Concord City Council Votes To Reject Employment Security Project

CONCORD, NH — The Concord City Council voted Monday to reject a $3.5 million incentive package for a 125-unit market rate apartment complex on South Main Street in Downtown Concord at the location of the former New Hampshire Employment Security building. Two-thirds of the council – 10 votes – were needed to approve two parts of the deal and the first vote failed by a 6 to 9 vote. At the beginning of the meeting, Mayor Jim Bouley asked the councilors to take up the $3.5 million incentives package first noting that if two-thirds was not reached, all of the other resolutions would be moot.

Andrew Dolben, the executive director of Dolben Development, the Massachusetts developer of the project, and Matt Walsh, director of Redevelopment, Downtown Services, & Special Projects for the city of Concord, approached the council so that officials could ask questions.

Dolben explained that some of the changes with the plan during the last 18 months came to be because the original plan didn't have internal parking. Originally, parking spaces most of the parking spaces would be off-site. His financial research led him to believe, however, that not having parking spaces on the parcel was not the way to go, he said.

"The project really requires having at least one space for each unit inside of the building," he said.

When pitching the designs to contractors, the cost then exceeded his original financials, and he said it was not feasible to deliver. The cost of the project was more expensive than the market could support. This required him to come back to the city and renegotiate, or to say to the city that it should find another developer.

"The feeling between the parties was to find some way to close the gap," Dolben said. "We are taking, on our end, significant risk."

The city, he added, hadn't spent any money. If he couldn’t find a construction company to build the complex, it wouldn't happen. Creating a building, with as many units as possible, are economies of scale, Dolben said.

"We're hoping that the stars will align, if you will," Dolben added. "The luxury apartments we are building are something that haven't been done before in the city … we are pushing the envelope of what residents will want to pay for rent."

Dolben said figured out the financials by using a development concept called "value engineering" – attempting to optimize the cost of the project, bringing it down, without affecting the building's revenue or amenities for customers.

Walsh said the project should be finished by September 2022.

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Ward 2 City Council Allan Herschlag questioned the numbers and also thought that instead of paying off the bond more quickly, a portion of the $625,000 should be returned to the general fund faster, to alleviate property taxes. Walsh said that most TIF districts, including the agreement with Dolben, were set up to pay off the debt as quickly as possible.

Herschlag also asked Dolben why the city shouldn't have a surety bond for the project, in case he walked away. Dolben said that the city wouldn't have any money into the deal so a bond wasn't needed.

Bouley asked about other projects Dolben was working on and Dolben noted that there were many including the Tuscan project in Salem, Gloucester, and other communities. He hoped to get this project into the queue to work on next.

The apartments downtown wouldn't include heat and hot water. A two-bedroom apartment would be priced as $1,999 per month. When asked how much Dolben would be getting in Salem, he said around $2,300 per month.

"I think this project is going to be very unique because it is going to have some of the best views in the city, because of the height of the building," Walsh said. "When you get to the third and fourth floor, the views are phenomenal. You also have parking that is inside the building. I think this is a level that the community hasn't seen before."

Meredith Hatfield, who represents Ward 4, asked about some of the financials as well as the historic school attached to the building. She also said she had heard from constituents that what the city needed was workforce housing. Walsh said there were other projects in the city and housing was in short supply, in fact, thousands of units under what was needed for a community of its size. Dolben said there would be some movement between current residents in other apartments and housing around the city into the luxury units, which would free up housing elsewhere.

Hatfield also asked about whether or not if the Planning Board rejected the project, what would happen then. Walsh said that everyone would have go back and rework the project.

Bouley called the downtown a "shining gem," but questioned why the city needed to add incentives of anything. Walsh said, at the end of the day, there were math problems with the parcel and the size of the project needed to make it feasible for the developer and the city. The math doesn't work on it, "much in the way the math didn't work on (other projects)," he said.

"Incentives have always been controversial, but many of the projects the city has embraced (have been controversial)," Walsh said, adding that the project was needed so that Main Street would "continue to evolve."

Ward 7 City Councilor Keith Nyhan said he was against the project 18-months ago. But now, he likes it, and said he was comfortable, either way, with what happened. But he wasn't going to support it.

"I can't help but think about all the other projects that are competing with the same $3.5 million," he said. "There will be another project, it won't be the same, but what sums it up to me is that it's math problems ... I'm uncomfortable with the math problem."

Jennifer Kretovic, who represents Ward 3, said that 18-months ago, it was a different situation than it was today. There might be movement in the housing market based on the project but that was no guarantee.

"Like you, I've not heard a person in the community who raised their hands and said, 'Yes,' to this project," she said.

Hatfield agreed.

"Not only does this have a math problem but we heard the developer say that the stars had to align," she said, adding that the city didn’t need luxury housing right now.

Hatfield added that she was concerned about gentrification, too.

Herschlag concurred that he hadn't heard from a single person in support of the project. He said he wasn't concerned about the market rate issue; it would balance what was in the downtown now.

"If we put $4.6 million into this project, what's the next developer going to ask for?," Herschlag said.

Mark Coen said he was supporting the project because he thought it would be a good investment for the city and there were already hundreds of units of affordable housing in Ward 4.

Fred Keach, another at-large city councilor, also said he would support the project and was disappointed that the vote on the project appeared to be turning into a referendum.

Linda Kenison, the representative of Ward 6 where the project is located, also said she would be voting for the project, adding that she told voters that she would do what was best for the Ward and not be political.

"I believe there is a demand for this kind of housing," she said. "When we did the Complete Streets, we planned on going further south … we need all kinds of housing in the city."

Champlin also said he was going to vote for the project and said it was a positive long-term investment for the city that will return hundreds of thousands in the future.

Candace Bouchard from Ward 9 said she was "very excited" about the concept and thought it would bring vibrancy to the downtown but that there was "a fairness issue" to subsidizing luxury housing downtown and as to whether or not one developer should receive public support while others don't.

Todd said if the city didn't want to be in the position it is in, it shouldn't have bought the property in the first place. It was the difference between taking a risk versus a gamble, he said. Residents, Todd added, should be concerned. But, the $3.5 million wouldn't be at risk unless the project moved forward. It's not ideal, he added, "it's getting really hairy," adding that he was hesitate to move forward on a similar project in the future. But, he said, he would be voting for it.

Amanda Grady Sexton, an at-large councilor, said that she and others had lost faith in the project but believed there would be other projects in the future, adding that she would vote No.

Gail Matson, from Ward 8, agreed, and said she would vote No.

Editor's note: A quote was incorrectly contributed to a Councilor Champlin about the views of the building was actually Walsh speaking. The quote has been corrected.

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