The stone work at left is from the original building built in 1831, and the brick work at right is part of the addition to the mill, built in the 1860s. Below, the school’s library will be on the fourth floor with a water view.

The Providence Journal / Bill Murphy

NEWPORT — Standing atop metal scaffolding two stories up, a worker swung a small hammer at loose pieces of an outside stonewall of the Aquidneck Mill.

But neither the crumbling pieces of native green granite nor the gray skies and rain could dim the bright future of the historic building, built 177 years ago. Inside, local and state officials gathered to recognize the ongoing transformation of the once derelict building into expanded quarters for its owner, the International Yacht Restoration School, and other tenants devoted to maritime trades.

In the unheated and unfinished space on the first floor, they applauded the news that more than $500,000 in federal money had been secured for the $7.5-million project, with the help of U.S. Senators Jack Reed and Sheldon Whitehouse.

While much work remains, the restoration of the four-story Thames Street building is expected to be completed by December, with the school and its tenants moving in after the new year. Where cotton was once woven into thread and electricity generated from steam, the state’s maritime industry will be buoyed by bringing businesses and vocational training together under one (renovated) roof.

“We are here in a building that was built in 1831. Back then it was manufacturing hard goods. Now it is transformed for a new economy, manufacturing ideas and education — and that in the long run is probably the future of our success in our globalized economy,” Reed said.

About one-third of the 30,000-square-foot building will be occupied by the school, which will take advantage of the new space to open a research library and establish a program in advanced joinery and marine furniture-making. The remainder will be leased to such maritime businesses as yacht designer Sparkman & Stephens, Boothbay Harbor Shipyard, Confident Captain license training, Legacy Yachts and The Museum of Yachting.

Terry Nathan, the school’s executive director, said the leases are necessary to generate revenues and to meet requirements of the federal tax credits granted for the project. For a minimum of five years, a certain portion of the space must be leased out, he said. He and others emphasized the synergy they expect to be created by bringing together the educational and commercial endeavors in one space,

Reed noted that about 6,000 people in Rhode Island are employed in the marine trades.

“But we can do better,” he said. “This is a place [the Aquidneck Mill Building] that will bring together all of the marine trades … to face a growing demand for their services worldwide. This is truly a global industry, no longer a regional or national industry … and we will — as we have been in the past — be global leaders because of the investment we are making here and because of the work IYRS is doing.”

The project will not only boost the industry but create an aesthetically pleasing space whose restoration must meet the stringent requirements of the state Historical Preservation and Heritage Commission.

“It’s a little like a SoHo loft space,” said Nathan while giving a tour of the building.

He pointed out the high ceilings, wood floors, exposed brick walls and archways and 15-over-15 pane windows, some of them overlooking Newport Harbor.

“It’s a wonderful view,” he says.

Some of the original windows will be saved and placed on the side of the building fronting Thames Street, he said. The building comprises two structures, the granite building erected in 1831for cotton production by the Newport Steam Factory Co. and the brick addition closer to Thames Street and half a story taller, constructed in 1863.

In some ways, the building had to be modernized to meet contemporary codes, such as the addition of an elevator and stairwells. But wherever possible, state historic preservation officials demanded certain materials and appearances. The plaster around one new window, for example, needed to appear more aged, Nathan said.

The library will be on the top floor of the granite building, with a view of the harbor. It won’t be a lending library, but it will be open to the public for research and for anyone who wants to view the latest exhibit in its glass showcases. The collections of the yacht school and the Museum of Yachting, which merged with the school recently, will be combined here.

The top floor of the other building, with its vaulted ceilings, may be leased to a company that makes and repair sails. It’s possible, said Nathan, that an educational program could be created for students to learn about the sail business. During the off-season, the space could be used for public lectures and gatherings, he said.

Just a couple of months ago, the yacht school feared the loss of state historic tax credits. State House officials grappling with budget shortages were considering revoking already pledged credits. Fortunately, said Nathan, the credits were scaled back, not eliminated, to 22.5 percent of the total cost of the project from 27.5 percent.

The additional good news, the school learned, is that Reed and Whitehouse secured more than $500,000 in the 2008 appropriations bills for the restoration.

According to the school, the marine industry accounts for $1.6 billion in sales and provides more than 6,600 jobs. But there is a 10 percent job vacancy rate and many students get job offers before they even graduate, said Nathan.

Keith Stokes, executive director of the Newport County Chamber of Commerce, said the restoration of the mill is helping revive the working waterfront.

“I am probably the last generation of a Newport-born person who remembers a true working waterfront in the ’60s and ’70s,” he said. “As a Chamber, it’s pretty exciting when companies are now asking me, I have an interest in coming back into the Newport area, where they belong, these traditional maritime trades. So this project we think is a beginning — it’s the beginning of a resurgence in this area of a mixed-used maritime trades community.”

rsalit@projo.com