LINCOLN, Maine — Agreements between the Town Council and social service agency Penquis that the council accepted Monday will allow the agency to pursue building a 24-unit senior housing complex at the former Lake Mall site worth as much as $6 million.

The council twice voted 7-0 Monday night to allow interim Town Manager Lisa Goodwin to sign a Credit Enhancement Agreement and pursue a tax increment financing application that will help Penquis fill the large crater left by a 2002 arson that devastated much of downtown.

The enhancement agreement will pave the way for the TIF and other Penquis efforts to secure federal or state aid to build the complex, said Tom Lewis, a consultant helping Penquis engineer both.

If all goes well, construction of the building will begin by Aug. 1, 2009, and finish a year later, said Stephen Mooers, Penquis director of housing services. The Bangor-based social service agency will also begin applying for building permits.

“This complex will be a great addition to downtown,” council Chairman Steve Clay said after the meeting. “It will be nice to have ‘the hole,’ as people call it, finally filled.”

If Penquis succeeds in building the complex, it will have rehabilitated the last of about eight properties devastated by arson fires in 2002. The fires destroyed eight of 32 Main Street businesses. No one was charged in the arson.

Penquis plans to build the housing units within the proposed 15,000-square-foot building at Main Street and West Broadway. The plan will also include a Lincoln branch office for Penquis, and a town office — if councilors approve the idea.

The town office was not part of Monday’s votes. Penquis has an alternative building design ready if the council opts not to move the town office from 63 Main St., Mooers said.

Tax increment financing is among the state’s leading tools for aiding economic development. When a town realizes an increase in valuation created by an investment, it also experiences a reduction in its share of state revenues and an increase in county taxes. A TIF allows a town to “shelter” the new valuation from the calculations of state revenue sharing, education subsidy and county tax assessment — in effect creating more money for the town, usually over 20 years.

The Penquis TIF, town Economic Development Director Ruth Birtz said, will allow Penquis to use the sheltered valuation funds to lower the rent charged to seniors and make it affordable for them.

The TIF would be one of three in Lincoln. The others encompass the Lincoln Paper & Tissue LLC mill on Katahdin Avenue and the Lakeside Plaza building on Main Street, she said.

State laws limit TIFs to no more than 2 percent of a municipality’s land area and 5 percent of its valuation, but the three won’t come close to meeting that standard, Birtz said.

“We are at, like, half a percent on both,” she said.