Penquis plans to redevelop the Pine Tree Inn on Cleveland Street in Bangor. Credit: Linda Coan O'Kresik / BDN

A Bangor social services agency will receive $4.25 million in federal funding to redevelop the Pine Tree Inn on Cleveland Street and turn it into housing for formerly homeless people and families.

MaineHousing granted the agency the money using COVID funds from the American Rescue Plan Act, Penquis announced Thursday.

Penquis plans to develop 18 efficiency units and 18 one-bedroom apartments and will allow vouchers to cover the majority of the monthly rent, said Jason Bird, the agency’s housing development director. It will also partner with another organization to offer addiction recovery and other services for people living there.

“The development will also have ample community rooms, meeting rooms, a library, computer lab and other amenities to ensure that residents have every opportunity to thrive in a supportive environment,” he said.

The new development would add 36 affordable units at a time when Bangor is facing rising homelessness. The hotel is close to the Hope House shelter and across the street from a homeless encampment.

Penquis signed an option to purchase agreement with the inn’s owner, John Karnes, in March, and received permission from the city planning board in May to rezone the property at 22 Cleveland St. to allow for efficiency units.

The city assessed the building and land at $1.4 million last month, according to public records. The Pine Tree Inn has operated there since 2018.

Penquis plans to name the development the Theresa Bray Knowles Place in memory of the family nurse practitioner at Penobscot Community Health Care who passed away last year, Bird said.

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Lia Russell

Lia Russell is a reporter on the city desk for the Bangor Daily News. Send tips to