Lincoln County commissioners have terminated $240,000 in pandemic relief funding meant to help Wiscasset plan affordable housing near the site of a former nuclear power plant.

The money, secured last year from a pool of American Rescue Plan Act funding, was approved to cover site assessments, community outreach and the development of a plan for affordable housing at the 300-acre site on Old Ferry Road next to the shuttered Maine Yankee Atomic Energy Plant.

But after an unnamed developer approached the town about the possibility of building a large-scale data center there, local officials began asking the county whether that money could be used for housing projects elsewhere, freeing up the site.

They got their answer late last month, in a letter from County Administrator Carrie Kipfer to the Wiscasset Selectboard.

“Since the project that was previously submitted by the Town of Wiscasset has changed significantly in scope, the Commissioners have made the difficult decision to withdraw their funding approval for the Old Ferry Road project completely,” Kipfer wrote in the letter, obtained Monday by the Press Herald. “The Commissioners wish you the best of luck as you explore development options on this parcel.”

Aaron Chrostowsky, Wiscasset’s economic development director, said he and other town officials were “a little shocked” by the county’s response. He said the proposal had always included room for mixed development, which could have included a data center or other businesses.

“The original concept was a mixed-use development with commercial and affordable housing, and we believed that we could still do that,” Chrostowsky said.

The town looked for ways to allow affordable housing and the potential data center to both utilize the property, he said, including by asking the center’s would-be developer whether there could be room for residences next door.

“The data center kept on saying they needed more land, and the county was signaling to us that they didn’t want to play with us with this project because of the data center,” he said.

Of 300 acres, the proposed data center would take up 200 acres — the entire developable portion of the land, according to county records.

WHAT HAPPENS NOW?

Lincoln County still has the $240,000 in its account, Kipfer said, but it’s unclear whether it can be used for a different project within the county.

“Worst case scenario is it goes back to the federal government,” she said.

She said the county has been speaking with Wiscasset officials and warning of the potential loss of funding for several months.

“Is there still an intent by the town to proceed with this project as originally proposed, with a sincere goal of advancing the development of affordable housing? Or is the town withdrawing its application and forfeiting the ARPA funding in pursuit of private development of the site?” Kipfer wrote in a March letter to the town obtained by the Press Herald.

Town officials responded later that month, stating that they had always intended the site to be mixed use and that affordable housing was a “desired” but “not guaranteed” component of the site plan.

Kipfer said the funding was explicitly intended to support housing, and the Wiscasset project appeared to be moving away from that goal.

“It’s not that we’re not supportive of what Wiscasset is trying to do. Quite the contrary: We want them to make their own decisions,” Kipfer said.

The federal government required ARPA funds to be allocated by the end of 2024, leaving commissioners unable to consider new proposals after that, she wrote in the letter.

Chrostowsky said the future of affordable housing in Wiscasset is “still bright,” adding that there are several other privately and publicly owned tracts of land available for development.

But without the grant money, Wiscasset taxpayers could be on the hook for any additional site review, unless the town can pass those costs to a private developer, he said.

In the meantime, town officials plan to ask the selectboard to stop putting proposals for the site on its agenda and establish a comprehensive process for taking and evaluating bids on parcels, including the Old Ferry Road site, he said. That motion is slated for consideration at Tuesday’s meeting.

“The data center could put in a proposal for that property, an affordable housing developer could put something in,” Chrostowsky said. “The select board is going to have to evaluate those proposals and determine which is best for the community.”

Wiscasset officials have repeatedly declined to name the developer, pointing to a non-disclosure agreement signed in August, but Chrostowsky said Monday that they were still interested in moving forward.