PORTLAND — City councilors are ready to up the ante on their support for an affordable senior housing project on Stevens Avenue.

On March 8, the Housing Committee unanimously approved reallocating a $201,000 federal grant from a planned Portland Housing Authority project at 58 Boyd St. to the redevelopment of the former St. Joseph’s Convent at 605 Stevens Ave.

“I would say for all of the community conversation around the development there, there has pretty much been unanimity about preserving the beautiful building,” Councilor Jill Duson, the committee chairwoman, said Tuesday.

Duson said city staff is also checking to see if the reallocation requires a full council vote.

Known as “The Motherhouse,” the former convent will be converted into 88 one-bedroom or studio housing units marketed to people 55 and older as part of larger housing construction at 605 Stevens Ave.

Low income housing tax credits, or LIHTC, sold by the Maine State Housing Authority, are the reason Motherhouse developer Kevin Bunker sought to reallocate the funding, which comes to the city from the U.S. Department of Housing and Urban Development.

The requirement to return unused funding is the reason the committee and city staff recommend shifting the grant to help Bunker partially close a $634,000 funding gap needed to convert the convent.

LIHTC credits are a staple of funding for affordable housing development. The credits are sold to investors who want working capital to build housing with covenants that require units to meet affordability guidelines for 30 years or more.

At The Motherhouse, Bunker, the principal of Developers Collaborative, will market 66 of 88 studio and one-bedroom units to people earning 50 percent to 60 percent of the area median income in a covenant lasting 45 years.

In the Portland area, the 50 percent threshold is $27,300 for single earners or $31,200 as a couple. The 60 percent threshold is $32,760 and $37,440, respectively, according to the MSHA.

Bunker has assembled a $17 million financing package that includes $3 million in low income credits and more than $7 million in state and federal historic tax credits. The city already committed $426,000 in HUD grants in 2015, according to a memo from Mary Davis, division director of the city Housing and Community Development Division.

Redeveloping The Motherhouse is a critical part of the overall plan for 7 acres formerly owned by Rhode Island-based Sisters of Mercy of the Americas Northeast Community. John Wasileski and Matt Teare of Sea Coast Management Co. plan to build 160 housing units adjacent to the former convent on land once used by Catherine McAuley High School, which is now the Maine Girls’ Academy.

The entire project was not always well received by neighbors worried about traffic and possible encroachment on the adjacent Baxter Woods. In December 2016 the Maine Supreme Judicial Court ruled a zoning change by the city was valid, allowing developers to move ahead.

The funding gap Bunker now faces is due to a devaluation of LIHTCs sold to investors, and attributed to the possible decrease in federal corporate tax rates. Davis said the decrease is 98 to 87 cents per credit.

At the same time, PHA’s plans to build 48 affordable housing units in Bayside at 58 Boyd St. are on hold because the project does not have LIHTC funding. That freed up the $201,000 the city committed in a HUD grant in September 2016.

Davis said the city cannot just hang on to the money; HUD rules require the funds to be returned by July 31 if not awarded.

On March 9, Bunker said he was grateful for city support for the convent conversion and would find a way to close the remaining $433,000 funding gap. He expects work to begin in the spring.

David Harry can be reached at 781-3661 ext. 110 or [email protected]. Follow him on Twitter: @DavidHarry8.

The Portland City Council Housing Committee has agreed to shift $201,000 in grant funding to help finance construction of affordable senior housing at the former St. Joseph’s Convent, 605 Stevens Ave.