🔒Capital development: Augusta construction pipeline spans mixed-use builds to hundreds of residential units

Augusta has several major construction projects in the pipeline, including the mixed-use redevelopment of the former KMart Plaza, residential builds, downtown renovations and the conversion of a striking 19th century building into a boutique hotel.

Together, the residential projects will mean more than 1,000 new housing units, with more in the pipeline, says Keith Luke, the city’s director of economic development

Based on a 2020 study, the city’s housing shortfall is well over the number that has been approved. “But we’re making important progress,” says Luke.

The city council’s goal, he says, is to bring in as much housing as possible, and in every category.

“We’re working closely with the development community to make sure they’re aware that Augusta is a welcoming place for housing development,” he says.

In 2022, Luke estimated the value of residential investment coming into the city to be nearly $100 million. Today, it’s well over $250 million.

“Residents of the new housing units being created will be the employees that our existing employers need to grow, and the available workforce that will help the city attract new employers in the future,” Luke adds.

In recent years, the city has been attracting local and out-of-state real estate developers looking to build apartment blocks and renew and fill vintage brick and stone buildings in the downtown area.

“I think Augusta has done a great job working with developers and owners to make the downtown a much more open place for development,” says Andrew LeBlanc, a local resident and developer. “When you go to downtown Augusta, you’ll see a lot more restaurants, apartments and local shops that weren’t around five years ago.”

Plaza redevelopment

“When you come to Augusta on a project, they take the attitude that they’ll try to work with you,” says George Campbell, co-developer with Joe and Greg Lajoie and Ryan Landry from Augusta construction firm Lajoie Brothers of the multi-use Capitol Heights Plaza at 56 Western Ave.

With Capitol Heights Center LLC as the project owner, the development is at the site of the former Augusta Plaza that included a defunct, and recently demolished KMart building.

The property is under option to Capitol Heights Center LLC. Campbell says he expects the deal to close by December.

The plan includes a phase-one build of an 11,000-square-foot building with first-floor retail and garage units plus 58 market-rate apartments.

Phase two will be a 12,000-square-foot building with retail and 60 market-rate apartments, bringing the total to 118 units.

There will be a standalone retail unit totaling 6,000 square feet, landscaping and a walking path.

Capital Heights Center is also negotiating with a separate developer to build a 122-room extended-stay hotel.

The first phase could break ground next spring and wrap up in 18 months.

Market potential

The near-term investment is estimated between $50 million and $60 million, with potential future spends.

Financing includes bank loans and investor equity and a 30-year tax increment financing district, recently approved by the city council, with 100% of new taxes reimbursed to Capitol Heights Center for the first five years and 90% reimbursed for the next 25 years, with a $16 million cap.

Campbell has extensive leadership background in the private and public sectors. He’s led four companies, including an inter-modal transportation business and a northern New England commercial real estate business. His public service posts have included commissioner of transportation for Maine and New Hampshire, and city councilor and mayor of Portland.

The part-time Augusta resident is now with McClure Engineering in Iowa and also has a small consulting company.

For Capitol Heights Plaza, he was attracted to the site’s location and market potential.

“How could you have a more valuable eight acres?” he says. “Valuable in the sense that it’s three blocks from the capitol and can be redeveloped as multi-use. Especially talking with Lajoie Brothers, I knew that the city could use more market-rate apartments. And an extended-stay hotel close to the capitol made a lot of sense.”

Boutique hotel

At 295 Water St., Andrew LeBlanc and Nate DeLois want to convert a 19th century building called the Olde Federal Building into a 40-key boutique hotel.

“The Olde Federal Building in Augusta presents an exciting opportunity to work on something unique and special,” says DeLois. “The historic detail of the building could never be replicated in today’s world due to costs.”

DeLois is CFO and director of development at Uncommon Hospitality, a hotel operations and development company founded in 2015 by DeLois and his brother Tony. Its properties include the recently built Longfellow Hotel in Portland.

LeBlanc previously performed a $7 million apartment conversion of the Vickery, a downtown building on the historic register.

Converting the Olde Federal Building into a boutique hotel that is open 24 hours a day will mean the building, and its historic features, will be like a “living museum,” says DeLois.

