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Concord denies $3.5 million to downtown developer for former DES building 

  • This rendering shows Do-Soul Properties LLC's most recent vision of what its Main Street apartment complex might look like. The view is from the corner of South Main and Fayette Streets. City of Concord

  • The former Department of Employment Security building on S. Main Street.

Monitor staff
Published: 8/12/2019 11:12:10 PM

Several councilors and the mayor expressed concerns Monday night about offering a developer $3.5 million in funding and incentives to build market-rate apartments in downtown Concord at the site of the former Department of Employment Security building.

“I think what sums it up for me is that there are math problems. I have not had one person approach me over the last month who has said, ‘I’m in favor of this.’ It’s been just the opposite,” said Ward 7 Councilor Keith Nyhan, about the proposed project by Dol-Soul Properties, which included 125 units, a parking garage and a restaurant.

Nyhan was one of eight councilors and the mayor who voted against offering the developer the $3.5 million in financing through a special Sears Block tax district. To pass, two-thirds of the group – 10 people – would have needed to approve the plan. Six councilors voted in favor.

Nyhan said he liked the project, but that it was the high price tag of the city’s participation that forced him to vote against it.

“I can’t help but think of all the other projects that are essentially competing for the same $3.5 million that could be invested elsewhere in the city,” he said. “If it was less than that, maybe $1 million, I think I’d be much more comfortable, but it’s a big chunk of money.”

Ward 9 Councilor Candace Bouchard saw the project similarly, saying the funding was an issue of fairness with other projects.

“I’m very excited about the whole concept: the housing, the parking, and the retail and restaurants. But what I’ve been hearing from constituents, it’s not the concept, they’re not against the concept. There’s a fairness issue,” Bouchard said. “I just think the city now is putting money into a project where there are other housing units going up in the greater Main Street area that we have not put our public dollars into.”

Dol-Soul was asking for $3.5 million from the city to split the $7 million increase in the estimated cost of the project since it was originally proposed. The project, which was pitched by Dol-Soul two years ago, was expected to cost $30.4 million.

Andrew Dolben, the executive director of Woburn, Mass., company Dolben Development, one of multiple developers that make up Dol-Soul Properties, said rising construction costs related to more people looking to build after the recession was one reason for the price tag increase. Another was the addition of 16 apartments to the plan, which Dolben said was to maximize the use of the space.

Also, the original project design also did not include as much on-site parking. When the developer proposed this project two years ago, the team was looking at finding much of the parking in existing city garages, Dolben said.

“We came to the conclusion that it was not feasible to deliver an apartment building in this location, in this market, without having the parking,” he said. Dolben said his team determined that it would be important to have at least one spot for each of the 125 apartments on location.

Dolben said after Dol-Soul understood the adjustments they would need to make for the project to be viable, he went back to the city requesting help. That’s how the idea to split the $7 million was born.

“I think the feeling between the parties was, we would be better off to go with a project now that everybody thought was right for the site, and find some way to close the gap between what we thought was economically feasible, and what the project can afford to pay,” he said.

But the majority of councilors Monday said it was an investment they couldn’t back. Many said the risk outweighed potential rewards.

Ward 3 Councilor Jennifer Kretovic said the landscape of Concord, in particular the housing market, has changed since Dol-Soul first presented the project.

“When we were originally looking at this project and we were purchasing this building, we pointed out that we were interested in market-rate housing with a restaurant retail component – 125 units in the downtown was very viable. Since that time, we’ve had a number of different housing opportunities in the downtown, so the question is really related to scaleability,” she said.

“When we’re looking at a $7 million gap, is it possible to scale back on this project or re-look at the number of units that are in that. Is the market still viable for 125 units, that it would then change or potentially change the overall cost? I do think the scaleability of $7 million is not being accepted well in the community.”

Matt Walsh, director of Redevelopment, Downtown Services and Special Projects with the city, said Dol-Soul will not be able to complete the project without financial support from the city. Long-term, Walsh said, the city would see benefits. After construction, the building was expected to be worth $20.7 million, generating about $625,000 in property tax revenue each year.

In addition, Walsh said from what he sees, there’s still plenty of demand for housing in the downtown area.

Walsh said some of the things that made the Dol-Soul project unique were the views, which Walsh said would be some of the best in the city because of the height of the building, 80 feet, which is comparable to the Hotel Concord building.

“I think there are some very nice housing products that are out there for apartments in downtown now, but I think this is going to be at a level that the community has not seen before as far as luxury,” he said before the vote.

Dolben said that there would have been a variety of apartment types in the building, estimating that the largest two-bedroom would have rented for $1,999.

Ward 5 Councilor Rob Werner, who voted in support of the project, said he has talked to some people who were excited about the housing proposal.

“I think this is an opportunity that we can’t afford to pass up,” he said. “I think the investment on the front end is worth the outcome in the back end.”

Councilors Werner, Brent Todd, Byron Champlin, Mark Coen, Linda Kenison and Fred Keach voted in favor of offering $3.5 million in TIF district funds for the project.

Councilors Nyhan, Bouchard, Amanda Grady Sexton, Allan Herschlag, Meredith Hatfield, Gail Matson, Jennifer Kretovic, Zandra Rice-Hawkins and mayor Bouley all voted against the proposal.

“I think it’s become very clear that the residents of Concord lost faith in this project, and I have as well,” Grady Sexton said. “But I am confident that economic opportunities will continue to grow in the city and that projects will surface that meet the needs of Concord and that aren’t going to require us to subsidize them.”

Dol-Soul Properties owns Pembroke Place on Manchester Street and Penacook Place on Fisherville Road in Concord.

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