White River Junction
“We will not move forward with the conversion of 241 South Main St. to housing if we do not have clarity regarding impact fees very soon,” developer Mike Davidson said in an email on Friday.
After Davidson raised the issue with the town earlier this month, the Hartford Selectboard held a special meeting on Tuesday to consider waiving the fees; members unanimously agreed to delay action after the town’s attorney, Robert Manby, indicated waiving the fees would be illegal under the town’s existing ordinance, which was passed in 1989.
“Unfortunately, the Town Ordinance makes no specific reference to authority of Town of Hartford to reduce or eliminate impact fees for development activity that might be related to retention of existing employment or creation of new employment,” Manby wrote.
The Selectboard has asked Town Manager Leo Pullar to research different alternatives that could include amending the ordinance, or repealing it altogether.
Davidson and his manager on the project, Tim Sidore, said the fees create a very narrow tipping point for the development, which would target employees of Northern Stage Theater, among other potential renters.
“Projects like ours literally turn on a dime,” Sidore told the Selectboard, according to a CATV video of the meeting on Tuesday. “If they see in the grand scale of what that project costs, ‘oh, it’s only $30,000 or $40,000. You can afford that.’ But it makes the project not work.”
Sidore said the Selectboard should consider the community benefits the redevelopment would bring to the area, including the Davidson-owned Freight House across the street.
“This is one of those last big pieces of South Main street, an abandoned, ugly, forgotten building that’s a fire trap,” Sidore said. “Less than a year from now, it could be 36 beautiful homes. … In this case, it doesn’t make financial sense for us to move forward.”
Right now, the property, which used to hold College Cleaners, a belly dance studio called Raq On, and the White River Redemption Center, appears to be vacant.
Sidore and Davidson argued that the project should be exempted from certain fees, including about $17,000 that would go to the Hartford School District, $12,000 to support the Hartford Recreation Department, $7,000 for water and sewer and about $2,000 for public services like the library and emergency responders.
Sidore said that the impact on water and sewer would be less than the town’s projections, and said it was unlikely that the studio apartments would be rented by families, so the impact on recreation and schools would be negligible.
Hartford School Board Chairwoman Lori Dickerson argued that the school relies on impact fees to meet future demands, and said Davidson could not predict who will rent the apartments, now or under a potential future owner.
The situation has touched off a broader conversation about the rationale behind a 28-year tradition of charging impact fees to developers, and the manner in which those fees are assessed.
Impact fees are continually being used to shore up the infrastructure of the community.
Last year, the school district used impact fees to help build an access road for the newly renovated Wendell A. Barwood Arena, while the town used about $100,000 to help pay for a sewer system upgrade and the renovation of the parking lot outside of the former American Legion on South Main Street, among many other projects.
But Pullar said that, in researching the issue, he couldn’t find a good, comprehensive explanation of the system by which the town devised its fee schedule.
“I’m not getting a good answer to why. … How did we determine what those fees are?” he said.
The issue places the Selectboard squarely between two different budgetary considerations —impact fees create an alternative revenue stream that eases the immediate burden on property taxes, but, if the fees discourage development, they could be turning away part of the commercial tax base that also has the potential to ease residential property taxes.
For example, town records show that Davidson’s property has a taxable value of about $189,000, producing less than $4,600 annually in property tax revenues. If the renovation project goes through, the value of the building is projected to soar to $1.6 million, which would increase the annual tax revenues to almost $40,000.
Selectboard Chairman Dick Grassi called the potential loss of the project “devastating.”
“This is very disturbing, the fact that we might lose an investment in downtown White River Junction. But I think it’s pretty clear from the ordinance that we really don’t have much choice with this project. … I’d like to know how much investment we have lost, just in housing,” he said at the meeting.
But some have also expressed skepticism that the project could really be endangered by such a small amount — Sidore said that the average rent on the apartments would be $800 monthly, which works out to nearly $29,000 per month, or $346,000 in annual revenues, assuming full rental capacity.
Pullar said that, if the Selectboard takes action before April, it could help Davidson’s project, because most of his fees are not due until a certificate of occupancy is issued. Davidson has said he hoped to open the apartments in the spring.
Sidore told Selectboard members that, if the project falls through, he and Davidson are exploring turning the space into a storage business.
The Selectboard plans to revisit the issue later this year.
Matt Hongoltz-Hetling can be reached at mhonghet@vnews.com or 603-727-3211.