The 41,212-square-foot, four-story structure on Augusta’s riverfront was built as a post office and courthouse in the late 1800s. It’s a contributing structure in the Augusta Water Street National Register Historic District.

“This is a spectacular stone building; it looks like a castle with turrets and a tower,” says DeLois.

Romanesque arches

Faced with granite, highlights include a central tower, Romanesque arches, an open marble staircase, terrazzo flooring, wood paneling and trim, ornamental plasterwork and a first-floor colonnade with six arches supported by columns.

More recently, the building was remodeled for professional office use. Installations included sheetrock and drop ceilings that covered some historic features.

In 2022, a proposal was in the works to redevelop the building for a mixed-use apartment complex with street-level and lower-level retail and office space. That idea fell through, says Luke.

Converting it for hotel use is challenging.

“We’re adding new mechanical and electrical service and more than 40 bathrooms throughout a building in which no two floors are the same — and doing it while retaining and restoring significant historical elements,” says DeLois.

Each guest room is different and their designs are their own projects, he notes.

The hotel will add 50-plus jobs. As a hub of activity for locals and visitors with a café, bar, bathhouse and meeting spaces. It could bring more visitors to the downtown area.

Overall project costs and financing are still coming together as the designs are finalized. Depending on the permitting timeline, construction could start this fall and the hotel could open in early 2027.

The project team includes Brooklyn, N.Y.-based Post Co. for interior design, Bridgehampton, N.Y.-based BMA Architects and Augusta builder Lajoie Brothers.

“Historic tax credits make the project feasible from an investment standpoint; otherwise, the costs of the project would make this project potentially impossible to pursue,” says DeLois.

Downtown rentals

Jonathan Miller of Hemlock House Development envisions converting two vintage downtown buildings, both dating back to around 1900, into a total of 26 rental units, half designated as affordable.

Established in 2018, the North Yarmouth firm specializes in historic renovations as long-term rental investments. Miller has worked on other buildings in downtown Augusta, including a 28,000-square-foot project called the Vickery — a renovation of four historic buildings to provide 26 luxury residences and retail spaces.

Miller says he enjoys working with old buildings because they have a great deal of charm and character that can’t be recreated in new construction projects and they allow him to create apartments that are distinctive from one another.

Historical features at the 7,750-square-foot building at 211 Water St., which he owns, include massive windows and tin ceilings, which will be revitalized. Eight apartment units would go into 6,000 square feet of unoccupied space; three designated affordable.

At 333 Water St., which is under contract, the 25,000-square-foot building includes a grand stairwell. Redevelopment would include converting 15,000 square feet of unoccupied space into 18 apartment units, six designated affordable, plus two retail spaces.

Custom process

The process includes demolishing almost all non-historic materials back to the brick and wood. Historical elements are retained, catalogued, fixed as needed and reinstalled. Things are often out of square. New mechanical, electrical and plumbing systems will be installed.

“Doing the finish work is a very custom process,” he notes. “It increases the construction cost significantly.”

Miller utilizes federal and state historic tax credits to help fund construction.

“These historic building renovations would not be feasible without these tax credits,” he says.

The total for the two renovations is estimated at $8.2 million. Design and financing are being worked out. Miller is applying for a TIF designation.

“We are hoping to start construction this winter,” he adds.

Miller has seen a range of demographics coming into previous projects.

“We’ve had people working retail jobs, nurses, doctors, teachers,” he says. “Our target is anybody, but it’s mostly been younger, single tenants or younger couples.”

Affordable housing

Developers Collaborative is planning to two phases of affordable housing, envisioned as an “intergenerational campus,” on city-owned property at 33 Union St., a former Augusta Police Department site.

The project team includes Ginny Stanley at Invivid Architects and civil engineer Adrienne Fine at Terradyn Consultants.

Building one will have 50 one-, two- and three-bedroom apartments for families and a 3,000-square-foot child care space.

“We’ve been discussing this space with the adjacent Kennebec Valley YMCA as a potential expansion of their existing child care program, for which there is strong demand,” says Laura Reading, the Portland firm’s director of affordable housing.

If low-income housing tax credits for the first phase come through, construction could start in approximately one year.

Building two will be primarily one-bedrooms, with some studios for 55-plus households.

“We’ve had previous successful developments in Augusta and wanted to continue to work with the city to develop more affordable housing,” says Reading.