Work being done this summer on the top floor of the Spinning Mill in downtown Skowhegan. Anna Chadwick/Morning Sentinel

SKOWHEGAN — The developer of the Spinning Mill project in downtown Skowhegan says the work is back on track eight months after record flooding brought it to a halt.

With funding from town, county and state agencies, and a local tax incentive, allowing construction to resume, a portion of the Spinning Mill could open later this year, according to Dash Davidson, a principal of High Tide Capital, the Bangor-based developer renovating the former mill.

“I’m very happy to report that the project is securely back on its feet and charging forward towards an initial completion later this year,” Davidson said.

The project, which drew the attention of Gov. Janet Mills immediately after flooding caused an estimated $4 million in damage, is expected to be a key part of Skowhegan’s economic revitalization efforts. Construction began in 2022.

When finished, the 80,000-square-foot former Solon Manufacturing and Maine Spinning Co. mill at 7 Island Ave. is to include commercial space, a 20-room boutique hotel and 41 apartments.

Davidson said in an interview Tuesday he is expecting the commercial spaces on the ground and first floors to open later this year. That includes the hotel, a restaurant and bar space, an event space and a coworking space.

The apartments, which are a range of sizes, are on track to be ready for occupancy in early 2025, Davidson said. A few have been designated as workforce housing, and the rest will be priced competitively.

The old Spinning Mill building Wednesday in downtown Skowhegan. Rich Abrahamson/Morning Sentinel

The flooding damage set the project back about six months. As the Kennebec River crested to historic levels, the ground floor filled with about 5 feet of water, tossing around dozens of 300-pound windows stored there and damaging electrical systems.

The flood waters ripped a few large propane tanks off a heating system and nearly knocked a large shipping container holding hardwood flooring and other construction materials into the river.

Construction came to a halt, but the bills kept coming.

“As every homeowner knows, your mortgage is due every month, relentlessly,” Davidson said. “So even in the six months that we weren’t able to work on the mill as a result of the flood, we were still paying a significant amount of interest.”

A combination of public-private partnerships and support from the community helped the project through a difficult period, Davidson said.

Davidson called a tax increment financing, or TIF, package, approved by voters at the annual town meeting in June, “simply vital” for the Spinning Mill’s future.

A TIF designates a district where a municipality can capture increases in property taxes resulting from investment. In this case, the area has been defined as parcels on Skowhegan’s downtown island, where the Spinning Mill is located.

Skowhegan is set to use the increase in tax proceeds over the Spinning Mill’s original assessed value to fund specific projects, such as sewer and other infrastructure work.

The TIF also returns a portion of the increase back to the Spinning Mill through what is called a credit enhancement agreement.

In the proposed TIF approved at the town meeting, 90% of the tax increment is to go back to the development for 15 years, with the other 10% going toward the town’s TIF fund. Then, for the next five years, the Spinning Mill project is to get back 45%. For the remaining 10 years of the 30-year TIF, the Spinning Mill is not to receive any credit.

The TIF also shelters the expected additional property value generated by the development from the negative aspects of a growing tax base. Any increased value would not decrease state education funding and revenue sharing or increase the school district and county assessments.

Jeff Hewett, Skowhegan’s director of economic and community development, told the Board of Selectmen at an Aug. 13 meeting that the town has submitted its TIF application to the Maine Department of Economic and Community Development. The department reviews and approves all TIFs in the state.

The Spinning Mill also received its latest support earlier this month: A $100,000 grant from the state’s Business Recovery and Resilience Fund, established as part of $60 million in funding approved in May for recovery efforts related to winter storms in December and January.

The grant added to a $200,000 loan from Somerset County and its economic development agency, the Somerset Economic Development Corp., and a $100,000 loan from the town’s Skowhegan Economic Development Corp., both approved in February.

“Those two loans … were super vital because those carried us through the really early stages of the cleanup process,” Davidson said. “We weren’t able to borrow more money from our bank at that time until the damage from the flood had been repaired, and so we were really in a bind.”

Now, the project is back to relying on its private sources of funding, including partner equity and financing from First National Bank, Davidson said.

In May and June, Davidson and his partners invited the public to tour the construction site during what he said were well-attended open houses. He said he expects more opportunities for residents and others interested in the project to tour it before it opens.

“We’re grateful to the community and to the state as a whole in helping us get everything moving again,” Davidson said.