AUBURN — Coastal Enterprises Inc. hopes to convert three Main Street buildings into a single housing development, with a little help from the city.

The company is asking the city to create a housing tax-increment financing district to help qualify for federal housing credits.

Plans call for razing three buildings on two parcels, starting from the red brick apartment building at 268 Main St. — on the east side of Main Street, opposite Academy Street — south to Bonney Park. It includes the two buildings with addresses 272 and 282 Main St. All told, the three buildings have 22 apartment units.

The buildings would be replaced with a single apartment building, a mix of three-, two- and one-bedroom units, said Roland Miller, city economic development director. The plan calls for low-income rents.

“It’s all affordable, and it would be required to remain affordable for 90 years,” Miller said. “So this would be affordable housing for a long, long time.”

The developer’s plan relies on federal housing credits administered by Maine Housing.

“They run a competitive program a couple of times per year, taking proposals and judging them as to their strength and accomplishing the goals of the program,” Miller told the City Council at a workshop meeting Monday. “Then they can allocate tax credits to those programs; they are then sold on the open market and the capital they raise pays for the project.”

Miller said CEI applied for tax credits for the project last year but was turned down.

“They have approached us to consider a housing tax-increment finance proposal,” Miller said. Under the TIF plan, a portion of the property taxes the developer pays are rebated by the city and used to pay down rents.

The city’s TIF district would help CEI qualify for federal affordable housing credits.

“Under (Maine Housing’s) scoring criteria, it scores bonus points if the community supports it with a tax incentive,” Miller said.

He told councilors he would present a complete financial plan at a meeting in August, including total costs and the amount of property taxes that would be rebated by the city.

At least one councilor said he was reluctant. Councilor Eric Samson said the proposed development is in a key part of Auburn’s downtown.

“I think there is a better use for those properties,” Samson said. “There are better opportunities to enhance the experience downtown. I’ve worked in communities where there have been housing like this in the downtown, as opposed to business.”

staylor@sunjournal.com