Bates Mill No. 5 with its black saw-toothed roof is seen in August 2019. The city will extend an option agreement with developer Tom Platz for the purchase of the mill. Russ Dillingham/Sun Journal 2019 file photo Buy this Photo

LEWISTON — City officials will continue negotiations with developer Tom Platz on extending an option agreement for the purchase of Bates Mill No. 5, the last and largest of the former mill buildings to be redeveloped.

The three-year agreement expired at the end of February, but city staff said they are nearing a new agreement that “would reflect new terms” as well as an amended parking agreement for the Bates Mill complex.

The City Council also unanimously approved a tax-increment financing district aimed at capturing tax value from the mill complex and using it to fund future infrastructure improvements related to Mill No. 5.

Once finalized, it would mark the fifth agreement between the city and Platz since 2015. Since that time, Platz has developed significant parts of other mills in the complex, but redeveloping Mill No. 5, with 350,000 square feet in need of environmental mitigation, has been elusive.

According to a council memo, Platz has “continued to make progress” on the redevelopment, including engineering studies, architectural plans and pursuing historic preservation tax credits.

The potential timing of the purchase, however, was made more complicated by a federal Brownfields grant that will pay for some of the environmental work at the mill. Under the terms of the grant, the city must own the property while the work takes place. The grant, which is expected to pay for roughly half the final price tag, must be spent by September 2022.

Last year, Ransom Environmental was hired to oversee the project, which includes the removal of asbestos, lead paint, and the encapsulation of PCBs, a group of man-made chemicals that were widely used in electrical equipment.

Officials said this week that COVID-19 has also played a role in slowing the redevelopment progress.

“Both parties have been negotiating in good faith on the extension of the option agreement, but have not been able to finalize legal documents prior to the expiration of the existing option, despite intention to renew the option,” the memo said.

Since the city took over the property in 1992, there have been decades of discussion on whether to demolish or redevelop the property. City officials have said that regardless of whether the mill is redeveloped or demolished, the environmental issues in the mill need to be mitigated.

The approval Tuesday also signals that the city will likely rework its parking agreement for the mill complex.

Lincoln Jeffers, director of economic and community development, said last month that the city is more than a year out of compliance on its parking agreement with Platz. It states that the city must start the design of a decked parking garage within 30 days of Platz providing notice that it is starting redevelopment of a section of the Bates Mill complex. Notice was provided in October 2019 when 108,000 square feet of mill space was redeveloped, which now hosts Grand Rounds and Northeast Bank.

Due to the agreement, the city included $952,000 in next year’s Capital Improvement Plan for initial costs for an expansion of the Lincoln Street parking garage. The overall garage expansion, however, is estimated to cost more than $10 million, which would require a voter referendum to proceed.

Jeffers told officials that with the onset of COVID-19, “many Bates Mill tenants directed staff to work from home, significantly reducing demand on the garages for the time being. However, it is likely workers will return to the office, and demand will increase again.”

In a recommendation to the City Council last month, the Planning Board said the city should renegotiate its parking agreement with Platz, and believes “a referendum on the matter will likely not pass, and that city dollars would be better spent on pedestrian infrastructure to benefit community growth. The board felt there is no current demand for additional parking garages but welcomes the day when there is.”

According to city staff, the TIF district will be used to fund infrastructure improvements such as the environmental cleanup and increased parking, both of which are eligible uses of TIF revenues.

The annual revenue projections show the district generating under $100,000 in its first three years, but estimates reaching $1 million in TIF revenue by year 10.

Lewiston’s state application says revenue from the district “will allow the city to create the parking necessary to support (the) remaining $95 million redevelopment investment. Additionally, it will assist in Brownfields cleanup efforts in the mills, allowing for reuse of a property that has been blighted and vacant for 20 years.”

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