🔒Augusta ‘on the cusp’: Residential development gathers momentum in Maine’s capital

Growing up in Portland, attorney James Bass never thought he’d end up in Augusta. Now he can’t imagine ever leaving.

“If the ghost of Christmas future had come to me back when I was a junior at Deering High School and said that I would be living in Augusta, I would have thought I may have done something wrong,” says Bass, half of a two-person law firm and co-owner of Cushnoc Brewing Co.

“It’s a welcoming community that’s on the move,” says Bass, a resident of Augusta since August 2014 whose practice at Soltan Bass LLC includes government relations work and advising real estate developers in a 19,000-population city he says is “on the cusp” of a building boom. “Over the next 18 to 24 months, we will see some steel in the ground here in Augusta.”

So far, Bass says, the growth of Augusta’s residential development has been organic and has partly come from the conversion and rehabilitation of many downtown buildings, including five by Tobias Parkhurst, his partner at Cushnoc Brewing. Bass expects the next growth phase to come from new construction of larger, multi-unit buildings.

Keith Luke, Augusta’s economic development director, estimates the value of residential investment coming into the city to be approaching $100 million. That includes $20 million to $25 million from a planned 260-apartment project by the John Flatley Co., of Canton, Mass., plus several single-family developments.

“It certainly manifests as a boom now, limited only by the availability of contractors,” Luke says. His pitch to developers thinking about building in Augusta: “The historically low rental vacancy rate and the paucity of homes available for sale both serve to demonstrate the fantastic investment opportunity that exists in Augusta and central Maine.”

Besides a thriving downtown, Augusta offers a stable economy with tempered growth and affordability despite rising prices, according to locals. As of May, the median price for a home in Augusta was $237,991, or 20.7% higher than what it was a year ago, according to Zillow. That compares to a $350,000 statewide median sales price in May, 14.8% above what it was a year ago, the latest Maine Listings data show.

“Augusta right now is seeing increased demand among folks moving here from outside the community,” observes Matthew Pouliot, an Augusta-based Realtor and Republican state senator. “It’s indicative of people’s awareness about changes that have been made in Augusta in recent years to add new restaurants and bring more vibrancy to the community.”

Bay State developers keen on Augusta

Augusta is attracting a mix of local real estate developers and those from out of state, including John Flatley, whose proposed project is currently being vetted by Augusta’s Planning Board.

Telling board members at a June 28 meeting that the planned project in Augusta is similar to a current, 400-unit project in Providence, R.I.. he said, “I look forward to working with the city, and doing the best that we can to make the neighborhood happy with what we end up with.”

Documents on file with the Planning Board show plans for 260 apartments in four five-story buildings on 27 acres west of Rod Road, with two access points from that street.The proposed complex would have 140 two-bedroom units and 120 one-bedroom units.

Written comments for and against the project are on file with the city. One is from Chuck Hays, president and CEO of MaineGeneral Health and MaineGeneral Medical Center, who expressed his support for the project in terms of adding apartments, trails and other amenities. He also applauded the developer’s plans to work with local contractors.

“I am in support of bringing more housing to this region and in support of a housing project that builds on community and sets them up for success in living a healthy life,” he wrote.

Among the project’s critics, longtime resident Veronica Dumont voiced concern that the project could lead to an increase in traffic. She also noted that the road currently doesn’t accommodate adequate breakdown lanes or safe walking or biking conditions.

While the Flatley Co. is proceeding with its planned project, the pandemic and uncertain economic environment have prompted Saxon Partners LLC of Hingham, Mass., to pause a fully permitted project to build two three-story buildings with 250 apartments on 15 acres. Bass, the attorney for Saxon partners on the project, says that despite the decision to put the project on hold due to the pandemic and uncertain economic environment, the client “still feels the Augusta market is ready for this residential project as it would help them meet the city’s growing demand for new, modern housing.”

‘Larger impact’ in a smaller city

Among projects under construction, Senior Living at the Marketplace is a $10 million project , financed through Maine State Housing low-income tax credits. Located at 10 Civic Center Drive, the building will include 42 affordable rental apartments for tenants age 55 and older.

The developer, Tim Gooch of Best Apartments Inc., aims to start leasing in December. Formerly based in Freeport, he prefers a smaller market like Augusta, where he can make a bigger impact.

“Many areas get passed up for new rental housing because they are considered rural,” he says. “Yes, the capital of Maine is by HUD/Maine Housing standards rural.”

Another reason he likes Augusta, he says, is because he finds that capital cities don’t see a lot of ups and downs. He also has a personal interest in providing housing for older residents.

