AUBURN – Councilors agreed to waive loan rules for Court and Main street developers Monday night to make sure their project happens.

The City Council voted 6-1 to clear the way for American Holdings Inc. to develop the block of buildings at Court and Main streets – called the Phoenix block.

The developers will get $400,000 more than the maximum loan amount under the city’s Commercial Loan Program, 40 years to pay it back and a 2 percent interest rate, according to the agreement.

“This is our gateway project,” said Councilor Joe DeFilipp. “The Phoenix block, as it has existed for a number of years, is one of the worst eyesores in the downtown. And now we have the opportunity to get rid of that sty.”

That loan package will allow developers to begin work on the project this spring and offer rents of $11.50 per square foot.

“We need projects like this, and if this is what it takes to make it happen, I support it,” DeFilipp said.

Plans call 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 and will attach to American Holdings’ Riverpark building just south of the project. The two buildings will share an elevator.

In all, the project should create 8,350 square feet of rentable space and 20 new jobs downtown.

Roland Miller, city economic development director, said the project almost didn’t happen.

“It’s fair to say that if there was not an elevator the new building could attach to, and if we did not have a tenant ready to move in, this project would not happen,” Miller said.

The project was budgeted to cost about $1.2 million but that changed when bids on the project came in higher than expected. Developers couldn’t find private financing and turned to the city for help.

According to Miller, developers will get a $500,000 Maine Rural Development Agency loan and another $250,000 loan from AVCOG and $100,000 from the Lewiston-Auburn Economic Growth Council in addition to the city loan. In all, the project is expected to cost $1.8 million.

The city agrees to loan developers $525,000 from the Community Development Block Grant funded program and gives them 40 years to pay it back. Developers will also lock in a 2 percent interest rate. Requirements of the loan program set the maximum loan amount at $125,000 and require the loan be paid over 25 years at 6 percent interest.

Juggling

Councilors had to find another $118,000 in the block grant money to make that deal happen. They did that by delaying plans for a New Auburn master plan and sidewalk work there, canceling some budgeted demolition projects and taking some money out of other loan programs.

That was too much for New Auburn council representative Belinda Gerry.

“I can’t support shifting that money away from New Auburn,” Gerry said. “I don’t feel New Auburn has had the advantages other parts of the city have,” she said.

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