By a show of hands, nearly two hours into a discussion about the apartment complex proposed for the Penacook tannery site, half the voters registered their disapproval for the plan.

The other half in the cafeteria Tuesday at Penacook Elementary School was split between remaining unsure and supporting the nonprofit housing developer’s offer to the city.

The Massachusetts-based Caleb Group has offered to pay the city’s asking price, $540,000, to buy 2.5 acres at 35 Canal St. with the plan to build a 54-unit apartment complex, mostly designated for low-income residents.

The proposal could bring the assessed value of a fenced-off dirt lot near the village center to an estimated $3 million. But several residents worried aloud Tuesday that if the units bring enough children into the school district, the complex could hurt the tax rate – not help it.

Penacook resident Tony Puntin was in the camp that’s ready to see something happen at the site, which was condemned in 2002.

“It probably is the best we can hope for. It’s not ideal. Everybody would love a Trader Joe’s, a grocery store, but if the numbers aren’t there, the numbers aren’t there,” he said, referring to the relatively low traffic and population density that have put off retail developers.

Matt Walsh, the city’s director of redevelopment, special projects and downtown services, said the parcel has been on the market for nearly two years and has had only three showings.

Another group of residents noted that it would be several years before taxpayers felt any benefit from the project, if taxes on the new assessed value are directed to the local tax-increment finance district, which was used to develop the area nearby.

With the Caleb Group project, Walsh said it would take nine years before TIF district investments to the area are repaid, and perhaps longer if the district is used to pay for a desired riverside park next to the site.

In the meantime, new revenues from the project wouldn’t offset the high tax rate paid by Penacook residents. The city estimates that nine children would live at the apartment complex, which could immediately increase costs to the school district.

“I’m worried about the number of kids that could be in there,” resident David Newell said. “It’s a TIF district. There’s not going to be any tax revenue out of there for, what, 15 years? Every kid that comes here, we’re going to pay for.”

City Councilor Allan Herschlag, who was one of four councilors in attendance, echoed that point.

“We’ve heard for years that you have to increase your tax base. But increasing your tax base doesn’t necessarily do anything to stabilize the tax rate. Clearly that’s what we’ve seen here in Penacook,” he said.

Herschlag said if the school district adds six students as a result of the apartment complex being built, the associated cost could outweigh the new tax revenue the district would receive.

The Caleb Group is proposing to build two apartment buildings of 24 and 30 units, with 14 units as two-bedrooms and the rest one-bedroom. 85 percent of the units would be restricted to households earning 60 percent or less of the county’s median income.

Rob Bernardin, the director of acquisitions for the Caleb Group, said although the project would be marketed with a preference for seniors, it was important that it be multigenerational if it is to compete for the federal tax credits that would make it viable.

Near the end of the meeting, City Councilor Brent Todd sought to put the tax challenge Penacook is facing in perspective.

To reduce the tax rate by $1 per $1,000 of assessed valuation, the village would have to add $17.7 million in new growth, he said.

To go even further and try to bring Penacook’s tax rate in line with that of Concord, it would take roughly $100 million in growth.

“That’s quite a challenge, isn’t it? We’re not going to do that with this project” or any other single step, he said. “So the question to you folks is … is this the right way forward in let’s call this the next phase for Penacook?”

“Or do you feel this is really not the project for Penacook at this time or any other time or whatever? … That’s what we need to hear from all of you so we can get a sense of direction,” he added.

The city council will hold a public hearing on the proposal at its May 8 meeting.

(Nick Reid can be reached at 369-3325, nreid@cmonitor.com or on Twitter at
@NickBReid.)