With nearly 300 new housing units being built near downtown Concord – at a time when the need is critical – only a fraction will be designated as “affordable,” a term that is set by area income levels.
Two major development projects, the Rail Yard on Langdon Ave, and the long-awaited reconstruction of the former Employment Security Buildings on S. Main Street will help add stock to the county’s low vacancy rate. But the rents at the two projects are expected to be very different – one targeting working individuals and families, the other targeting empty nesters and young professionals.
The Rail Yards is a 199-unit development in the South End that used federal tax credits to create mostly income-restricted affordable apartments. It is currently under construction and the first apartments are expected to be available next year.
The former Employment Security Building, which is being demolished, is set to consist of 64 units priced at market rate. In other words, despite the significant public investment in the building, the Flatley Company will be able to charge whatever it wants for rent after it purchases the property for less than $300,000 from the city.
The need for housing in Concord is a solidified narrative. A healthy real estate market where the supply of housing meets the demand for it has a rental vacancy of 5 percent.
Yet in Merrimack County – where the current vacancy rate sits at 0.3% – a consistent problem exists: there are not enough empty units for those looking to rent or move to the city, which is stifling the city’s workforce and even the students at the UNH law school.
With limited options comes expensive rents. Over the last five years, the two-bedroom median rent price has increased by about 12%.
To afford an average two-bedroom market-rate unit, New Hampshire Housing estimates tenants need an annual income of $52,700.
The Rail Yard will provide 96 affordable housing units in its first phase of construction with strict income guidelines to make sure they are available to those who need cheaper rent. One and two-bedroom units will be available to residents making between 30 and 60 percent of the area median income. This means renters must have an annual income between $19,700 and $43,980.
In the second and third phases of construction 96 and 103 units will be added. Twelve will be priced at market rate, with the others designated as affordable, according to Katie Cardillo, the marketing director for Dakota Partners.
To finance these units federal and state programs are available to incentivize developers.
Since 1986, federal Low Income Housing Tax Credits have incentivized private developers to invest in affordable housing projects across the country. The tax credit is a key portion of the Rail Yard’s first phase of financing.
The 96 affordable units that are currently under construction are financed through this federal tax credit, as well as a loan from New Hampshire Housing, according to Dakota Partners.
In Concord, just 11 buildings have been financed using the Low Income Housing Tax Credit. In 2011, Mennino Place, a 45-unit apartment building downtown opened on Storrs Street, with the goal of providing affordable housing for artists in the area.
Penacook Landing, an apartment complex on the banks of the Contoocook River opened its first phase of apartments in 2020. Phase two, which will include 20 affordable units, will also be financed through a Low Income Housing Tax Credit.
The program gives money to state agencies to distribute tax credits for the acquisition, rehabilitation or construction of low-income targeted housing. In New Hampshire, New Hampshire Housing distributes these funds.
In August, Governor Chris Sununu announced a $100 million housing fund called InvestNH to help developers accelerate affordable housing projects. The sheer volume of applicants has delayed the announcement of funds awarded.
For InvestNH, development projects qualify for funding if their project provides multifamily rental housing to individuals who are at or below 80% of the area median income – or below $58,650 in Merrimack County.
After years of proposals and city investments, the city this week sold the former Employment Security building on Main Street for $278,000 to the John Flatley Company, which plans to build 64 new units in its place.
These apartments will be priced at market rate, according to the developer and city officials.
The city has no regulation over the rents charged at private housing projects. These choices are solely up to developers.
Often, developers include income parameters in proposals when they are applying for funding.
Plans for the once-iconic yellow and blue paneled building downtown have been a long time coming. The city first purchased the property from the state in 2014 for $1.575 million.
Over the course of the past seven years, the city has poured more than $2.5 million into the property to clean up and improve the site. The city has also considered 17 different redevelopment proposals for the parcel that sits at 32-34 South Main St.
At the Concord Planning Board meeting in April, Doug Richards from the Flatley Company explained the building is intended for “young professionals and empty nesters.”
With the sale, the City of Concord’s net investment into the building is about $1.6 million.
The project is set to be completed by June 2023.