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BATH — The City Council on Wednesday unanimously approved an affordable housing tax increment financing district for a proposed rental housing project at the former John E.L. Huse Memorial School.
The Portland-based Szanton Co. intends to develop nearly 60 mixed-income residential apartments in the 73-year-old Andrews Road 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, which the city would retain, and the 2.49-acre Huse School lot, which Szanton would own.
The company expects to know by December whether its MaineHousing affordable housing tax credit funding application is successful. If so, Szanton hopes to close on the property in late spring 2016, and open the new apartments a year later.
If Szanton doesn’t receive the credits, its agreement with the city would be extended a year to allow a second application in October 2016, with a closing in spring 2017.
The TIF does not make Szanton eligible for the tax credits. But the three points MaineHousing awards for having a TIF would “significantly strengthen” the company’s application, Szanton project manager Andy Jackson has said.
Only three points separated the top-scoring project from the lowest-scoring project to receive funds in last year’s funding round, Jackson pointed out.
The terms of the credit enhancement TIF agreement call for Szanton to be refunded half its property taxes for 15 years. But the fact the property would be on the tax rolls for the first time is a benefit to Bath, City Manager Bill Giroux has said, noting that if Szanton doesn’t receive the financing it needs for the project, the building “doesn’t go back on the tax rolls, and we get no tax money.”
MaineHousing only awards points for TIFs running a minimum of 15 years and keeping 50 percent of incremental taxes, according to Szanton.
While he voted in favor Wednesday of the TIF, Councilor Tink Mitchell criticized the city’s lack of control on the length and incremental percentage of the TIF.
“I … think the city of Bath, and the rest of the municipalities in the state, ought to take a long look at this thing,” he said. “… Right now we’re basically being held hostage.”
Giroux acknowledged the council’s support of the project and its TIF, but said “what they’re not happy about is that this is a requirement from Maine State Housing Authority, and that municipalities who join as partners in … these kind of projects are being held to this standard which, to our recollection, we were never asked if this would be a good standard to have.”
Nathan Szanton, principal with the development company, told Mitchell that he considers it “an excellent idea to pursue a dialogue” with MSHA. “I think that would be healthy for everybody,” Szanton said.
Since the company 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,” Szanton noted last month.
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,” according to Szanton.
The building’s estimated new tax value after project completion is $3.15 million, which would produce nearly $64,000 in taxes in today’s dollars, Szanton said. The city and developer would split that for 15 years, each receiving about $32,000.
The Planning Board in June granted the project a land-use amendment that permitted contract zoning on the property. The panel also issued subdivision, contract zoning, site plan and developmental subdivision approvals.
The council on July 15 unanimously allowed contract zoning in the city’s Mixed Commercial and Residential District, where the building is located.
The panel also unanimously supported the contract zone agreement with Szanton, which in return requires a public benefit from the developer.
Proposed benefits for this project 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 pedestrian and connectivity enhancements have also been proposed.
The Bath City Council on Wednesday approved an affordable housing tax increment financing district for the former Huse School. This rendition shows how the renovated building would appear with an additional wing.