Downtown Waterville, Maine, 2019. Credit: Linda Coan O’Kresik / BDN

WATERVILLE, Maine — The former Seton Hospital’s eight-story tower will be converted into 67 apartments to help address the lack of affordable housing in the area.

The project calls for one- and two-bedroom apartments that qualify as affordable housing in accordance with MaineHousing standards, Kevin Mattson, Dirigo Capital Advisors president, told Waterville city councilors during a public hearing Tuesday.

The proposal involves a new affordable housing tax-increment financing district, or an economic development tool that allows municipalities to use all or a portion of tax revenues generated from a new capital investment to assist in the project’s financing.

Mainers across the state have struggled to find housing, and what is available is often too expensive for average people. Waterville officials say the project addresses the city’s need for more housing and transforms a building that has sat dormant for years. It goes a step further by creating a revolving loan program that will generate even more development in the coming years, Chairperson Rebecca Green said.

“Costs of the project have ballooned over the last four years, like any other project,” Mattson said. “It started at about $12 million and just the tower portion is now $25 million, so it’s a very difficult environment.”

Waterville Redevelopment Company III owns the property at 30 Chase Ave. in Waterville. Renovations can begin as soon as developer Dirigo Capital Advisors of Topsham gets approval from MaineHousing, which is reviewing an energy study on the building. Mattson expects apartments to be ready in 2024, he said.

In 2013, Mattson bought the Seton building, which in 1997 had become part of MaineGeneral Medical Center, according to the Morning Sentinel.

The apartments will target single people and couples in the workforce. Mattson gave the example of municipalities hiring police officers, teachers and others who have struggled to find housing within an affordable price range.

It will cost just more than $900 per month to rent a one-bedroom apartment, which is from 600 to 650 square feet, he said. Two-bedroom apartments average 900 square feet and will cost just more than $1,000 per month.

The project is considered a historic rehabilitation, so many of the building’s original features, like a chapel, will need to remain as required by the U.S. National Park Service, Mattson said. The back of the building, which isn’t part of the proposed housing but needed to be renovated, has been under construction for nine months, and crews are hooking up natural gas.

“It’s like a Rubik’s Cube,” he said. “You have to work within these areas that you have to keep.”

The new 30-year tax-increment financing district is possible because the proposal involves removing the tower portion of the building, or 4.72 acres, from an already existing district. That original district, which is 9.11 acres and formed in 2017, included the whole Seton building and adjacent parking lot, Councilor Claude Francke said.

Remaining acreage in the original district would continue to operate as normal, although the term would be extended from 2037 to 2047, Francke said. He serves as chairperson of the TIF committee, which recommended that councilors approve the proposals.

In the new district, the developer and city will split revenue, meaning each gets $1,874,000, according to the proposal. City officials have proposed using half to create the loan program, a quarter to support schools and a quarter for public safety and infrastructure.

“The amounts are flexible,” Green said. “As we go through the next 30 years, we can determine, based on the needs of the city, how we will be able to spend that money.”

Councilors unanimously approved amendments to the existing Seton Hospital tax-increment financing district and creation of a new district that allows the 67 apartments.