Matt Morrill of Mastway Development discusses the Erskine Building while leading a tour of the Stevens Commons complex in Hallowell in April 2017. Morrill is also behind Tree Tops Housing, a 17-unit affordable housing project in Stevens Commons that will begin construction soon. Joe Phelan/Kennebec Journal file

HALLOWELL — Tree Tops Housing, a 17-unit affordable housing project in Stevens Commons, is close to beginning construction after the Hallowell City Council approved a tax credit deal with the project’s developer at its meeting earlier this month.

About half of the $19,000 in property taxes the city expects to collect each year on the housing project on Beech Street will be returned to the developer, Mastway Development, to offset costs and help maintain the affordability of the housing.

The council is expected to formally sign off on the tax credit agreement during an executive session at a special meeting Tuesday night. The project itself was approved by the city in December 2023.

For at least 45 years, the housing development will be limited to tenants earning 80% or less of the area’s median income, which in Kennebec County this year $87,000 per year for a family of four, or $69,600 for a family of two. Specific rent limits will be set by the Maine State Housing Authority.

The project was one of just six to receive funding in March from MaineHousing under the state’s Rural Affordable Rental Housing Program. Matt Morrill, owner of Mastway Development, wrote to the Hallowell City Council in May that the funding application process was competitive, but the Tree Tops Housing project scored well because it had already been approved by the city and the site is close to city services.

The state’s rural affordable housing funding was only available for projects with 18 units or fewer, which Morrill said fit perfectly with the space available in Stevens Commons for development. Tree Tops Housing will include 17 apartments in a single building, including two, two-bedroom apartments on the first floor and 15 one-bedroom units on the first and second floors.

The project falls in line with the city’s comprehensive plan, passed by the council in 2022, which called for more effort toward developing and maintaining affordable housing. The city estimated in the plan that 167 new affordable rental units would need to be constructed by 2032 to meet demand.

According to MaineHousing, almost half of all renting households in Hallowell are cost-burdened — meaning they spend more than the federally recommended 30% of their income on housing. Nearly 80% of single-parent renting households in Hallowell are cost-burdened.

Countywide, cost burden for renters is similar, with about 45% of all renters spending more than the recommended amount on housing.

“This was an underutilized, vacant parking lot that’s now going to provide much-needed affordable housing to Kennebec County,” Morrill said.

The final hurdle for the project is a MaineHousing review of the project’s final construction details. Morrill said he expects that approval from MaineHousing within the next two weeks and for construction to start in September or October. He said he plans for the project to be complete and for tenants to be moving in by late fall 2025.

Mastway Development has led the revitalization of Stevens Commons in Hallowell since Morrill acquired the campus from the state for $215,000 in 2016.

Since then, three buildings have been remodeled for student housing for the University of Maine at Augusta and the former campus administration building was renovated to hold 29 units of affordable senior housing with help from Community Housing of Maine.

“Through his vision and hard work, Matt and Mastway Development have turned what was a run-down, underutilized property into a growing, sustainable complex that is a successful and thriving example of the importance of investing in older and historic properties,” Hallowell Mayor George Lapointe said in a letter of support for the Tree Tops Housing project in December.

Mastway Development also developed the 99 Western Ave. workforce housing project in Augusta, which is now accepting rental applications.