“I am 57 years old and some of my friends’ parents who worked in the mills around that area, who paid taxes to the state for many years, don’t live in quality rental units,”says Gooch, who also develops market rate housing. “I enjoy helping those people and providing quality housing for them.”

To developers not familiar with Maine’s capital, he says. “Why would you want the star on a map to have such poor-quality housing? Augusta is a very convenient place to live and work. Augusta has a strong community, and the city government is willing to listen and work with developers like me.”

Projects by other developers currently under construction include the Kennebec Valley Community Action Program’s Cony Village development of single-family affordable homes, and Fieldstone Place, a higher-end single-family home subdivision near Cony High School.

City officials are also reviewing an application for a subdivision of 14 lots on 8 Rod Road.

Further evidence of a residential building surge is reflected in a rise in city-issued permits for new dwellings, from 33 in 2019 to 49 so far this year. If the rate of permitting continues apace in the second half of the year, that would put Augusta at 100 new permits in 2022.

“It could happen,” Luke says, “but I am concerned that supply-chain issues and contractor availability will present challenges to that.”

Augusta Housing also busy

It’s not only private developers who are seeking to add to Augusta’s housing supply. So is Augusta Housing, the city’s public housing authority.

“When I arrived at Augusta Housing in December of 2013, the housing authority was a bit anomalous as one of just a couple of housing authorities in the state that had never owned, managed or developed housing,” says Executive Director Amanda Olson.

That changed in 2015, when the organization signed a 90-year lease on a 1950s vacant school building—that otherwise would have been demolished — for a symbolic $1 a year. Augusta Housing then used historic preservation and low-income tax credits to create 47 units of affordable senior housing, opening the Hodgkins School Apartments in 2016.

Today, Augusta Housing has two projects in pre-development: 1 Park Street, with 34 one-, two-, and three-bedroom affordable workforce housing on a safe, dead-end street, and Malta Street, with 45 one-bedroom affordable apartments for adults ages 55 and older in a walkable, in-town location. The aim is to start construction on both projects next year and open in 2024, Olson says.

She notes that adding 66 units falls far short of the 870 affordable units currently needed in Augusta as reflected in Maine Housing data. Another 1,465 are needed in Waterville and Winslow, putting the three-city deficit at 2,300 units.

“We know that we can’t meet the need with just the work that we’re doing,” Olson says. “We’re building large-scale communities, but we’re not going to get to the 870 units doing just that, nor should we. We need to add to the supply from many different angles, and small-scale private development has a huge role to play in that.”

She sees possibilities for that resulting from L.D. 2003, a new state law that allows up to two units to be built on lots zoned for single-family housing.

“There are tons of property and homeowners in Augusta, and a lot of the lot sizes are larger and conducive to adding maybe a couple of units onto existing units to meet the need,” she says. The new law “is really opening up opportunities and getting people really thinking about how everybody who is a property owner to be part of the housing solution.”

Asked about the optimal proportion of private and nonprofit housing developers, she says, “I think it’s important to have a mix. There’s not necessarily a magic number. Any healthy community is diverse, both in terms of those that contribute to and invest in the community as much as those who live there.”

A third project, still at an early stage and dependent on the green light from the city to sell the property, could add around 50 units of affordable housing, Olson says.

Augusta Housing is also in negotiations to buy the office building it currently shares with the Augusta Police Department for $650,000 to house its six-member staff, create workforce housing and set up a child daycare center in collaboration with a local operator.

“We’re a tiny staff, but we’re like the little engine that could,” Olson says. “We’re trying to step up to the plate in terms of expanding housing opportunities through the development of new affordable housing.”

Her take on the city’s housing situation: “The replenishment of housing stock in Augusta has historically not kept pace with the need,” she says. “The resulting shortage of inventory has only been exacerbated by the pandemic. That said, there is a boom here, largely due to the city of Augusta’s ability to create a developer-friendly environment.”

‘Hasn’t scratched the surface’

Much of that environment is due to Parkhurst, a former pro skateboarder who moved back to Maine in 2008 and got into development because he wanted a nice apartment and couldn’t find one, as he told Mainebiz in 2018. He ended up buying and renovating five downtown buildings with ground-level retail and upper-level apartments.

Today as Parkhurst embarks on an all-commercial endeavor to convert an empty building at the bottom of Sand Hill he recently bought into a bagel eatery, he’s watching today’s residential market with interest.

“The downtown stuff has been great,” he says. “But it hasn’t even scratched the surface … I don’t think that there’s any type of housing development you could put in Augusta that would not be successful right now. We have such a need.”