Tim Sink makes a number of good points regarding the improvements to Main Street (Sunday Monitor Forum, Sept. 16).
New market rate residential units, greater storefront occupancy, more projects slated for downtown development and more people visiting our downtown.
Assessed values have increased, and if the Employment Security building moves forward we can anticipate an additional 125 market rate apartments. If the current trend continues for a few more years it would not be unreasonable to anticipate an additional 500 people living downtown.
All positives. So with all these positives, why did I vote against funding the Main Street project?
Cost: We were told that the project would cost $7.85 million. It was anticipated that private funding would contribute 20 percent of the projects costs. The first two rounds of bidding had the costs with all the bells and whistles more than double the original estimate ($7.85 million) from the city’s engineering consultant. The third round for bids used what is referred to as the construction management approach. This is the bid the city accepted and we hired Severino Construction to perform the work.
It is important to remember the original scope of work was from Storrs to Storrs Street and included heated sidewalks. The accepted project went from Centre to Concord Streets with no heated sidewalks. When you compare apples to apples (meaning the same scope of work for all three bids) the bid the city worked out with Severino was at least as expensive as the first two bids.
There was limited buy-in from the stakeholders. The TIGER grant application indicated the private sector would contribute 20 percent of the project costs. At $7.85 million that would have been $1.57 million and at $13.2 million that would be a $2.64 million contribution. At the end of the day, $700,000 was raised, less then half the amount indicated on the grant application for a $7.85 million project. And $13.2 million was more than $5 million over the original cost estimates for less work than was originally proposed.
Maintenance: Costs for the first few years are about $365,000. The out years anticipate much higher maintenance costs.
Project add-ons: Burying power lines, over $1.5 million; purchase of the DES building and associated costs, just under $2 million and costs associated with its demolition, estimated at $300,000; pavement overlay from Concord to Storrs Streets.
Increased value and special tax districts: Twenty acres of South Main Street is in a tax increment finance district. While assessed values have increased because of improvements to buildings in the district, these new taxes are not being used for citywide, school or county services. They are being used to pay off construction bonds for the Main Street project, the parking fund and maintenance costs. It can take up to 20 years (or longer) before all the bonds and expenses associated with Sears Block TIF district are retired. Until then you may not see any taxes from the newly assessed properties contributing to citywide, school and county services.
Additionally a number of properties and projects also received tax relief through RSA 79:E. These buildings, in addition to being in the TIF district, are not paying taxes on the added value of their buildings for approximately five years, give or take a year or two.
The epilogue: There is a difference between tax base expansion and tax rate stabilization. If assessed values increase and new taxes don’t go into the big pot you and I pay our taxes into, then the new assessed values do nothing to stabilize tax rates.
In Sink’s article he also mentions the renovation of the Concord movie theater. Unfortunately, similar to 30 percent of the total assessed value in Concord, it is likely the theater will also seek tax exempt status.
Citywide we have seen the city’s assessed value increase approximately $25 million each of the last two years. Using just the city’s portion of the tax rate, which is a little under $10 per thousand, that generates less than $250,000 in new revenue. This is less than the maintenance costs on Main Street.
An investment is something that yields a positive return. I imagine a loose definition could use the term to explain a project that improves the quality of life without a financial component. But that is not what we were told. We were led to believe it would both improve our city and bring a financial return to the community.
I voted against the project, not because it wouldn’t improve our downtown (I believe it has) but because of the cost to the community. Without true tax base expansion that stabilizes property owners’ tax rates, I am concerned that we won’t be able to afford special projects like Main Street and that it will make it difficult to pay for projects that keep our community safe.
Did the Main Street project generate more interest and traffic for the downtown? Absolutely. As a quality-of-life investment it certainly appears to be paying dividends. Is it generating more revenues to pay for the services your and my property taxes pay for? Not yet and not for many years to come.
(Allan Herschlag represents Ward 2 on the Concord City Council.)