This is a link to City staff’s report to the Mayor and City Council, prepared by Matt Walsh, Dir. of Redevelopment, Downtown Services & Special Projects. The above photo shows the proposed apartment site in red, and the future City riverfront park in blue. There are a lot of factors to consider with the Tannery site, and I welcome your input on this proposal. Here is an excerpt highlighting pros and cons. For more info see https://tinyurl.com/kcrs7tk.
The NAI Norwood Group has been diligently marketing the property for the past 20 months. The property has several positive attributes, including the following, which have been highlighted as part of marketing efforts:
- Close proximity to I-93.
- Frontage on the Contoocook River.
- Walkable location in newly renovated Penacook Village.
- Environmental cleanup has been completed and the property has secured a “Covenant Not to Sue” from the State of New Hampshire.
- New storm water infrastructure is in place linking the site to the Contoocook River.
- The property is located in a Tax Increment Finance (TIF) District which could potentially assist developers with infrastructure improvements if required to support redevelopment of the property.
However, despite these attributes, a strong economy, and robust real estate market, developer interest has been very low. City Administration believes this can be attributed to the following factors:
- Only 2.5 acres of the 4.04 acre site is developable due to leather and coal ash materials which have been encapsulated at the site. This reduced lot size precludes the opportunity for large developments, consequently suppressing developer interest. In addition, waste materials encapsulated on that portion of the site to be conveyed to a developer further reduces the site’s attractiveness in the marketplace, as developers typically prefer opportunities that do not have such complications.
- The traffic count for Canal Street is 7,019 vehicles per day (circa 2011). This volume of traffic is too low to attract most retail tenants.
- The elevation of the site sits approximately 8’ (or 2/3s of a story) below Canal Street. This circumstance reduces curb appeal of the site, and may also present other development challenges.
- Poorly maintained properties abutting the site complicate marketing efforts.
- Penacook Village’s low population density generally limits opportunities for mixed use and commercial projects.
- A relatively high tax rate also complicates the marketability of the site.
- Lastly, lack of market absorption of existing vacant commercial spaces in Penacook makes it very challenging to interest developers in potentially building mixed use, office, and commercial uses.
Staff Recommendation: Staff recommends that the City Council authorize the City Manager to enter into the Purchase Option Agreement for the following reasons:
a. The proposed use is appropriate for the village setting.
b. The proposed use is financially feasible and will likely be economically viable in the local market.
c. The City will receive its full asking price of $540,000 for the site. After paying a commission to the NAI Norwood Group and other closing costs, staff estimates that net proceeds to the City will be approximately $496,800.
d. The City has no obligation to build any infrastructure to support this development. Therefore, no additional TIF investments are planned at this time. While the City Council may wish to consider development of the long-discussed riverfront park at some point in the future, the City has no obligation to develop such a park under the terms of the proposed Purchase Option Agreement.
e. Should the City Council ever wish to develop a riverfront park adjacent to this new project, the residential development will be an excellent complimentary use.
f. The addition of 54 new households in the Village will help support existing businesses, as well as help make Penacook more attractive for future economic development.
g. The proposed project will be attractive and will greatly improve the aesthetics of the Canal Street gateway into Penacook Village.
h. The proposed development will create $3 million in new assessed value and $115,000 in new property tax revenues. Coupled with the adjacent medical office building completed in 2011, redevelopment of the former Allied Leather Tannery will ultimately result in approximately $5 million in new assessed value on 4.5 acres of land ($1.11M per acre), generating approximately $185,000 in total new property tax revenues annually.