After transforming the former site of a landmark Portland lumber business into condos and a hotel, the developers of the Commercial Street property in Portland are asking the city’s approval for an additional seven-story commercial and residential building.

The onetime home of Rufus Deering Lumber Co. is entering its next phase of development, as developer Reger Dasco Properties submits plans for a 65-foot-high building with 64 residential units and space for commercial use. The proposed building would stand at 387 Commercial St., near the intersection with High Street across from Becky’s Diner, and would cover 35,100 square feet.

Under Portland’s inclusionary zoning ordinance, a new building with that many residential units would have to include 6.4 workforce-rate units, but the developer is paying $640,000 to opt out of that requirement. That money would go toward Portland’s affordable housing programs, as the ordinance dictates.

Joe Dasco, of Reger Dasco Properties, said the construction cost of those workforce housing units made them commercially unfeasible compared to what they could be sold for. But Dasco said he hoped the building, with its new housing and space for businesses, would extend the Old Port feel – and associated foot traffic – of Commercial Street’s brick facades down toward Becky’s Diner and the Gulf of Maine Research Institute.

“It adds some much-needed housing,” Dasco said of the proposal in an interview Sunday. “There’s some serious need for housing on the peninsula.”

Portland’s Planning Board is scheduled to review the proposal in a workshop on Feb. 23, which will be held remotely at 4:30 p.m., according to the city website. Final approval would follow at least one more Planning Board workshop, said Dasco, who hopes to break ground in June.

Parking for the new building would be included on site, according to an Oct. 19 letter to the Planning Board from Reger Dasco Properties’ engineer, Sebago Technics.

The city approved a master plan in 2017 that includes the building as a third phase of development on the former lumber property. Because the project is “grandfathered” under the plan, Dasco said, he didn’t expect it to be subject to new building requirements under a recently passed citizens referendum. The “Green New Deal” referendum increases the percentage of units in new housing developments that must be devoted to workforce housing, as well as the opt-out fee for developers.

Facing a possible $150,000 fee per workforce unit deferred, rather than the existing $100,000, Dasco is reconsidering future developments, including one that’s now seeking master plan approval, he said.

“The uncertainty is the worst part,” he said.

Reger Dasco is building, however, an affordable housing project at the nearby corner of State and Danforth streets, Dasco said Sunday. That project has been in the works for years but, as of late 2019, hadn’t yet reached a deal around its complex financing arrangements.

Once approved, the upcoming phase of the Deering Lumber project would take roughly two years to build and open. The developers haven’t confirmed any commercial tenants yet, but Dasco said he envisioned perhaps a small grocer, a coffee shop, and other businesses that could lend a neighborhood feel to the block.

Rufus Deering Lumber Co. announced plans to close in November 2016 after 162 years in business. At the time, senior officials at the lumber company said they had already lined up a buyer, whom city officials identified as Dasco.

At the time, the 2.5-acre lumberyard property was valued at more than $2.3 million for tax purposes. On Sunday, Dasco estimated that, all told, the developments would add about $150 million to the tax base.

The property lies within a tax increment financing, or TIF, district, where tax revenues generate funds for long-term capital projects to preserve the city’s working waterfront. Such tax arrangements subsidize development by refunding or diverting a portion of the taxes developers would pay on their projects, making upfront costs easier to bear.

Founded in 1854 by Rufus Deering, a prominent businessman whose family lent its name to numerous city landmarks, the company operated for its first 90 years at Hobson’s Wharf, across the street from its final location. From Portland’s bustling waterfront, the Deering Lumber Co. shipped Maine lumber across the country and beyond.

The company also helped rebuild Portland after a devastating fire that destroyed 1,500 buildings in 1866. It closed its doors on Nov. 30, 2016, according to a Facebook post from the company at the time.

By July 2019, condos were selling briskly at Hobson’s Landing, the condo-hotel development built in an earlier phase. Prices ranged from $350,000 to $3 million for the largest penthouse. About 40 percent of units had been sold, Dasco said at the time. Now, with condos set to open in the next few weeks, that figure is up to 80 percent, he says.

“We think it’s a positive that Portland has that desirability for people seeking a high-quality life in a small urban environment,” Dasco said.

Those wishing to attend the Feb. 23 Planning Board meeting virtually may find more information at http://portlandmaine.gov/2597/Remote-Planning-and-HP-Board-Meetings.

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