Politics & Government
Former NH ES Building Developer Wants $3.5M More From Concord
After the city borrowed $2M to acquire the building, a Massachusetts developer wants millions more to build 125 market rate units downtown.
CONCORD, NH — City officials will be requesting city councilors to approve millions more in incentives in a new sales agreement with a Massachusetts-based developer to build market rate apartments at the former New Hampshire Employment Security building in Downtown Concord via tax increment financing. On July 8, the Concord City Council will consider a proposal ironed out by Matt Walsh, the director of Redevelopment, Downtown Service & Special Projects, to allow City Manager Tom Aspell to enter into an updated purchase and sale agreement with Dol-Soul Properties LLC for the building, located at the intersections of South Main, Fayette, and South State streets. Dol-Soul Properties is a consortium of real estate developers led by the Dolben Company of Woburn, Massachusetts, a privately held company that specializes in mixed use real estate projects with around 11,000 apartment units in the Northeast – including two developments in Concord.
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According to Walsh, Dol-Soul is proposing to construct 125 new market rate studio to two-bedroom apartments – targeted for young professionals without children and empty nesters – as well as a commercial space, probably a restaurant, on the ground level.
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Originally, the developer agreed to build 109 market rate apartments and commercial space (likely a restaurant) and entered into an agreement to purchase the site from the city for $1.075 million in January 2018 – after the city had already borrowed nearly $2 million to purchase the building from the state and mothball it. The city also agreed to cap impact fees and pay for the demolition of the building, with up to 32 permitted parking spaces at the Storrs Street Garage to sweeten the deal.
According to city documents, during the process of seeing if the project was viable, Dol-Soul estimated that the building would cost $30.4 million to construct but project revenues only supported a development cost of $23.4 million.
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"Consequently, the project has a $7 million gap," Walsh noted in a June 10 memo to councilors. "This gap must be resolved in order for the project to move forward."
In order to fill the development profitability gap, Walsh proposed a new purchase and sale agreement that included $4.63 million in incentives including $3.5 million in additional improvements – more money for demolition costs, roadway, sidewalk, a public plaza, utilities, and streetscape improvements around the property, payment of impact fees, and any other lawful purpose as mutually agreed to by the city and the developer.
The original purchase price would be lowered to $1,003,000.
The city's portion of the new financing would be bonded through tax increment financing from the Sears Block TIF District – essentially borrowing against current and future tax revenue, passing on the district's share of city expenses to every other property taxpayer, in order to have future revenue that would return to the city, school, and county coffers many years from now.
The developer would resolve its $3.5 million share of the gap by value engineering, providing more equity, and working on revenue expansion for the project. Tenants would also pay the city's market rate for the 32 parking spaces – to meet the city requirement of around 160 parking spaces for the building. The other spaces will be built on the parcel.
The city and developer would have until February 2020 to negotiate the exact mix of development incentives.
If approved, the project will have an assessed value of nearly $21 million and be one of the biggest projects undertaken in Downtown Concord. The building is projected to generate around $625,000 annually in new property taxes beginning in 2022.
Currently, the outstanding debt balance for the Sears Block TIF District is nearly $16.1 million. If everything goes according to the financial plans, only $3.6 million in debt will be left to pay-off by 2032 with about $4.5 million of an available fund balance that year.
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