Nashua weighs ‘transit-oriented development’ to pay for rail

Nashua aldermen are considering so-called “transit-oriented development” as a means of generating the $14 million needed to match the $56 million in federal funds earmarked for the restoration of rail service between Nashua and Lowell, Mass.

The plan developed by the Nashua Regional Planning Commission would include the creation of a tax increment financing – or TIF — district, in which tax revenues derived from the development would pay for the city’s portion of the project.

The concept, presented to the aldermen by Stephen Williams, executive director of the planning commission, calls for mixed-use commercial and residential development at a yet to be determined “appropriate train station location in South Nashua.”

The rail service to Lowell, with connections to Boston, would draw an estimated 950 round-trip passengers each day to the Nashua station, Williams said.

Williams outlined a potential development that would include 150 residential units, together with 70,000 square feet of retail space, 10,000 square feet of restaurant space and 100,000 square feet of office space.

The estimated assessed value of the development would be $42, 850,000, yielding $1,044,255 in property tax revenue at the city’s current tax rate, he said.

Under the TIF plan, the money would be used to pay off the $19.2 million the city would borrow to cover the $14 million in matching funds and the city’s $5.2 million share of an $18.4 million, 2,300-space parking deck over the station. Bond payments would range from an estimated $1.466 million annually over 20 years to $1.17 million over 30 years, according to the TIF analysis provided by the planning commission.

Williams said the transit-oriented development concept is relatively new in this part of the country, but has been used successfully in a number of cities, including Washington, D.C., Dallas, Texas, and Portland, Ore. “I think it’s a great model for mixed-use development,” he said in an interview before the meeting. “It will really stimulate the economy and increase property values.”

Nashua has been looking for a local option for the matching funds since the state’s plan to divert $14 million in highway funds for that purpose was ruled unconstitutional by the New Hampshire Supreme Court. Tax increment financing would enable the city to pay off the bonded debt from a new development solely with taxes collected within the TIF district rather than with general revenue funds.

“You’re creating the real estate value by investing the money,” said Gordon Leedy, a land development consultant with Vanasse Hangen Brustlin Inc. in Bedford. “It’s wealth that does not (presently) exist,” he told the board. “It’s being created by the investment.”

While no specific development plan is on the table, aldermen are being asked to pass a resolution stating their commitment to raising the $14 million needed in matching funds through transit oriented development and “smart growth principals.” Williams said the resolution will send a signal to the state’s congressional delegation that the city is determined to make use of the available federal funding.

The resolution also calls for the creation of New Hampshire Transit Authority to operate and maintain and expand commuter rail in New Hampshire. The agency would be created by agreement of the city, the Nashua Regional Planning Commission and the state Department of Transportation — a contractual arrangement that would have to be approved the governor and council, Williams said.

The state DOT would manage the rail project, while the city would retain approval authority over the train station site design. DOT also would be responsible for negotiations with the Massachusetts Bay Transit and Guilford Railroad, which owns the rail lines between Lowell and Nashua.

State Transportation Commissioner Carol Murray told the Business Review she believes the department can meet the additional responsibilities with the personnel in its existing Rail Transit Bureau. “We do a fair amount of work with Guilford on rail crossing improvements and on agreements to help providers share tracks with them,” she said. “It’s not an unfamiliar thing to us. Is it additional work? You bet. Do we feel we can take it up in a way that will help this particular initiative succeed? We think we can.”

Nashua Chamber of Commerce President Chris Hodgdon said support for restoring rail service is strong among the chamber’s 600 members, especially the 90 with businesses in the retail strip along the Daniel Webster Highway at the south end of the city.

“We have supported bringing commuter rail to Nashua for over 20 years,” Hodgdon said. “There is an opportunity here that is not going to last forever.”

The presentation drew mixed reactions from the aldermen, however. Alderman-at-Large David Deane said the rail service would be the “right solution to the spillover of (automobile) traffic” into the city, while fellow At-Large Alderman James Tollner said he wanted to hear from his constituents before committing to the plan.

“We’re starting down this road without any feedback,” he said.

Paula Johnson voiced her concern that last year’s appropriation of federal start-up money for the rail project had expired on October 1.

“We need an answer from Congressman (Charles) Bass,” she said. “I want to hear if he’s going to guarantee that $4 million.”

The resolution has been referred back to the Planning and Economic Development Committee and is scheduled to come to the full board for a vote on Nov. 23. Brian McCarthy, president of the board, expressed confidence the measure would pass.

“I think they need some time to think about it, and I think there needs to be more answers,” McCarthy said the next day. “But I believe they will decide that this is the best course for the city to take. I think we’ll structure the development agreement in such a way that we’ll know going into it that there aren’t going to be any substantial risks on the part of the city.”