A proposal to turn the site of the Augusta Plaza into a hotel, housing, retail and offices has been praised by city officials. The project requires a contract zone from the Planning Board due to the proposed height of its hotel, which at 85 feet tall would offer sweeping views of the Capitol building, the dome of which can be seen above the trees to the left. Joe Phelan/Kennebec Journal

AUGUSTA — A  proposal to bring a hotel, housing, retail stores and more to a run-down former Kmart site could take a struggling area of Western Avenue to new heights, city officials say.

But the height of the project’s tallest building, proposed at up to 85 feet, also presents an obstacle to the multimillion-dollar plan. That height is also a key element of the developer’s plan, designed to take advantage of sweeping views of the Capitol complex and Kennebec River beyond it.

Keith Luke, the city’s economic development director, describes the proposal from George Campbell as a game-changer, and exactly the type of project city officials have hoped for at the deteriorating Augusta Plaza site since before he began working for the city. He said the hotel would attract tourists and other visitors who would spend money at other local businesses, including in the nearby downtown. It would also provide lodging for people doing business at the Capitol, provide much-needed housing, and redevelop a neglected but high-profile location, he said.

“It’s certainly a game-changing proposal for the city and of course the Kmart plaza site, and one we’re very excited about,” Luke said. “It’s the kind of mixed-use development that we have been working toward and hoping for, for many years. And the time for it is now. It is moving forward with great optimism.”

Campbell is a seasonal Augusta resident who was commissioner of the Maine Department of Transportation under the late Gov. Joseph Brennan. His career has also included work as a state development director, president of the University of Southern Maine Foundation, Portland’s mayor, and president of the The Boulos Company, a commercial real estate agency. He said the site attracted him for the development due to its close proximity to the Capitol, the sweeping scenic views from the site, and the opportunity for an economic development project that would help address the need for more housing in Augusta.

“It seems like the timing is right,” Campbell said. “The site was developed in 1962, it was the first plaza strip center in the city, which has served two generations, and now it’s time to see what the next two generations will look like.

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“What an extraordinary location, for its view and proximity to the Capitol, it’s really worthwhile. How extraordinary to have almost 8 acres of land that has utilities already there and that can really serve the community.”

The proposed hotel would likely be five stories tall, and, Luke speculated, could have a rooftop bar or restaurant that would provide sweeping views.

The sign for Augusta Plaza on Western Avenue. Joe Phelan/Kennebec Journal

That would require the building to be taller than the maximum of 42 feet permitted in the property’s zone, though the zone does allow taller buildings as conditional uses. The building could be as high as 85 feet, according to application materials.

Even at that height, the project — dubbed the Capitol Heights Center Project — would not block the views of its neighbors, documents filed with the Augusta Planning Board claim. The application states the views of neighboring properties will actually improve, because they will look out over the highly landscaped project instead of the broken-up parking lot and neglected strip mall at the site now.

“The current use has all hardscape parking lots,” application materials state. “The current situation is in stark contrast with the Capitol Heights Center Project. A project whose design will incorporate extensive landscaping, thereby creating a welcoming environment that is a central element of the future development plan in the rezoned area.

“Furthermore, the proposed height change will offer guest and residence views of the Capitol, capitol parks, and the Kennebec River without impeding abutters’ sight lines.”

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The developer is seeking a contract zone to allow the project to be up to 85 feet tall, and a waiver of the city’s standard floor area ratio requirements for that zone, which regulate new buildings based on the ratio of floor area to the total lot area.

The city granted a similar contract zone, waiving floor area ratio standards, so developer Matt Morrill of Mastway Development could build a 38-unit apartment building at 99 Western Ave., just uphill from the former Kmart site at 56 Western Ave.

The Planning Board meets at 6 p.m. Tuesday, in council chambers at Augusta City Center to consider the request for a contract zone for the project. Such agreements require proposals be consistent with the city’s comprehensive plan.

A staff review of the proposal states, in part, “the Planning Board could reasonably find that this proposal is, on the whole, consistent with the 2023 Comprehensive Plan.”

Application materials claim the major investment required in the project means it needs the contact zone — and height exceptions and floor plan rules changes — to be financially feasible.

The documents also state the developers will likely seek a tax increment financing deal with the city to return some of the property tax dollars to the developer to help finance the project.

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Luke said the completed project would likely be assessed by the city for tax purposes in excess of $15 million, and the cost to build it will likely be well more than that.

Campbell said he has an option to purchase the property from owner Richard McGoldrick. He said he would then work with partners to develop the property. He said he does not intend to own the finished project.

Luke said Campbell’s involvement has been essential in bringing the project forward.

“There are few individuals in Maine who have accomplished more in their professional lives than George Campbell,” Luke said. “It’s taken all his skills and contacts to bring this project to the forefront.”

The project is proposed to include a hotel; market-rate, condominiums or apartments; retail spaces, including restaurants or bars; and professional or medical offices. Drawings of the site indicate that it would include a landscaped park or plaza area with parking between the site’s multiple proposed buildings.

The view of the Capitol’s dome from the Augusta Plaza on Western Avenue in Augusta.  Joe Phelan/Kennebec Journal

The Wendy’s restaurant and other lots alongside Western Avenue are not part of the project, nor is an auto parts supply store under construction now near the former site of Friendly’s restaurant.

The Kmart building, site of a temporary Halloween-related retail shop, has been mostly vacant since Kmart closed there in 2019.

City councilors rejected zone changes requested to allow multiple versions of a proposal to build a $ 9 million self-storage business on the site. Some councilors, in voting to reject that proposal, said they felt the site should have a better use than storage, including, potentially, housing.

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