An Aroostook County housing developer whose company lost 14 downtown apartments in a fatal 2022 fire is asking Houlton officials for a credit enhancement agreement to help keep the rebuilding initiative on track.
The project relies on an anticipated $4.2 million rural development grant from MaineHousing, but that funding has hit a snag, according to Kerry Simpson of WLR Residential Properties Inc.
After reviewing the project’s current cost projections, the state organization that had previously given WLR notice to proceed said it was not cost effective. Officials instead suggested that the developers look at the property tax structure for the new 18-unit Mechanic Street building, according to Simpson.
During a Town Council meeting in late March, Simpson explained that if Houlton approves the credit enhancement, MaineHousing staff said they would likely release the $4.2 million in funding — although there are no guarantees.
“I’m encouraging the councillors to consider this seriously and help me turn a three-story green building into a finished blue building,” Simpson said, meaning it would be environmentally and economically sustainable.
MaineHousing’s rural affordable rental housing program was designed to bring economic equity to rural areas of the state and to assist developers with affordable housing projects that offer five to 18 units.
According to the program’s guidelines, all units must be rented to households earning not more than 80 percent of the area medium income.
“These are not low-income; they are affordable housing units,” Simpson said.
“It was three years ago yesterday that we had a fire in that building. A tragic fire, where a life was lost. And of course, it was a detriment to the downtown along with, you know, with the sadness that came with it,” Simpson told councilors during the meeting. “I’m reminded, every time we hear a fire siren in town, of that event. And I’m also reminded of how the town rallied when 14 families were left homeless on a snowy day.”
The developers thought the structure was well-insured, he said, but that was before economic changes during the COVID-19 pandemic significantly drove up the cost of construction.
“We were quickly aware of the fact that our insurance was not going to be even close to enough to replace that structure,” Simpson said, adding that the town pointed them toward the rural development grant.
Town Manager Cameron Clark said that the town has a number of credit enhancement projects, and because the WLR apartments are in the downtown tax incentive financing district, they are eligible for the assistance.
They are also eligible to receive the highest allowable enhancement of 85 percent on property taxes based on an estimated assessed value of just over $2 million, according to Clark.
A credit enhancement agreement is a tax reimbursement back to the property owner, which is used to help developers in the early stages of a project designed to enhance and revitalize the town, he said.
“We have a number of them in place right now, like Market Square Commons,” Clark said. “The town would get to collect 15 percent tax, and he would get reimbursed for 85 percent, and that would help with the project.”
The town has not done a credit enhancement agreement for a number of years, with the last one on the UPS building, Clark said.
“We want to help them,” he said. “The ultimate decision is up to the council.”
There will be an April public hearing on the matter before the council votes on the WLR request.
