WATERVILLE — A more than $30 million project to redevelop about half of the former Lockwood-Duchess Mill building at 6 Water St. into housing and commercial space is on pause as the developer grapples with construction costs and awaits word on financing.

“We are still trying to close with MaineHousing,” Maria Monks, a director with North River Co., wrote in an email. “The delay has been due to serious increases in construction costs. We don’t have a closing date yet.”

The redevelopment plan calls for 65 affordable apartments on upper floors of the building’s southernmost wing, according to Monks. The affordable housing would be tied to the local median income.

North River is trying to set a closing date for financing and is working with the Maine State Housing Authority, an independent authority created by the state Legislature to address problems with unsafe, unsuitable, overcrowded and unaffordable housing. MaineHousing also has oversight authority on housing that involves rental assistance, according to its website.

Last year, the mill project was awarded $1 million in federal American Rescue Plan Act financing.

Mayor Jay Coelho said last week he is confident the redevelopment will happen. With such projects, it is common to face challenges at every corner, but they can be overcome, he said.

“I think it’ll come through,” he said. “It’s just government, and it’s slow. We need the housing. We need a mix of housing. If they can make them all affordable, that’s good.”

Scott Thistle, communications director for MaineHousing, said officials with the authority are reviewing the development proposal.

“We do not have a closing date since we still have to underwrite the project, and that will need final approval from MaineHousing’s loan committee before it can move to a closing date,” Thistle said.

He said that over the next 18 months, 1,500 new, affordable units are expected to open for occupancy in Maine.

“Between now and the end of 2024, we expect we’ll see at least 1,500 units come online, and another 1,000 in 2024-2025. And behind that is another 1,500,” Thistle said. “In all, there’s 3,600 units on the runway.”

He said MaineHousing is seeing that as people move into more expensive market-rate apartments, it opens space for less expensive units.

“Every kind of housing, in our estimation, is good because it puts units out there,” Thistle said. “It can help free up units for affordable housing. It is all good, and it’s in part because of a lot of support from both the Congress and the state Legislature. And that support is very bipartisan and broad across all political lines, because everyone knows we need housing and we need housing for workers.”

Thistle said for the most part, town and city governments in Maine get it, and do much with zoning and ordinances to help ensure affordable housing development.

The southern wing of 6 Water St., which is parallel to the nearby Ticonic Bridge, would be developed as part of a first project phase, and the wing parallel to Water Street would be done later, according to Monks.

The building is visibly run down, with many broken windows and, in some places, window casings that are falling in. Birds fly in and out of the open spaces.

The cost and details of the second phase have yet to be determined, according to North River. Plans call for commercial and retail uses in about 4,000 square feet of the 120,000-square-foot, four-story building. Work has been done to clean up and remove asbestos inside the building to prepare for construction.

North River also owns two adjacent mill buildings. The three were called the Lockwood-Duchess Mill complex, used for textile manufacturing for many years until 1956. The southernmost mill building on Water Street was home to C.F. Hathaway Co., a shirt and clothing manufacturer, from 1957 to 1992.

The space at 10 Water St. became the Hathaway Creative Center and now includes 67  apartments on the upper floors. The building is also home to MaineGeneral Health offices, Waterville Brewing Co., Bricks Coworking & Innovation Space, GenoTyping Center of America, Waterville Creates, Hathaway Mill Antiques and other tenants.

Redevelopment of the 66,000-square-foot, two-story building at 8 Water St., between the other two buildings, could be done as part of phase two, according to North River.

The three mill buildings, built in the late 1800s, were designed by mill complex architect Amos Lockwood.

North River bought the buildings at 6 and 8 Water St. in 2019 for $1.5 million from Paul Boghossian, who developed the Hathaway Creative Center. North River bought the center from him in 2017 for $20 million.

The northernmost mill building, at 6 Water St., was owned previously by Marden’s Surplus & Salvage, while Central Maine Power Co. used the middle building, at 8 Water St. The buildings at 6 and 8 Water St. sit on 3.27 acres. The entire mill complex, including the Hathaway Creative Center, is 412,000 square feet and overlooks the Kennebec River.

North River is a privately held real estate investment and management firm based in New York City. The company also owns the Fort Andross Mill in Brunswick and mills in Portland, Boston and New York.

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