BIDDEFORD — A proposed 78-unit workforce housing development in the city’s mill district almost came to a halt when several city councilors tried to nix a financing contract, which the developer said is necessary for the project.

However, in a 5-4 vote, the council approved a change in the contract sought by The Szanton Company to allow the company to move forward with an application for financing from the Maine Housing Authority so the project can proceed.

Last year, city council approved a Tax Increment Financing, or TIF, district for The Lofts at Saco Falls, being developed by The Szanton Company.

Under the TIF credit enhancement agreement, the developer would be reimbursed 75 percent of the property taxes on the new value of the property for 15 years. The amount to be reimbursed would be reduced 4 percent each year for the next 15 years. At the end of 30 years, the city would receive the entire amount of property taxes.

Last year, the developer applied to Maine Housing Authority for affordable housing tax credits but was unsuccessful. It plans to apply again this year, but sought what Nathan Szanton, a principal in The Szanton Company, called a technical change in the contract with the city.

The change would allow the company to use the reimbursed property taxes for debt service as well as operating funds.

Szanton said this would improve his company’s chances in securing the tax credits that he said are needed to finance the project.

Some councilors voted against the change.

Councilor Brad Cote voted against the measure, saying, “I didn’t support this last time. I didn’t think this was a very good deal for the city.”

Councilor Marc Lessard was also in opposition to the measure. Because of the amount of property taxes to be reimbursed to the developers, he said, increased city services used by residents in the new housing units would be borne on the backs of existing residents.

He questioned whether the existing TIF contract with The Szanton Company could be rescinded.

City Manager John Bubier said such an action could incur liability by the city because of the amount of money already spent by the developer on the project.

Szanton said his project wouldn’t put a strain on city services.

Most of the units would be one-bedrooms, he said, and no children are allowed in those units, so there would be little impact on the school system.

In addition, said Szanton, a 66-unit apartment complex developed by his company in Biddeford, The Mill at Saco Falls, has had minimal police calls for service, and he predicted the new project would have similar low-level needs.

A benefit of the project, he said, was that it would develop one of the most deteriorated areas in the mill district. The complex would utilize two of the Riverdam Mill buildings.

This would be a “catalyst” for Steve Goodrich, owner of Riverdam, to revamp the remainder of those buildings, said Szanton. He said Goodrich has a number of plans to renovate those buildings, but none of that will happen unless The Loft at Saco Falls is built.

“Development begets development,” he said.

Mayor Alan Casavant passed his gavel to speak in favor of the project.

“You have to look at the big picture,” he told the council.

During a trip to Portsmouth, New Hampshire, Casavant said, he was surprised to learn the positive effect workforce housing had on revitalizing that city’s downtown. With more workforce, or affordable housing, units in the Portsmouth city center, there are more people to patronize the shops and other businesses, and a number of those new residents also found work in some of the area establishments.

The proposed development “has a good purpose for the city,” said Casavant.

While some are against the project because of the size of the property tax reimbursement going to the developers, said Councilor Michael Ready, without this project, it is uncertain when the buildings would bring in more taxes. Even with the TIF, the city would earn more property tax revenue from the buildings than it currently collects.

“It’s the type of development we want in the downtown,” said Ready.

— Staff Writer Dina Mendros can be contacted at 282-1535, ext. 324 or dmendros@journaltribune.com.