AUBURN – Developers will rely entirely on public financing to pay for the development at Court and Main streets, councilors learned Monday.

The $1.87 million project will rely on city community development block grant loans, Maine Rural Development Agency money and loans from the Androscoggin Valley Council of Governments.

That loan package will allow developers American Holdings Inc. to begin work on the project next spring and offer rents of $11.50 per square foot – about average for Lewiston-Auburn, according to Economic Development Director Roland Miller.

“This has been a challenging project, primarily because of the condition of the building,” Miller told councilors at Monday’s workshop meeting.

American Holdings signed a purchase and sale agreement with the city last spring, agreeing to buy the buildings for $145,000. The city agreed to tear down the wooden frame structure at 18 Court St. to make room for the expansion.

The original plan called for Austin’s Fine Wines and Foods to expand along the first floor of the property. The upper floors would be developed for office space. In all, the project should create 8,350 square feet of rentable space.

Miller said initial estimates placed the project cost at about $1.2 million. That changed when bids on the project came in higher than expected. When developers were unable to find private loans, Miller said the city helped put together the public loan package.

“Financing for projects like this is always done with multiple players,” Miller said. “That is what the city does for these kinds of projects. We help developers find financing to help important projects happen.”

Developers will apply for a $500,000 Maine Rural Development Agency loan and another $250,000 loan from AVCOG. The city had already agreed to loan developers $345,000 in Community Development Block Grant money. Now the city plans on increasing that by $180,000, to $525,000.

Developers will pay $448,000 up front, Miller said. Developers will also pay back the loans.

Auburn, Lewiston, Portland and Bangor get Community Development Block Grants from the U.S. Department of Housing and Urban Development.

The agreement also allows the developer to delay payment of the $145,00 for 10 years.

That money helps the cities pay for economic development, public improvements, public services and similar programs.Reine Mynahan, Auburn community development administrator, said the city will have to move around several block grant projects to make that happen. She proposed delaying work on a New Auburn master plan and using other city loan programs for business development and down payments for first-time homebuyers to make up the difference.

Councilors are expected to vote on the the block grant changes at their Jan. 16 meeting. Once the grant money is settled, they can vote on the city’s share of the loans, Miller said. He expects that to happen in January or February.

“They are ready to go, as soon as they have the financing,” Miller said. “They are ready to begin the work. So the sooner we can finalize this, the sooner they can get started.”

staylor@sunjournal.com

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