CLAREMONT — An 83-unit apartment complex being built in the husk of a historic mill overlooking the Sugar River is in the home stretch after a complicated financing package came together for the $11 million construction project.

Newmarket, N.H.-based Chinburg Properties, which acquired the 62,000-square-foot Peterson building last year for $1.2 million, has secured funding through a combination of federal tax credits, bank loans and regional development money that will enable the developer to finish converting the five-story building into apartments ready for move-in next spring.

The red-brick Peterson building, which was part of the Monadnock Mills textile operation, is one of the most imposing structures in downtown Claremont and the last in a trio of historic properties — the other two now occupied by Red River Technology and Common Man Inn & Restaurant — to be repurposed for modern use. More than a decade ago, the city spent millions to upgrade the Water Street area to spur private investment in the redevelopment of the mills, including building a parking garage and pedestrian bridge across the Sugar River.

“It’s been exciting to watch it unfold,” said Nancy Merrill, director of planning and development for Claremont, about the conversion work on the building that began last fall more than a decade after a prior developer’s plan to convert the 19th-century mill structure into condominiums collapsed during the recession.

“There’s no vacancies down here for apartments and these will be filling critical housing needs of employers,” she said.

Last year, in a move to help Chinburg redevelop the Peterson building, the City Council approved a tax-relief measure that freezes the building’s assessed value at $753,700 for a period of 11 years.

Economically distressed since manufacturing plants closed down more than a generation ago, the economic comeback in Claremont has been slow and halting. But the city is currently in the midst of a $4.5 million project to redesign Pleasant Street to make it more amenable for foot traffic.

The Peterson building project represents a significant piece in the city’s revitalization hopes.

The building’s residential units are to include a mix of studio, one-bedroom and two-bedroom “market rate” apartments ranging in rent from an average of $1,150 per month for studios to an average of $1,860 per month for two-bedrooms, according to Matt Asia, director of asset management at Chinburg.

Other features of the apartment complex will include wi-fi, a private outdoor grill patio for residents, a rooftop deck, on-site laundry facilities, a “club room” on the ground floor to host parties and a “dog wash” room with tub and dryer, Asia said. Parking will be provided in the city-owned Claremont parking garage across the street.

Asia said Chinburg, which is also building and managing the property, will begin leasing apartments toward the end of year in anticipation of occupancy beginning in March or April.

“We just know there are few apartment vacancies across New Hampshire and in the Upper Valley in particular, so we anticipate a high demand,” Asia said.

Chinburg develops and builds residential properties in New Hampshire, Massachusetts and Maine, including single-family homes and apartment and condominium complexes. Among the company’s projects has been the Newmarket Mills, which converted a former mill into a $17 million mixed-use residential and office complex with 116 apartment units.

Although Chinburg began work at the Claremont building earlier this summer, final financing for the project was wrapped up only a couple weeks ago, according to Asia, as cobbling the package together involved myriad parties .

Leading the financing effort was Lebanon-based Mascoma Bank, one of the few independent banks in New England which has a group dedicated to tapping government tax credit programs to finance projects that are too costly for conventional lenders.

That program, called the federal historic tax credit, allows investors participating in projects targeted at redeveloping historic buildings for new commercial and residential use to take a 20% tax credit. The projects must be reviewed and certified by the National Park Service in the Department of the Interior to become eligible for the tax credit.

The federal credit is designed to get hard-to-finance projects over the line when they entail too much risk or too little return for conventional lenders.

“These buildings would stay fallow, a blight in the community, were it not for this program,” said Dick Jennings, manager of the community development lending group at Mascoma Bank.

Mascoma, Jennings said, was brought in to lead the financing by Claremont Savings Bank, which is also helping to finance the project but did not have a background in navigating the federal program. Other participants in the financing include the Capital Regional Development Council in Concord and the Regional Economic Development Center in Raymond, N.H.

The federal tax credits have been bought by Monarch Private Capital in Atlanta, according to Asia (the $11 million in construction costs does not include the cost of acquiring the Peterson building, design and architectural work, permitting, legal and financing, all of which will push the total cost of the project — and the amount to be financed — higher.

Given the ongoing housing shortage in the Upper Valley, which has only been exacerbated by the pandemic, local real estate professionals do not expect Chinburg to have a problem finding tenants to lease the apartments.

Don Chabot, of Town & Country Realty Associates in Claremont, said that although the rent that Chinburg will charge for the apartments is higher than that typically seen in Sullivan County, “they should do alright.”

“Locally, our market would be more like $900 for a studio to the $1,400 range for a two-bedroom,” Chabot said. “But I think the $1,100 to $1,600 market in Lebanon is going to come here.”

Contact John Lippman at jlippman@vnews.com.

Correction

Chinburg Properties is converting the Peterson building in downtown Claremont to 83 market-rate apartments. An earlier headline and photo caption with this story incorrectly described the ownership structure for the units.

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