Rich Girard: The proposed apartment complex on Manchester's Front Street would cost taxpayers big-timeBy RICH GIRARD
November 19. 2012 12:50PM
Past performance does not guarantee future results. This is something I am legally bound to share with my clients when we discuss possible investments. While this is a prudent disclaimer in the investment world, one has to wonder whether or not it applies to real estate developers and the projects they build.
I refer to the proposed rezoning on Front Street that would enable a developer to construct up to 27 three-bedroom rental units where a singl- family home currently sits on just over two acres of land. The developer's request has made its way through the process and now only needs final approval from the Board of Mayor and Aldermen (BMA).
Were I an alderman, using history as a guide, I would vote to decline the request, as the city has seen this movie before with this developer in the starring role.
First, let's address the developer's claims.
The developer's representatives say they're targeting a 'young professional' clientele with their three-bedroom apartments priced at $1,600 per month. They claim the 'YPs' will choose their housing over the area's two- bedroom units priced from $1,700 to $1,800. 'Money talks' said the developer's representative at a recent subcommittee meeting. They use the example of a young professional couple from Germany, with no kids. in one of their Bodwell Road developments as proof of what this development would attract.
In response to a direct question from Ward 1 Alderman Joyce Craig, chairman of the subcommittee with jurisdiction on zoning matters, about the number of children expected, the developer gave what could only be considered a meandering, non-responsive answer. The representative used the developer's recent development on Spring Garden Street, which has four three-bedroom units and only two children as an example, implying that the same would happen on Front Street. What children would be there would come from the surrounding neighborhood because parents don't like to change schools, was the statement.
Then the representative said the company planned to install 'a play area for kids.' The developer failed to mention who would fill the vacancies created in the surrounding neighborhood by those who moved to their units. Is it not logical to assume that units that once housed kids would house them again?
Among this developer's two dozen holdings are two similar developments: Cohas Brook at 1791 Bodwell Road, developed in 2006, and Whitetail Crossing at 1095 Bodwell Road, developed in 2004. Both were single-family properties until this developer came on the scene.
According to tax assessing records, Whitetail Crossing once contained two two-bedroom, single-family units on nearly two acres of land, built in 1965 and 1969. They're now neighbors to 26 three-bedroom units built by this developer on that same 1.9 acre parcel. Valued at nearly $2.8 million, the development will pay $61,935.43 in taxes at the current tax rate. According to school district records, it also houses 31 children who attend Manchester public schools.
Cohas Brook has similar numbers. The existing four-bedroom, single-family home was built in 1964 on just over 3.5 acres of land. Today, it is neighbors with 20 three-bedroom units. Valued at just over $3.8 million, this development pays $84,774.18 in taxes at the current rate and houses 27 public school children.
Total taxes paid by this developer on these units: $146,713.61.
Total cost of school children using the current per pupil average cost of roughly $10,000 would be about $580,000.
Not counting 'city expenses' like police, fire, public works, etc., for every dollar collected in tax revenue from these developments, the city spends $4 just for schools. That means that every taxpayer in the city must pay higher taxes to offset the significantly increased expenses caused by developments like this.
Since this developer's representatives themselves referenced these Bodwell Road developments as the model for what they'd do on Front Street, shouldn't the city use past performance as an indicator of future results? If it does, it can expect about $77,000 in tax revenues and 30 school kids costing $300,000, not counting other city services; a cost of $4 for every dollar in tax revenue.
Not only does this kind of 'development' have to stop, there is precedent for stopping it. Ironically, it can be found in the denial of a rezoning request made by this very developer for a large parcel of suburban single family land on South Mammoth Road. Former Ward 8 Alderman Betsi DeVries blocked it. This board should do the same lest taxpayers be saddled with higher taxes to offset these predictable losses.
Rich Girard, a former Manchester alderman, is a financial advisor and host of Girard-At-Large on 90.7 FM.