LEBANON — Plans are taking shape to convert a city-owned parcel on Spencer Street into 80 units of affordable housing.

Hollis, N.H.-based developer The Muse Lebanon, LLC plans to build a new four-story building at 20 Spencer St., located a short distance northeast of City Hall and Colburn Park, that would include a mix of one-, two- and three-bedroom apartments and eight live-work units for artists, according to application materials filed with the Lebanon Planning Board.

“New Hampshire is in a housing crisis and there’s such a tremendous need for all types of housing but specifically affordable housing,” Jake Tamposi, of The Muse Lebanon, LLC, said.

Four key principles for the redevelopment, which is now pending before the Planning Board, include:

■“provide high-quality affordable housing for a diverse range of households,”

■“create spaces that inspire artists and add to the community’s cultural vitality,”

■“develop a site that is connected and integrated with the broader community and streetscape,” and

■“construct a building and physical infrastructure that is energy efficient and lasting,” according to the application materials.

Three of those principles were a part of the Request for Proposal that the city issued last fall. The fourth, “creating a space to inspire artists and add to the community’s cultural vitality,” was unique to the Muse Lebanon’s response. The city selected the Muse project from a pool of three proposals developers submitted in response to a Request for Proposal that the city issued last fall.

The property has been owned by the city for at least 75 years, said David Brooks, Lebanon’s deputy city manager. It served as a former public works garage and administrative building until about a decade ago.

The city continues to own the property during the proposal process and Tamposi is pursuing the permitting and funding to proceed with the development, Brooks said.

“Assuming all of this comes together, we will close on the property; they will take ownership, then it will be their project to move forward with,” Brooks said.

The proposed development plan is for rental units affordable to households earning an average income of 60% of the Grafton County Area Median Income, or about $65,000 for a family of four, with eight of the units being live-work units with a preference for artists.

Funding is anticipated to come through a combination of public resources, including Low-Income Housing Tax Credits, allocated by the New Hampshire Housing Finance Authority.

In addition to affordability, the development seeks to “enrich the streetscape and cultural vibrancy of the downtown area” through the live-work units and their potential for gallery spaces, according to the proposed plans.

The proposed plans highlight the role Lebanon plays as a hub for the arts, in part through nearby cultural institutions such as AVA Gallery, the Lebanon Opera House and the Upper Valley Music Center. But the plans note that high housing costs and a lack of affordable housing for artists threaten the vitality of Lebanon’s creative economy and cultural institutions.

“I think that housing has gotten extremely high in the Upper Valley,” Shari Boraz, executive director of AVA Gallery and Art Center, said in an interview. “But people who are artists cannot be dedicated to their art when they’re worried about where they’re going to be living.”

Making it possible for artists who teach at AVA to live within walking distance, Boraz said, “would take a lot of pressure off of them.”

The design of the Muse apartments also seeks to make use of the nearby Northern Rail Trail by providing a direct connection from Spencer Street to the trail. The ground floor lobby space of the Muse apartments will also include an indoor bike storage and repair station for residents, to encourage bike use. In addition to the rail trail, the project may include a public playground.

“On the Rail Trail and the playground, our hope is for it to be a collaborative process with the city,” Tamposi said.

The project was introduced at the Sept. 9 Planning Board meeting and will continue public hearing at a special meeting scheduled for Monday, Sept. 16 at 6:30 p.m. in the council chambers at Lebanon City Hall.

Tamposi is requesting conditional use permits to allow a fully residential occupancy across the first floor and to increase the heigh t of the building on the first floor, he said.

Should the project move forward, the sale of the property is expected to bring in revenue of $400,000 to the city, according to the proposed plans. The project also is expected to return property to the city’s property tax rolls. Based on an analysis in the plans, the project anticipates providing property tax revenues of approximately $110,000 per year.

“This will put the vacant property to great use and bring property tax to the city,” Brooks said. “It is a very good and very needed use.”

Elle Muller can be reached at daniellewingmuller@gmail.com.