SACO — The city is considering granting a New Hampshire developer a tax increment financing district, commonly called a TIF, to create apartments in a former mill building on Saco Island.

Chinburg Properties has proposed creating 150 apartments, as well as some commercial space, in a former mill building uphill from the Island Terrace Condominiums, commonly referred to as “Building No. 4.” The four-story, 237,600-square-foot building has been abandoned for about 30 years, according to a letter to the city from Matt Assia, director of asset management for Chinburg Properties. Many windows have been removed, and the building has been exposed to weather, resulting in “significant rot and damage,” according to Assia.

Officials at Chinburg Properties estimate they would need to invest more than $18 million, which includes $650,000 of impact fees to the city.

The proposed TIF agreement would allow Chinburg Properties to keep 80 percent of tax revenue generated by the property for up to 30 years, at a cap of $5 million.

“This project really needs the relief requested by this TIF in order to proceed,” said company President Eric Chinburg at a city council workshop Monday night.

City Administrator Richard Michaud said he supports the proposed TIF agreement.

A tax increment financing district would allow the city to “shelter” increases in valuation from the proposed project during the term of the TIF, according to a memo to the city from Jim Damicis, senior vice president of economic development agency Camoin Associates.

Because an increase of the valuation would be sheltered, it would save the city from a decrease in state aid for education and an increase in county taxes, according to Damicis.

Chinburg Properties has renovated eight former mill properties in New Hampshire and Massachusetts, creating more than 600 apartments along with 1.3 million square feet of commercial space, said Chinburg.

Chinburg said his company creates “very high-end, upscale apartments.”

He noted that mill developer Doug Sanford has a waiting list for apartments at his building across the river in Biddeford, and said there is a market for the housing he’s interested in creating.

“There is a reasonable amount of housing stock here, but there’s not a high amount of high-end” apartments, he said.

Chinburg said he envisioned young professionals or retirees living in the proposed building. He said in the more than 600 apartments his company has produced in former mill buildings, none have schoolchildren living in them.

“We don’t burden schools,” he said.

Should the city agree to the TIF, Chinburg said he envisions the project would be completed by 2016.

Mayor Don Pilon said there are many seniors looking to downsize because they don’t want to maintain a home. He said there is also a housing market for University of New England students, and there is a UNE commuter bus that stops at the nearby train station.

Nathan Johnston, city councilor for Ward 7, which includes Saco Island, said many people who move to Saco are families who come here because of the schools, and noted that high-end apartments in the newly renovated former fire station building are empty.

“I think you’re going to have a hard time renting them,” he said.

Johnston said he spoke with residents in his ward, and people would rather the building be developed into condos than apartments.

Chinburg said the proposed project needs to be apartments, rather than condominiums, because he plans to use historic tax credits.

— Staff Writer Liz Gotthelf can be contacted at 282-1535, ext. 325 or egotthelf@journaltribunecom.