Bath council OKs contract zone for Huse School housing

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BATH — The City Council will vote next month on an affordable housing tax increment financing district for a proposed rental housing complex at the former John E.L. Huse Memorial School.

In the meantime, the council on Wednesday unanimously approved allowing contract zoning in the city’s Mixed Commercial and Residential District, where the building is located. The panel also unanimously supported a contract zone for the housing project.

The Portland-based Szanton Co. wants to develop nearly 60 mixed-income residential apartments in the 73-year-old building, with almost half in a new northeast wing.

Szanton has a contract to purchase the building and surrounding land. The property would be subdivided into a municipal band building and ball fields, to be retained by the city, and the 2.49-acre Huse School lot, which Szanton would own.

Szanton will know by December if its MaineHousing affordable housing tax credit funding application is successful. If so, it could close on the property in late spring 2016, and open the new apartments a year later.

If Szanton doesn’t receive the credits, the agreement with the city would be extended a year to allow a second application in October 2016, with a closing in spring 2017.

A public hearing held Wednesday on the TIF proposal drew little comment, and all of it was positive.

While the TIF does not make Szanton eligible for the tax credits, the three points MaineHousing awards for having a TIF would “significantly strengthen the application,” Szanton project manager Andy Jackson said in an email Monday.

“For example, in last year’s competitive funding round, only three points separated the top-scoring project from the lowest-scoring project that was awarded funding,” Jackson added. “You can see how three points for the TIF could easily make or break the project. We are asking the city to help maximize the chances that this project will get funded this year.”

Under the terms of the credit enhancement TIF agreement, Szanton would be refunded half its property taxes for 15 years. Still, the fact that the now city-owned property would be on the tax rolls for the first time is a benefit to Bath, City Manager Bill Giroux said Monday.

“Unless they get the necessary financing to build the project, it doesn’t go back on the tax rolls, and we get no tax money,” he said.

Since Szanton would pay less in property taxes during the 15-year TIF, “MaineHousing does not need to provide as much low-interest financing … to the project,” company principal Nathan Szanton said in an email Monday, adding that the project would be able to “afford more regular debt from MaineHousing,” like a greater conventional mortgage, “so MaineHousing does not need to provide as much subsidy.”

The building’s estimated new tax valuation after the project is completed is $3.15 million, Szanton said, which would draw nearly $64,000 in taxes in today’s dollars. The city and developer would split that for 15 years, each receiving about $32,000.

MaineHousing only awards points for TIFs that run a minimum of 15 years and 50 percent of incremental taxes, Szanton explained.

“It can be more than that, but it can’t be less,” he said. “So we’re asking for the minimum that would get us the points.”

The Planning Board on June 2 granted the project a land-use amendment to allow for contract zoning on the property, as well as subdivision, contract zoning, site plan and developmental subdivision approvals.

Szanton needed contract zoning to provide “laxity in setback, yard area, and density,” Planning Director Andrew Deci wrote in a May 26 memo to the Planning Board.

The City Council had to approve the contract zone, which in return requires a public benefit from the developer. In this case, proposed benefits include moving the school’s playground closer to a nearby ball field, upgrading the playground equipment, and improving a basketball court south of the ball field. Public bicycle racks, and connectivity and walkability enhancements are also proposed.

Alex Lear can be reached at 781-3661 ext. 113 or Follow him on Twitter: @learics.

A Maine native and Colby College graduate, Alex has been covering coastal communities since 2001, and currently handles Bath, Topsham, Cumberland, and North Yarmouth. He and his wife, Lauren, live in the Portland area, and Alex recently released his third album of original music.