Red tape mires Portsmouth federal building project

It has been six years since an ambitious plan to build a new federal building in Portsmouth and turn over the old one to the city was unveiled by U.S. Sen. Judd Gregg. The deal, which would involve the acquisition of the Thomas J. McIntyre Building in downtown Portsmouth for $1, will eventually put the huge four-story structure on the city’s tax rolls and potentially be redeveloped into commercial, retail, office and condominium space.

When the proposal was first advanced in 2003, it sparked an enthusiastic response from city officials, who saw the two-acre downtown parcel as a veritable gold mine for economic development. But before that occurs, a new federal building housing the Internal Revenue Service, Social Security Administration and other government offices will have to be constructed.

To facilitate that, Gregg secured a nearly $25 million appropriation to build the new federal facility in an empty 11-acre lot near the visa and passport processing centers at Pease International Airport.

“This project is a tremendous opportunity (for) the city of Portsmouth. The downtown area currently occupied by the McIntyre Federal Building is a valuable location, and whether the city chooses to leave it as open space or occupy it with a variety of retail services, downtown Portsmouth will be positively impacted,” said Gregg at the time.

But so far, the General Services Administration, in charge of the project, hasn’t turned a shovel of earth to get the building project under way. That delay frustrates many in the city, including City Manager John Bohenko.

“We expected that we would be moving forward on this redevelopment project this year — actually 2010 — but we’re at the mercy of the GSA. They have to go through their process, and again it’s painfully slow,” said Bohenko.

‘Oreo’ development

Bohenko said that a recent inquiry to Gregg’s office yielded a letter and fact sheet regarding the GSA’s planning for the new construction at Pease. In the fact sheet, the GSA indicated that it is currently about 30 percent through the design phase for the 60,000-square-foot building.

“But they (the GSA) felt that because of some changes, the agencies’ square-footage needs are complicating their final housing plan,” said Bohenko.

The fact sheet indicates that the design completion will lead to a final construction timetable, something that is still uncertain at this time. While the final design phase for the new building could be ready in the spring, Bohenko said that the GSA may need additional funding to complete the project.

The city manager also is a member of the Pease Development Authority board of directors. Asked whether the PDA has any more insight into the project, Bohenko said, “I think they have as much information as we have.”

David Choate, a principal in the real estate firm of Grubb & Ellis Coldstream Real Estate Advisors in Portsmouth, questioned whether the location will actually work for what he called the “Oreo” type of development — retail on the bottom floor, office space on the middle floors and high-end apartments on the upper floor.

Besides, Choate said, the current economy, along with the glut of available retail and office space now available, may hamper redevelopment of the McIntyre Building for commercial purposes.

“There are a number of projects on the drawing board that are on hold, both in the Northern Tier and downtown, because of lack of tenants and lack of financing,” said Choate.

At the same time, Choate pointed out that the federal building location is a great site, adjacent to the heart of downtown Portsmouth, although attracting retail clients could prove to be a challenge.

“Unless a truly unique environment is created, most retailers want to continue to be on Market and Bow streets and Market Square, and don’t want to wander off of that. This would be obviously a secondary location.”

Choate said that he thinks the development of affordable housing might be a more viable alternative to commercial and retail space, when the building is finally available. Recently, a proposed 60-unit workforce housing development in the city was defeated by the zoning board, which ruled the project too large for its location.

“Maybe this is an opportunity for the city to provide a truly affordable housing opportunity for people who work downtown. I think if the city owns the property, and they somehow figure out a way to develop it, affordable housing, maybe in conjunction with other uses, would make a lot more sense, if it could be pulled off financially,” Choate said.

Another perspective on the old federal building’s potential is offered by Doug Bates, president of the Greater Portsmouth Chamber of Commerce. According to Bates, a mixed use of business and residential could work at the location.

“I think it’s key that you mix them so that you have a little community there,” he said. “I think Portsmouth has a lot of that in the central business district. That’s what gives us our vitality.”

He also pointed out that any project must include parking and be balanced with the rest of the downtown. “Even though I know it probably won’t be workforce housing, I think the housing and the retail and the parking would be an important addition to that parcel.”

In the meantime, the city is hamstrung by the slow process of the new federal building construction.

“Once we see some actual building commence out at the Pease Tradeport, I’ll go to the city council and recommend that we get a planning process in place,” said Bohenko, who pointed out that the city will have an 18-month lead time to complete that planning once work on the building at Pease has begun. The city has already committed some $100,000 in funding to study reuse of the old building.