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City seeks market-rate housing for Employment Security site

The Employment Security headquarters on South Main Street could soon be replaced with market-rate apartments. The city is seeking a developer to demolish the existing structure and build apartments with retail, restaurant or office space.

The project should “be something that would put money in the coffers and be something that folks in the community would like to see,” said City Councilor Allen Bennett, whose ward includes the South Main Street site.

Development on the site may also include a new city library, though that possibility hinges on interest from a developer and further negotiations.

The state Department of Employment Security will relocate its headquarters to the New Hampshire Hospital campus next year and sell its property at 32-34 S. Main St. The city and state are working together to find a developer to purchase the property and begin construction in the spring of 2014.

The property is generating interest from developers, said Matt Walsh, the city’s assistant for special projects. He attributed at least some of that interest to the $7.85 million Main Street redesign project scheduled to begin this fall.

“I think it’s the frosting on the cake for them that helps make the property a little more attractive,” Walsh said.

Concord developer Steve Duprey, who already has two new buildings on South Main Street, said he will “take a hard look” at the site.

Duprey is busy with construction on his new building across the street, at 43-45 S. Main St., and said he’s not sure whether he’ll submit a proposal. He plans to meet this week with his associate, Jon Chorlian, to discuss the property.

“We will try and assess what we think could work on the site – whether there are users, if the residential development would work,” he said. “And if we conclude that it can, we might respond. . . . And if not, I’m sure the city will be successful.”

Bill Norton, president of Manchester-based Norton Asset Management, said the site is too small and expensive to attract housing developers who typically build large, “cookie-cutter” projects.

The state is asking $1.75 million for the property, which spans three-quarters of an acre.

“If you’re doing redevelopment here, you’d be picking a niche – empty nesters or the semi-retired lawyer whose wife is up on the lake . . . so it’s somebody who wants that sort of urban experience,” he said.

Norton said he hasn’t been the primary developer of housing in years, but he thinks a developer will find a niche for new development on South Main Street.

The city is looking for a “mixed-use” project, with more than just apartments.

“Retail or service use – restaurant, bank, things of that nature – would be good on the ground floor,” Walsh said.

Walsh said guidelines for developers are intentionally open-ended, and proposals don’t have to include housing.

Bennett said the city council could be open to other possibilities.

“I look at the tannery site in Penacook as an example, how that morphed into several different things in the last decade, so it’s really, really hard to put your finger on it and say, ‘Yeah, I think market rate housing will be in that spot,’ ” Bennett said.

The city lists several possible developments: restaurants, offices, retail space, medical facilities, higher education facilities, or uses for the visual and performing arts.

One requirement for the site is a park or plaza.

“We kind of have this network of little parks and plazas downtown,” Walsh said. “We want to continue that down South Main Street as redevelopment continues.”

The redevelopment will be the next project on South Main Street, which has been transformed in recent years.

Duprey’s building on the former site of the New Hampshire Bindery is scheduled to open in August with Gibson’s Bookstore, Orr & Reno law firm and other office space. The Smile Building, also developed by Duprey, opened in 2011 at 49 S. Main St.

The Capitol Commons building, parking garage and Red River Theatres opened in 2007. Portsmouth developer Michael Simchik, who developed the Capitol Commons site through a public-private partnership with the city, was out of the country and unable to return messages left last week, according to one of his employees.

Also in the past two years, the Concord Food Co-op completed renovations on its South Main Street building and CATCH Neighborhood Housing opened Mennino Place, with low- and moderate-income apartments, on Storrs Street behind the Smile Building.

In June, CATCH will open 25 market-rate apartments at the Endicott Hotel on South Main Street. President Rosemary Heard said she has a list of more than 70 interested tenants. CATCH is too busy with the Endicott project to submit a proposal for the Employment Security site, Heard said, but she’d be happy to see more market-rate apartments.

