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Monday, August 18, 2014

City board debates affordable housing plan for Bridge St.

NASHUA – With plans in the works for Renaissance Downtowns to convert a portion of its Bridge Street project to low-income housing, some in the city are questioning whether the change is in Nashua’s best interest.

Aldermen approved an administrative change last week that will help Renaissance apply for low income housing tax credits ahead of an Aug. 28 deadline. ...

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NASHUA – With plans in the works for Renaissance Downtowns to convert a portion of its Bridge Street project to low-income housing, some in the city are questioning whether the change is in Nashua’s best interest.

Aldermen approved an administrative change last week that will help Renaissance apply for low income housing tax credits ahead of an Aug. 28 deadline.

Nashua’s Business and Industrial Development Authority recommended the move earlier this year to help Renaissance get the first phase of the major housing project off the ground.

Renaissance, based in New York, has struggled to secure conventional financing for the development, which is planned for the east end of Bridge Street. The first phase alone could cost as much as $36 million.

To entice financing, the project would need to be priced at about $1.53 per square foot, according to assistant project manager James Vayo, but plans
developed by Renaissance put the project at about $1.40 per square foot.

With a lack of capital threatening to sink the project, Renaissance developed a plan earlier this year to offset costs with tax credits for affordable housing.

A type of federal subsidy, the credits can be sold by developers to raise capital or equity. Investors receive a dollar-for-dollar credit against their federal taxes over a period of 10 years.

To implement the plan, Renaissance has teamed up with Dakota Partners, a Massachusetts firm that has extensive experience with low income tax credit programs. The group has reworked its plan for phase one of the development, proposing two rectangular buildings along the waterfront with a total of 66 units. Renaissance believes completing the buildings could help lure financing for the remainder of the project.

“All of that will really catalyze the ability for us to partner up with an investor for market rate units,” Vayo recently told the aldermanic Committee on Infrastructure.

Aldermen approved an amendment to the city’s agreement with Renaissance last week that will streamline the assessing process for the parcel of land being eyed for the first phase of project. The change was made to help Renaissance get all necessary approvals from the city before the end of the month, strengthening its tax credit application to the New Hampshire Housing Finance Authority.

“My assumption is that anything that hinders local approval may be a peg against us,” Vayo said.

While aldermen approved the change, some in the city had misgivings about the rent caps built into the affordable housing program.

In Nashua, the current market rate for a one-bedroom apartment is considered to be $919 per month, Vayo said. Rent would be capped at $880 for the same unit if developers received low-income tax credits to build it, he said.

Similarly, Vayo said the market rate on a two-bedroom apartment in the area is $1,199 and the cap set on affordable housing is $1,056.

During a meeting of the Board of Aldermen last week, Stonybrook Road resident Robert Sullivan questioned the need for additional low-income housing in Nashua, saying he recently checked a real estate website and found 50 to 60 apartments that fall within the affordable housing criteria.

“I think that this whole situation, that we don’t have enough affordable apartments available to the young people, is somewhat exaggerated,” he said.

Ward 9 Alderman Ken Siegel raised similar concerns during an Aug. 5 committee meeting, saying low-income housing could potentially change the character of the Bridge Street development and increase the need for city resources.

However, given the relatively small difference between current market rates and low-income rates, Siegel said he supports tax credit idea.

“It’s not really materially changing the rent roll numbers,” he said.

Given the difficulty Renaissance faces getting financing, Alderman at Large Jim Donchess said low-income tax credits appear to be one of the only options left for the project to stay on track.

“I think we need to grant the change in the appraisal procedure and hope that they get the approval and that the project gets off the ground,” he said.

Expanding Nashua’s tax base was among the Board of Aldermen’s primary goals when it authorized the Bridge Street development several years ago. The first phase of the project is expected to add as much as $350,000 to the city’s tax rolls.

One alternative to low income tax credits at the city’s disposal is deferring local property taxes on the project. However, doing so would run counter to the board’s original aim, Alderman at Large Diane Sheehan said.

She said the low-income tax credits will give Renaissance a “foot in the door” to show private institutions the value of the Bridge Street site.

“What the tax lift does to the rest of the property by breaking it up this way is make it easier to get market rate funding for the rest of the development,” she said.

Nashua hopes to ultimately develop around 750 units on two dozen acres, including an open field that formerly held a Johns Manville factory.

The first phase could be complete as early as mid-2016. It would be accompanied by changes to the intersection of Bridge Street and East Hollis Street that city planners hope will open up areas south of East Hollis Street to more development.

Telegraph staff writer David Brooks contributed to this report. Jim Haddadin can be reached at 594-6589 or jhaddadin@nashuatelegraph.com. Also, follow Haddadin on Twitter (@Telegraph_JimH).