SCARBOROUGH — An effort to reject a tax break agreement application on a proposed affordable senior housing project at 246 US Route 1 in Scarborough was not successful at the Town Council’s April 7 meeting.

The project, located at the former public safety building site in Oak Hill, involves a partnership between Avesta Housing and developers Tim Hebert and Jack Soley, who sold a parcel of the site to Avesta Housing for $500,000.

In 2020, the town sold the property, including the old police and fire station, to developers, who plan to create a campus-like environment at the property, including a mix of businesses, like a gym and grocer.

Avesta Housing is proposing a 31-unit affordable senior housing complex for adults 55 and up, said Nate Howes, the development officer. Units will be restricted to those making 60 percent of area median income or less, qualifying single residents who earn $42,000 annually.

Rosemont Market and Harbor Fish will open at the location, according to an April 2 Press Herald article by Meredith Goad.

Howes said the developers aim to create a senior-living campus, where older residents can age in place.

“This redevelopment offers an excellent opportunity to not only create a green neighborhood off of Route 1 but will also help create a community environment in the heart of Scarborough,” he said.

Avesta Housing went to the Town Council to request a credit enhancement agreement, or CEA, earlier this year, said Councilor John Cloutier, who is also chair of the finance committee. He said at that time the Town Council had adopted a new CEA policy, the process includes a review by the finance committee.

“The request is for a CEA that would return 75 percent of taxes we collect from development to Avesta,” Cloutier said. “We would keep either through the general fund or the TIF development fund 25 percent for 20 years. At the end of 20 years, we would keep 100 percent.”

Tax Increment Finance, or TIF, agreements allow new property tax value, like that produced through new development, to be sheltered for up to 30 years so the new value isn’t included in the town’s overall valuation. TIF funds do not go into a municipality’s general fund and can be used to pay for infrastructure improvements or go back to the developer producing the new value through a credit enhancement agreement.

The project would require a partnership with MaineHousing, which has a competitive scoring system when approving affordable housing applications, Howes said. A TIF agreement is something MaineHousing values and is included in 80 percent of Avesta Housing’s projects.

After discussions with Avesta Housing, Councilors Betsy Gleysteen and Jonathan Anderson, members of the finance committee, voted during a committee meeting to bring a motion to the Town Council against granting a CEA for the project.

“It just seemed like a natural point to say, ‘Hey, do we think a CEA is the right thing for this?'” Gleysteen said.

When the developers’ purchased the property in 2020, there was no discussion about a CEA, she said.

Soley said that the COVID-19 pandemic forced developers to pivot in order to achieve their vision for the site.

“Again, I felt this was a way I could move forward and maintain my commitment without chasing higher profits and doing something on the site that really I didn’t think met the integrity of the site we were looking for,” he said.

The timing seemed appropriate for the finance committee to bring the CEA back to the council for possible rejection in order to give developers more time to plan, Gleysteen said.

“At the time when this was first being talked about, just conversations with people around town and general councilors, there didn’t seem to be a lot of support necessarily for a CEA,” Gleysteen said. “So my thought was, ‘Let’s bring this forward to the council, and if we’re not going to grant a CEA, let’s bring this forward sooner rather than later so they can actually make different plans.’ The developer may decide to do something different.”

Although Anderson said he believes the CEA would help Avesta Housing, it is not necessary.

“From my view, through participating in the conversations with Avesta, it was unclear to me what the actual commitment from the town was going to be because there was somewhere between $500,000 and $1.1 million that was called out,” he said. “And so really, the true amount is probably somewhere in between.”

The TIF CEA is necessary for the project, Howes said.

“I’ve run the numbers on this project without a TIF, and there is a substantial gap of $500,000,” he said.

Councilor Ken Johnson said he believed rejecting the CEA during the April 7 meeting would circumvent the CEA application process. He said would decide whether he favored a CEA depending on changes to terms during negotiations.

Paul Johnson, council chair, said he did not see a viable path forward for the project. Although he at first said he was against a CEA, he was persuaded by Ken Johnson’s statement to vote against the rejection.

The need for affordable senior housing in Scarborough, where 55 percent of residents are 45 or older, is clear, said Councilor Don Hamill.

Councilors voted 5 – 2 against rejecting the CEA request, with Gleysteen and Anderson voting in favor. However, neither did the council approve a CEA for Avesta Housing.

During the same meeting, the council approved a $200,000 grant from the Scarborough Housing Alliance from the Affordable Housing Initiative Fund.

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