WATERVILLE — The City Council on Tuesday took first votes to approve changes to a pair of tax increment financing districts and related development plans for the Lockwood Mills housing project, which calls for developing 65 units in the former Marden’s Industrial building on Water Street.

The 7-0 vote followed a public hearing at which Dan Jacques and Mariah Monks represented North River Co., which owns the Lockwood complex. One more vote is needed on each of the TIF issues to finalize the changes.

The Lockwood Mills complex includes the Hathaway Creative Center to the south, the former Central Maine Power Co. adjacent to it, and the former Marden’s Industrial building at the north end of the complex, next to Ticonic Bridge. That building would be redeveloped to include 65 mostly affordable residential units and some at market rate. Hathaway Creative Center has 67 apartments.

A TIF is in place for the former Marden’s and CMP buildings, but North Country wants to change the TIFs to move 21 proposed housing units out of the CMP building and into the Marden’s building. That requires moving the CMP building out of the housing TIF and placing it into the economic development TIF, which the Hathaway building is located in.

City Manager Steve Daly explained earlier this week that the change is being made for financing reasons. The timeline is short and the tax adjustments would help with financing so North River can start the housing project in the fall, Daly said.

“If you approve these amendments, there will be no negative impact to the city’s revenue stream coming from the mills project,” Daly told councilors Tuesday night.

Tax increment financing districts allow cities and towns to shield increases in valuation due to new development. Because those increases are not used in calculations for determine state aid for education, state revenue sharing and county tax assessments, it saves in local property taxes.

Jacques said the project would reenergize a very busy intersection at Spring, Water, Main and Front streets. The TIF amendments are necessary to save the project, he said.

“We’ve modified the original plan and by doing that, the 65 units will all be in one building,” he said.

He said plans call for 47 affordable one-, two- and three-bedroom units. There would be 29 one-bedroom units, 22 two-bedroom units and 14 three-bedroom units.

Council Chairman Erik Thomas, D-Ward 7, noted that housing units in the CMP building could, theoretically, be included in phase two, later on. North Country secured financing through Maine State Housing and that is tied to a requirement that it have a certain number of affordable housing units.

“It’s really just a matter of of how the project phases at this point,” he said.

Some councilors toured the former Marden’s Industrial building Tuesday and noted that it is in rough shape inside.

“You can see the challenges of that building and why a credit enhancement agreement for this building is necessary,” Thomas said.

He said there is no way the project would occur without a TIF, so he fully supports it.

Councilor Rebecca Green, D-Ward 4, said she was one of the people who toured the building.

“It was pretty impressive, and we’re really fortunate that this project can go ahead,” she said. “I am definitely in support of this project.”

Councilor Claude Francke, D-Ward 6, said the benefit to the city is that a property not doing anything and has “zero taxable value” will be developed and a credit enhancement agreement is a way to subsidize that development.

It is actually a partnership between the city and the developer and turns a worthless property into something productive, Francke said. He thanked the representatives of North River for coming to the meeting and explaining their plans.

“I really think this is a good thing that we’re moving ahead with for Waterville,” he said.

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