Plan moves ahead to help spur development in Keene’s southeast corner

Nov. 09--City officials hope to encourage new investment in Keene's Marlboro Street area through a tax-relief incentive they say is one of the few economic-development tools available in New Hampshire.

But first, they have to hash out a few details -- a process that moved forward Wednesday night during a meeting of the City Council's planning, licenses and development committee.

The incentive is available to developers who substantially rehabilitate or replace certain structures. It essentially freezes a parcel's property taxes at pre-improvement levels for a number of years, rather than taxing the additional property value the improvement project creates.

A provision of state law, RSA 79-E, allows cities and towns to implement the tax incentive.

The state offers few proactive ways to lure new businesses, said City Councilor At-Large George S. Hansel, a member of the committee, at Wednesday's meeting. "But ... they do give us the ability to do something, and this is one of those somethings."

Hansel, for whom 79-E is a pet issue, spoke about the measure with evident delight. "We can take control of our economic-development destiny here."

If approved by the City Council, the 79-E program -- officially, the Community Revitalization Tax Relief Incentive -- will be part of a package of economic-development initiatives aimed at revitalizing the Marlboro Street corridor. The area, in Keene's southeastern corner, encompasses residential neighborhoods, businesses and a swath of once-vibrant industrial properties. At least four large commercial or industrial buildings stand vacant, according to the city's planning department.

Last month, the council rezoned the area, creating new districts oriented primarily toward economic development. That was followed by the establishment of an overlaying economic revitalization zone, which offers new or expanding companies credits on the state business-enterprise tax.

At Wednesday's meeting, Planning Director W. Rhett Lamb also alluded to planned infrastructure projects that could make the Marlboro Street corridor more attractive to businesses.

RSA 79-E lays out a few ground rules. To qualify, buildings must be in a downtown area, unless they are historic structures. Rehabilitation projects must meet a minimum cost threshold, and create at least one "public benefit." The tax breaks can last up to five years, with options to extend that in certain circumstances.

But the statute gives each municipality wide latitude in setting parameters on most of those points -- which was the agenda Wednesday night.

According to staff recommendations presented by Lamb and City Planner Tara Kessler, 79-E would apply only in the new neighborhood business district and most of the new business growth and rezoning district.

Because those districts contain "distressed areas," Lamb said, "we know that it's going to take extra work to encourage a developer, a landowner, someone who might want to make an investment in this location. So that's a great use of 79-E, as opposed to picking an area where redevelopment or development is already happening."

Kessler recommended limiting the tax incentive to commercial, industrial and office buildings; mixed-use buildings that are no more than one-half residential; and historical structures -- a point the four committee members present seemed to agree on.

Councilor At-Large Bartlomiej K. "Bart" Sapeta floated the idea of extending 79-E's applicability south into a residential district created as part of the recent rezoning ordinance, to capture any bed and breakfasts that open up there.

Kessler also suggested the minimum investment be set at $75,000, to weed out minor projects that will provide little economic boost.

Ward 4 Councilor Robert B. Sutherland asked if that threshold was high enough, as that amount can go quickly in construction projects. Lamb said it represents a significant chunk of the average assessed value of properties in the proposed 79-E zone, $191,150.

As for the public benefits -- each project must achieve at least one -- the statute lists enhancing economic vitality, encouraging reuse of existing building stock and promoting downtown development, among others, but allows municipalities to "further define" that list.

Hansel suggested adding job creation, space for public art and environmental sustainability to that list.

Much of the discussion revolved around how long to grant tax relief. Hansel proposed creating two tiers -- perhaps two years and five years -- to suit projects of different scales.

Those tiers could be determined by the dollar amount invested, the number of jobs created, the number of public benefits achieved, or some other factor, according to ideas bandied about by councilors and staff during Wednesday's meeting.

For his part, Sutherland argued a two-tiered scheme could complicate the process unnecessarily, confounding investors.

"Let's just keep it as simple as possible," he said.

Similarly, the lone member of the public to speak -- Ward 2 Councilor Mitchell H. Greenwald, who does not sit on the planning committee -- argued that a simple, "generous" program would attract the most investors.

"Don't be afraid," he said. "It'll work."

To claim the 79-E incentive, property owners complete an application, which the local city council votes to approve or reject after a public hearing.

The committee voted 4-0 to authorize city staff to draft a resolution for adopting 79-E in Keene. Ward 3 Councilor David C. Richards, the committee chairman, was absent.

Hansel said in an interview that planning staff will incorporate feedback from Wednesday's meeting into the resolution. Once drafted, the resolution will come before the planning committee, which can amend the language and decide whether to put the measure to the full council for consideration.

If passed, the incentive's success will depend on Keene marketing it to entrepreneurs here and elsewhere, Hansel said.

"I have already spoken to several business owners -- ones in town, and a few out of town -- and they're excited about this," he said. " ... We should be jumping all over it."

Paul Cuno-Booth can be reached at 352-1234, extension 1409, or [email protected]. Follow him on Twitter at @PCunoBoothKS

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