AUGUSTA — Construction is expected to start next spring of 34 units of affordable housing for people age 55 and older on Malta Street.

The $11.3 million project recently won approval for two key sources of funding.

City officials announced that a $500,000 Community Development Block Grant from the state Department of Economic and Community Development was awarded to the project. It’s a partnership of the city, Augusta Housing Authority and Portland-based private development firm Developers Collaborative.

The project also recently won approval from MaineHousing for 4% low-income tax credit financing.

“The equity generated by low-income housing tax credits and the $500,000 in CDBG funds represent the primary sources of funding for the development of the project,” said Norman Maze, executive director of Augusta Housing Authority. “Securing these sources of funding is crucial to moving this affordable housing development forward.”

Officials hope the units will ease the ongoing housing shortage crisis. The units are restricted to people making 60% of the area median income or less. Based on MaineHousing data for Kennebec County, that would be about $36,540 a year for a single-person household, or $41,760 for a two-person household.

Officials say the units will be ready for occupancy in spring of 2026. Rents will be priced at $913 a month for two studio apartments and $978 a month for the 32 one-bedroom units, with utilities included, according to Maze.

Housing remains tight, both in Augusta and statewide. A 2023 study cited by Maze determined Maine had an undersupply of 38,500 homes, with a need for an additional 39,700 to 45,700 homes by 2030. In 2021, MaineHousing identified a need for 873 new affordable units in Augusta, including 424 for senior citizens.

When the quasi-municipal Augusta Housing Authority won the city’s permission to build the project on the city-owned land, some neighbors objected. The initial proposal would have been spread out over an existing soccer field and baseball field with 25 stand-alone residences. Nature trails that connect to the Augusta Nature Education Center trail network would have run through the property.

In response, housing authority officials redesigned the project, sparing the main ballfield and not infringing on nature trails, and putting 34 units of rental housing into a single, three-story building on a portion of the property, just behind Hodgkins School Apartments. The quasi-municipal Augusta Housing Authority hired Portland-based development consultant Developers Collaborative to help.

As it has done with other developments on city-owned properties, the city will offer a long-term lease of the property at $1 per year.

The building is expected to include an office, laundry room, a community room with kitchenette and outdoor garden beds. There will be broadband infrastructure with capacity to support the provision of remote medical monitoring services, and conduits from the electrical panel to terminal units at the roof for current or future installation of solar panels.

“We are thrilled to receive this grant, which will enable us to provide much-needed affordable housing for our senior residents,” Keith Luke, economic development director for the city, said in a news release. “This project will not only enhance the quality of life for our seniors but also contribute to the overall vitality and inclusiveness of our community.”

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