“I feel very strongly that a balance of housing contributes to the vibrancy of the community,” she said. “It’s something in Concord that we have not had enough of in the past, which is why we went down the road we did with the Endicott Hotel.”

But it’s difficult to find the “sweet spot” between the number of units required to pay for the project and the number of units a developer could rent, Norton said.

In 2003, a housing study completed for the city found that downtown could support up to 70 new, market-rate units. Demographic changes since then would only increase the demand for market-rate housing, Walsh said.

“I personally believe that there is room for more market rate housing in downtown beyond what the Endicott Hotel is going to provide,” he said.

Duprey said he’s not sure what kind of development would best fit the Employment Security property.

“What any developer needs to do is figure out what market rents they could command downtown, what amenities are needed . . . whether you could build and deliver that project for a cost that will fall within that range,” Duprey said. “And we don’t know the answer to that yet.”

A new library?

The city has notified developers that it may be interested in building a 40,000 square-foot library and becoming a tenant on the property.

“I guess at this point we’re really leaving it up to the development community,” Walsh said.

If a library fit into a developer’s vision for the site, the process would be similar to current negotiations with Weston Solutions to combine the Penacook branch library with an assisted living facility on the former Allied Leather Tannery site. Having the city as a tenant could anchor a developer’s project, Walsh said.

Ward 3 City Councilor Jan McClure said she would like to see a library on the site.

“The library is going to generate economic development, so putting the library downtown is going to be a boon for economic development in the city,” she said.

McClure was chairwoman of Mayor Jim Bouley’s task force that studied possible library sites. In 2011, the task force named Storrs Street as its first choice for a new library, with the Employment Security property as an alternative.

Plans to buy land were effectively shelved under the city’s current budget; funding was delayed until 2022.

McClure is hopeful that the Employment Security site could include a library. It would “kill two birds with one stone,” she said, and the project could still include private development and tax revenue.

Bennett said he’s not sure about the library plan.

“I’m not really sold on that, and I’m not really sold on taking valuable real estate and taking it off the tax rolls,” he said.

An eyesore?

Developers must demolish the existing building – or renovate its facade to match “the 19th century brick character of downtown Concord,” according to the city’s request for project proposals.

The building has been called “the worst eyesore in Concord” by former employment security commissioner Richard Brothers.

A portion of the building is already brick, dating from 1927. The facade along Main Street was built as an addition in 1958.

It was featured on a 1960 cover of New Hampshire Architect magazine.

Its historical significance could have been a stumbling block to its demolition, but last year the state’s Division of Historical Resources agreed its history could simply be documented and displayed.

There are only three other buildings on the Main Street block between Fayette and Thompson streets.

The Concord Feminist Health Center isn’t ruling out the possibility of relocation, Executive Director Dalia Vidunas said last week.

“You know, that’s a difficult call to say and that would certainly have to be something that my board of directors would have to discuss and vote on,” Vidunas said.

The Fraternal Order of the Eagles did not return a message left last week. The Eagles, and the owner of a three-unit apartment building on the block, have previously declined to comment about a possible sale.

The property, “by downtown standards, is a very large lot,” Walsh said. A developer does not necessarily have to maintain parking on the site, but he said the parking lot makes it a desirable property.

Any project on the site would be a public-private partnership with the city, and could include tax credits, the city’s Tax Increment Finance District or leases on public parking.

Developers’ proposals are due next month, with hopes of the city entering a negotiating period with a developer in April. Because the property belongs to the state, purchase and sales agreements must be approved by Gov. Maggie Hassan and the Executive Council.

Those votes are tentatively scheduled for October, with a closing date of March 2014. Construction could begin by April 2014.

The approach fast-tracks the city’s right to purchase the state’s surplus property. Traditionally, the city would take ownership of the property before marketing it to developers.

“So we’re trying something different, and I think it’s going to work out well for both parties,” Walsh said.

(Laura McCrystal can be reached at 369-3312 or lmccrystal@cmonitor.com or on Twitter @lmccrystal.)

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