councilors said the project by Massachusetts-based Saxon Partners wouldn’t happen without a tax break.

“If we stand pat, this project wouldn’t happen,” said Mayor David Rollins. “I think this is the groundbreaking development that’s going to be a trigger for other development.

“We might be the hottest real estate market in Maine, and we all need to be proud,” he added. “This has been a long-term effort.”

The agreement will return a larger percentage of tax revenues to the developer than the city typically grants, to help fund the proposed development of a new 250-unit apartment complex off Civic Center Drive.

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 for 25 years, and more than that the other five years. Over the 30-year span of the TIF agreement, the developer would get back about $7.8 million in taxes, while the city would receive $5.6 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 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 because there is not a demonstrated market for this type of project in central Maine.

“Augusta is really coming on,” said James Bass, a local attorney representing Saxon Partners, the developer which is also currently working on similar developments near medical facilities in Lewiston and Biddeford. “But the outside world, especially the investment community, still looks at Augusta as a tertiary market, where they don’t have the confidence they would in, say, Portland or Boston.”

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.

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 Bass. 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. He said the complex would have numerous amenities onsite, including common gathering areas for tenants.

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

Officials noted it would help address a lack of housing in Augusta. The non-subsidized housing would not directly address a noted lack of affordable housing in the city. Ward 2 Councilor Kevin Judkins said an additional 250 units added to the local housing stock — which is currently seeing low supply and high demand and thus increasing rental rates — could help level off local rental rates by increasing supply.

Officials have 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 bill 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.

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.

Since the deal was first proposed, city officials have made one change, extending the life of the TIF agreement from 25 to 30 years, the maximum allowed by state rules, with, in the five additional years of the TIF, the city getting the full amount of the funds to use, and none of the funds going back to the developer in each of those years.

Municipalities can use funds collected in TIF districts for a variety of uses approved by the state Department of Economic and Community Development, helping to offset annual expenses.

Related Headlines


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.

filed under: