Senior preference removed from Penacook tannery apartment project

  • An initial rendering of the project, titled Penacook Landing, was developed by Burnell Johnson Architects. Burnell Johnson Architects

  • The former Allied Leather Tannery site and one of its few remaining structures is seen in Penacook on Wednesday, April 12, 2017. The Penacook Family Physicians offices, built on a section of the property that was sold off in 2011, are seen in the background. Elizabeth Frantz

  • For the city-owned brownfield site near the center of the village – vacant since 1987 – the nonprofit affordable housing developer’s full-price offer was the potential resolution of a 15-year, 4.86 million cleanup effort led by the city. GEOFF FORESTER

Monitor staff
Sunday, November 26, 2017

A low-income apartment complex planned for the former Penacook tannery site will still seek primarily senior residents despite changing the language of its purchase-and-sales agreement with the city of Concord, project officials said.

The Concord city council voted on Nov. 13 to remove language from the Caleb Development Group’s financial contract that characterized the 54-apartment-project as being a multigenerational housing development with a “senior preference.”

Instead, the sales agreement now reads that the development “shall be a multigenerational affordable housing project.”

The change was necessary in order for the Caleb Group, a nonprofit Massachusetts-based housing developer, to secure Low Income Housing Tax Credits, which are critical to the financial viability of the project, said director of acquisitions Rob Bernardin. The group filed its preapplication for the credits on Aug. 7 with the New Hampshire Housing Finance Authority. The final application was due Nov. 21.

According to Bernardin, the Caleb Group received feedback from the Finance Authority stating that having a “senior preference” project was in violation of federal tax credit regulations; for a housing project to quality for tax credits, it either needs to be age-restricted or a multigenerational development.

And pursuing an age-restricted housing development wouldn’t net as many tax credits: According to Rob Dapice, director of housing development for the Finance Authority, age-restricted projects are eligible for only $600,000 worth of tax credits, while non-age restricted projects are eligible for $800,000.

The Caleb Group plans to acquire 2½ acres of the former tannery site at 11-35 Canal St. for $540,000, according to a report written by City Deputy Manager Matt Walsh. The development budget for the project’s Phase I, which will consist of 34 apartments with rents below market rate, is $8.6 million.

Dapice said the Finance Authority has a policy of prioritizing non-age restricted projects written into their qualified allocation plan, which defines how the agency allocates tax credits.

Projects applying for tax credits are graded on a point-based system; the more qualities a project has that fit the Finance Authority’s priorities, the more likely they are to be awarded credits. Other priorities include readiness to proceed (able to be constructed in a short time frame), new construction and projects that achieve broad community development objectives such as neighborhood revitalization.

The tax credit application process is highly competitive, Dapice said. The Finance Authority has about $3.1 million in tax credits to distribute for 2018, enough for four or five projects; however, the agency expects to receive 12 applications throughout the state. Tax credits will be awarded in the spring.

Despite the change, Bernardin said the apartments will still be marketed toward senior citizens and will be attractive to that demographic based on its proximity to Penacook’s bus line, access to the medical clinic and a potential park that would be located next to the development. Only 14, or 25 percent, of the units will be two-bedroom, which would help limit children entering Penacook’s school district and increasing the tax burden for other residents, he said.

Bernardin also said the development has always been intended for multigenerational housing and that the change would clear up any misunderstandings about the developer’s vision for the project.

A contentious process

The project was first referred to as a “multigenerational family housing project, with a preference for senior citizen tenants” in a March 22 report by Walsh.

But not everyone agreed with that assessment. The item was pulled from the Nov. 13 city council agenda by Ward 2 Councilor Allan Herschlag, who said he felt the project had changed significantly enough to warrant a public hearing. He made a motion, which failed to get a second. He was the only “no” vote on approving the amended contract.

In addition to removing the senior preference designation, Herschlag said he was concerned that the development, which the city has characterized as workforce housing, would not qualify as such under state guidelines.

Herschlag said he was concerned that the Caleb Group, which has a long track record of developing affordable housing projects, would not know the state’s definitions of workforce housing and the Finance Authority’s rules for age-restricted housing. He was also skeptical the development would still primarily house seniors and said it seemed unlikely they would be able to market exclusively to seniors without violating the Finance Authority’s rules.

One of the major concerns residents had about the project was its potential to contribute more children to the Merrimack Valley School District. According to Walsh’s Nov. 13 report, the staff projected about nine school-aged children could result from the project.

Penacook residents have a significantly higher tax rate than the rest of Concord due to the school district. The village’s 2017 tax rate is $33.92 per $1,000 of assessed value, with a school portion of $19.01. That’s compared to Concord’s tax rate of $28.24, with a school portion of $13.24.

Under RSA 674:58, workforce housing is affordable for a household income no more than 100 percent of the median for a four-person household, or rental housing affordable for no more than 60 percent of the median income of a three-person household for the metropolitan area or county.

Housing developments that exclude minor children from more than 20 percent of the units, or where more than 50 percent of the dwelling units have fewer than two bedrooms, are not considered workforce housing, according to the RSA.

Grace Lessner, public information manager for the Finance Authority, said via email that a developer must submit a tenant selection plan and a marketing plan that meets applicable federal laws and fair housing guidelines before receiving any tax credits. Once the Finance Authority reviews and approves the plans, and when the developer meets any other applicable conditions, the money can be disbursed.

Bernardin said the project follows a broader definition of workforce housing, which he defined as affordable to anyone making 50 to 60 percent of the area’s median income.

He later said in an email that there will be restrictions on the number of tenants allowed in each unit, per state and U.S. Department of Housing and Urban Development guidelines.

According to Walsh’s report, Caleb has invested approximately $100,000 in predevelopment activities including design, permitting, due diligence and preparation of tax credit applications.

Given lack of interest in the marketplace for the tannery site, the property could lie fallow for years before another viable project comes along (if any).

(Caitlin Andrews can be reached at 369-3309, candrews@cmonitor.com or on Twitter at @ActualCAndrews.)