Auburn Mayor Jason Levesque, who owns the former Peck building, foreground, is planning on developing the parking lot just behind it at the corner of Middle and Lowell streets in Lewiston as seen in this photo from May. Russ Dillingham/Sun Journal file

LEWISTON — The City Council on Tuesday signaled its support for a multi-phase development proposal and a tax-increment financing district along Lowell and Middle streets brought forward by Auburn Mayor Jason Levesque.

The council discussion came one day after Levesque detailed the ambitious development, which could place up to 400 units in three buildings.

Lincoln Jeffers, director of economic and community development, outlined what a TIF would look like for the first building, 150 units on what is currently a surface parking lot used by Central Maine Medical Center. Officials said it’s estimated to cost $32 million.

He said the 20-year TIF would capture new value that would be used for infrastructure improvements, while the city would also share the cost of moving utilities underground between Chapel and Bates streets. An early cost estimate is $600,000 but officials conceded it could be much higher.

Jeffers said a 20-year TIF for the first building would generate $551,000 annually in new taxes, with 65% returned to Levesque over the first 10 years. The return would then decline 5% per year until year 20. In all, it would return $5.6 million to the developer, with $5.37 million going to the city.

Jeffers called the proposal “equitable” given that the city would be getting 150 new market rate units, the start of a multi-phase development that could create a new urban neighborhood and help drive further investment.

Levesque is teaming up with developer Joe Mannisto on the first phase, and is planning a second phase that could include another housing development on Middle Street, and renovations to the former Peck building that he already owns.

Jeffers said Mannisto’s building is proposed at 180 units. All the units are planned to be market rate, with estimated rents ranging from $1,340 to $2,000. He said a potential TIF for building two would “mirror” Levesque’s building.

City councilors were largely supportive of the plan Tuesday, stating that it could add much-needed diversity in housing options in the city.

Councilor Rick LaChapelle said the vision ties in with the city’s new Riverfront Island Master Plan, along with a proposed extension of the riverwalk to that area.

But, he and Councilor Lee Clement also said they are anxious to see the project break ground soon. They said other projects in the pipeline have sat idle.

“We’ve been brought to the edge of the cliff so many times, I certainly hope this is it,” Clement said.

While a specific development wasn’t named, the approved redevelopment of the former Pineland Lumber Co. property has been delayed more than once and construction has not yet begun.

Like that project, Levesque and Mannisto’s buildings will be mostly studio apartments geared toward young professionals, health care students and traveling nurses.

Responding to the concerns from councilors, Levesque said he’s already invested $100,000 to get to this point in the process.

“This is not playing with someone else’s money,” he said.

But, he said, there are variables out of their control. He said higher interest rates is “one of the reasons we’re here tonight” discussing a TIF. Another is competition for construction contractors, he said. As of now, however, he expects building one to break ground in 2024, and for the entire development to be complete by 2026.

Levesque told the council that he commissioned a market analysis that estimated there are  1,700 households within the Androscoggin County area that are “under-rented,” meaning the renters would be willing to live in a more expensive rental unit, but there are none available.

He argued that any new housing would free up other units, benefiting the housing shortage.

Councilor Linda Scott said the Sunnyside neighborhood is overdue for new investment, and that while the city has a lot of new housing coming forward, “we need market rate as well.”

Councilor Bob McCarthy said, “I don’t think you could put it in a better spot in terms of connections,” its proximity to downtown, and more. He also said he expects there would be a “multiplier effect” where the new housing will draw other businesses to the area.