BANGOR – The city’s role in preserving a pair of historic buildings, both owned by the Penobscot Theater Company, was one of the issues tackled this week by the City Council’s business and economic development committee.

One of the buildings at issue is the old Bangor Unitarian Church parsonage at the corner of Main and Union streets. Merrill Bank, located next door, is interested in buying the building from the Penobscot Theater Company.

The other is the troupe’s current home, the Bangor Opera House near the opposite corner.

The bank wants to restore the parsonage building and convert the interior into office space, Deborah Jordan, Merrill’s chief financial officer and manager of investor relations, told committee members. Though cost estimates set the project price tag at $1.25 million, Jordan said the actual cost could exceed that total.

According to a staff memo to the city committee, it would be more cost-effective for the bank to engage in new construction than to renovate the existing historic building. In order to keep the project cost realistic, however, the bank is asking the city for assistance in the form of tax-increment financing.

To make the project work, the bank would like the city to consider returning new property-tax revenue generated by the renovation project for a period of 20 years. As things stand, the city is not receiving tax revenue on the property because its current owner is tax-exempt.

In a memo to the committee, Community and Economic Development Director Rod McKay noted, “There is not strong potential for significant reuse of the property, a former church rectory, by any entity other than Merrill Bank.”

The proposal came before the business and economic development panel with a positive recommendation from staff. It also will go before the full council with the committee’s endorsement.

The sale of the property to the bank would benefit the theater company, which is working toward fiscal stability.

Also during the meeting, the committee voted to support Penobscot Theater’s request for financial assistance with improvements to the opera house.

The cash-strapped troupe applied for a $155,190 city business development loan, a program funded with federal dollars from the Community Development Block Grant program. The funds would be used for new sprinkler and alarm systems.

According to Stan Moses, the city’s assistant community development director, the theater company originally came to the city with a much higher request, but that request has been scaled back to essentials that would bring the theater to maximum usage.

During the meeting, Producing Artistic Director Mark Torres said he hoped the city would consider a grant instead of a loan. He said the company had already made substantial cutbacks, especially in the area of staff.

A grant would allow the company to build up reserves for operating costs and capital investments, he said.

The matter will go before the full council as a loan request, though staff will continue to work with the theater group on financing options.

Councilor Michael Crowley said that while the opera house has shortcomings, it “plays and proposes to play a significant role in the future of downtown and the usage of downtown.

[The theater company] has done a good job masking those shortcomings, but I think the community needs to understand that, through the loan program, you have the opportunity to do something significant with the building.”

Councilor Gerry Palmer, a Bangor history buff, noted that the city already had lost several historic structures, the Bijou Theater and the Park Theater among them.