AUGUSTA — A yearslong proposal to build 250 market-rate apartments off Civic Center Drive hasn’t moved forward because a Massachusetts developer has so far been unable to secure financing for the project.

The proposed development by Saxon Partners at 375-391 Civic Center Drive was granted a zone change in 2018 to allow apartment buildings to be built in a zone that did not previously allow them. It was approved by the Planning Board in 2019, and received a tax increment financing, or TIF, tax break from the city in 2020.

But no development has taken place at the site, a mostly vacant lot next to the Augusta Elks Lodge. The developer has extended its building permits twice, most recently a two-year extension in 2023 when company officials cited ongoing supply-chain issues, record high construction costs, interest rate increases and bank failures. Those issues have made it impossible to secure financing needed for the proposed $30 million project, the developer said.

Thomas Greco, director of multifamily development for Saxon Partners, wrote in a letter to the city requesting a second extension of its permits that the developer still sees a need for the type of housing project, which would target medical workers from the nearby MaineGeneral Medical Center campus.

“We remain bullish on this project and continue to believe there is a strong need in Augusta for the type of modern, efficient housing that we have spent a significant amount of time and money designing for this site” Greco wrote in June of last year. “While the project is unfeasible in the current economic climate, we remain hopeful this picture will change substantially within the next two years.”

Now the property is listed for sale, with an asking price of $6.5 million. It’s advertised as a fully-approved site with a significant property tax reduction and architectural plans in place.

Keith Luke, the city’s economic development director, said the property remains ripe for development as much-needed housing but commercial financiers have been reluctant to offer financing to such large projects in areas unfamiliar to them, such as Augusta.

Luke is hopeful another large housing project in the works that was recently approved by the Planning Board — for another Massachusetts-based developer, John Flatley Co., to build 260 apartments off Eight Rod Road — will get built, quickly fill up with tenants, and demonstrate to commercial lenders that loaning money for large housing developments in central Maine is a good idea.

“Talk to Saxon, and other developers, about why they’re not doing projects and they’ll say the financing is a significant issue,” Luke said. “And what could make the difference with the Flatley project is they have the capacity of self-financing.”

Saxon officials could not be reached for comment on Tuesday.

Luke said he’s heard from a few parties interested in purchasing the Saxon property, but none who’ve struck a deal.

Doug Martin, of New Hampshire-based KW Commercial Real Estate, the agent listing the property, said he’s received a number of inquiries on the property, which he said has been listed for six to eight weeks and is being marketed nationally.

“It’s a good project, a very good project, I’ve gotten a steady flow of inquiries on the property,” he said.

He said the property includes two commercial lots on Civic Center Drive that a developer could lease or sell off. He said the larger lot, with plans for the housing development already drawn up for it, is likely to remain as a housing project.

“That’s the highest and best use,” Martin said.

Betsy Poulin, Augusta’s city planner, said Saxon’s request to extend the permits for the project was granted by the Planning Board, giving the project until July 17, 2025, to start construction. Luke said the project’s TIF deal from the city stays with the property and should transfer to any other owners who purchase and develop the property as housing.

The deal could return $7.8 million in tax revenues from the proposed new development to the developer over 30 years. It 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 30-year span of the TIF agreement the city would receive $5.6 million in tax revenues.

The undeveloped property, at the time the TIF was approved, was only generating about $13,000 a year in property taxes. A developer would only get a tax break on new value created by the development.

The apartments, all studio or one-bedroom units, would rent at market rates.

Saxon Partners is also selling a 6.8-acre parcel of land in Lewiston where it had planned to build a 244-unit apartment complex overlooking the Androscoggin River, geared toward medical workers at the nearby Central Maine Medical Center.

Martin said Saxon is developing projects up and down the East Coast, building some itself and selling others off as permitted, ready-to-build projects.

“They find the right site, get them permitted, develop and build out and hold onto some of them, but with some they go through the permitting and sell it off,” Martin said. “You can’t build them all.”

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