AUGUSTA -- A proposed, $841,000 development of a significant Water Street property is expected to bring 10 renovated loft apartments and a new restaurant or pub to the city's downtown.

And the local resident behind the project, Richard Parkhurst, plans to offer a would-be restaurant operator rent-free space on the ground floor for the first two years, if certain conditions are met, to help lure them to come.

The project could bring some life and commerce to a downtown which has struggled to draw either in recent years.

"It's a bit of a change from what has been going on downtown," Parkhurst told city councilors Thursday.

The project would renovate the old Chernowsky's building at 228 Water St., which housed the clothing store of the same name that closed in 1994 and, more recently, Pavlov's Music.

It has been vacant since Pavlov's closed last year.

As an incentive, Parkhurst plans to offer potential restaurant operators two years of free rent if they pay the cost of fitting up renovations and agree to a five-year lease.

He noted new restaurants often struggle to get established, with many going out of business within the first couple of years.

"We feel we need to induce restaurants to go into business with us," Parkhurst said.

Parkhurst, of Winthrop, is also an owner of Oakes and Parkhurst Glass.

A key for the project is the city's plan to facilitate the installation of a small propane tank farm in the downtown area, to provide fuel for the restaurant's ovens and heat to the apartments on the upper two floors.

The project would use $73,200 already collected through the city's downtown Tax Increment Financing District, or TIF, fund. The city would provide upfront money for the project and would be paid back, over time, through a supply contract with a propane vendor, Mayor Roger Katz said when the propane proposal was approved by councilors in July.

Katz said not having access to propane was an obstacle to downtown development plans. Other downtown buildings could also tie into the propane supply.

"The city believes in our historic riverfront," Mayor Roger Katz said. "We will be working to facilitate the installation of a propane facility across the street to serve the heating and food service needs, not only for this project, but also ones we feel confident will follow."

Katz said the city would consider granting the project TIF funds, "at no cost to the citizens of Augusta to help get the project off the ground."

"This is exactly the kind of breakthrough we were waiting for," Katz said. "This project will succeed. We will have new people living in our downtown. We will have new people working in our downtown. Our hope is that all of this success will not be lost on others and we will see development both to the north and south of this building."

Parkhurst said he plans to purchase the building for $95,000. He said Kennebec Savings Bank would loan $505,000 for the project, his family will invest about $140,000 from personal resources, and other investors will provide about $96,000.

He hopes to purchase the building in 30 days, start construction in 45, and have apartments ready for occupancy by August of next year. He anticipates rent starting at $750 per month.

Parkhurst's son, Toebee, and his wife Crystal are currently renovating 204 Water Street -- half of the former Lamey Wellehan shoe store -- with apartments on the upper floors.

He also intends to connect to the propane tanks for heat for the building.