McIntyre – Binnie proposal – Seacoast Sunday, August 11, 2019
Bill Binney’s alternative plan for the McIntyre building poses a real alternative – and the key lies in the capital structure.
The Redgate Kane proposal takes the 2.1 acre site and adds quite a bit of new buidings. The largest income stream comes from luxury apartments. Hence the “inherent tension” – a project on land that is “the people’s land” that has a small – but well planned –amount of public space and a majority used for developer’s buildings.
Bill Binney’s plan has more public space than private He aims for a smaller lease income from the McIntyre only, lowers the cost of the project by turning half over to a park, a grand staircase at Bow Street, and a summer-and-winter glass atrium. And his company will fund the project with its own capital.
Binney will get a modest $3mm of revenue from the McIntyre building and his firm, Carlisle Capital, will invest $38mm to make the project happen. He will use no bank debt and no outside investors. He will seek a rate of return in single digits. This makes a huge difference between the two proposals, according to what he told The Herald’s editorial board.
Redgate-Kane, by contrast, will spend more than $61mm and will use $40mm of bank debt and $21.4mm of equity. Much of the equity will be raised from outside investors. It will seek an 11% internal rate of return and defines developer’s “reasonable profit” as at least 18% (according to the presentation to the council by financial consultant David Eaton).
In short, the Redgate Kane project is driven by a capital structure that must pay back banks and investors. This forces the developer in the public-private partnership to tilt the project more toward private return, and pack as much density in while still serving the public purpose.
One councilor teased that the Binney proposal has been the Revisit McIntyre proposal all along. It’s true they have a similar look, but Binney’s includes what the public said they wanted in the process last year – indoor atrium space for people to gather in winter (substantially more than Redgate-Kane). It also includes the rooftop restaurant and categorically reserves space for the post office, including keeping their loading dock (which Binney says is not true of Kane-Redgate),
Throughout the input process, which I participated in, we were told “the developer needs to make a profit.” But how much profit, for how many outside banks and investors? That’s where Binney proposes a very real and very liberating alternative. He doesn’t need luxury apartments, more building scale than public space they dwarf. Binney’s willingness to step up and self-fund for a modest return changes the game completely from where the process started in 2017. And that deserves a full and robust debate by the council.
McIntyre – Go forward or revise? Seacoast Sunday March 11, 2019
The McIntyre Project to redevelop two blocks downtown in a public-private partnership with the Redgate Kane development team is the biggest impact project downtown in a generation. Some thoughts on where it now stands:
The city council is “stuck in the middle.” Go forward, and the pushback from the Revisit McIntyre group and their more than 1,000 petitioners only grows more vocal, creating divisions in the community. Go back, and the council faces the bitter prospect of starting from scratch.
Everyone involved is seeking what they think is best for the city – and I include developer Michael Kane in that. He’s a local boy and Redgate has the best credentials of regional developers.
Rather than dissect what has gone wrong so far – which seems to be the topic in town — the more important question is what to do next.
First, there’s no rush. A senior council source told me tenants of the federal building aren’t going anywhere this year. This is a big contrast to when Deputy City Manager Nancy Colbert Puff said in late 2017 that plans had to be submitted June, 2018 because tenants were moving out in December 2018. What started in a rush has turned out to have time for reflection and improvement.
The council can decide whether to commit to Redgate Kane’s plan and begin the land review process with city boards. Or they can decide to get more input which could lead to reshaping the plan.
The current project preserves the federal building’s façade as a mid-20th century piece of history, turning it into prime office space. The balance of the land is split between apartments, retail and public space. The site is now a walled parking lot, and the Redgate/Kane plan opens walkways connecting it to Daniel, Penhallow and Bow streets. I’m on record as saying there is a lot to like about the plan, including the outdoor public spaces and indoor atrium as a gathering space. But many feel (and I agree) the project doesn’t have enough parking and the massing and infill can be intimidating in some places. Keeping the post office there is everyone’s preference, and the city is negotiating hard to do that.
A subcommittee of councilors Dwyer, Perkins-Kwoka, and Roberts debated whether to have more input or stand pat with the consultant-run work sessions done last spring. Councilor Dwyer has been vocal in not wanting to stop progress. But doing so would leave the issues that are being debated unresolved. The council – and a large number of citizens – are pondering what to do about that.
When the city sought a development partner in 2017, several parameters guided the process. The federal government would transfer the land to the city, keeping the building intact under the federal Monuments Act. A developer would be given the entire rest of the parcel in a public private partnership. The city would allow the developer to make a reasonable profit and would be off the hook for large public investment. The developer would include some public space. Excess profit above “reasonable” would go back to the city to fund parks.
A public dialogue process would determine our appetite as a community for going outside these constraints.
- Does more public space and less development on the site outweigh city desire to have the developer shoulder all the cost, even if that means taxpayer spending by the city?
- Does additional parking outweigh city’s desire to spend no money (the developer says it is uneconomic for him to do a second underground level)?
- Does lower density and building mass outweigh city desire to spend no money (city could reduce developers cost in a number of ways by providing parking and public space infrastructure, asbestos removal, etc.).
- What is the best public space – indoor, outdoor park or a mix?
Assistant Mayor Lazenby and councilor Roberts recommended a role for Portsmouth Listens in getting additional public input. Chris Dwyer disagreed. As a member of Portsmouth Listens, I can say we have always thought McIntyre was a great project for a public dialogue in the study circle format, but the prime moment for that was at the start. That would have been the best time to reach consensus on our values as a community for this prize property. Instead, public input was minimal before Request for Proposal was developed (one public hearing). The question is whether to reopen the process including whether the public buys the RFP constraints. There’s not an easy answer.
Study circles as an input process can be criticized, but they also have a track record of success from 1999-2013 on many contentious issues. Local people in study circles don’t filter their input through consultants. The people themselves deliberate in each circle, decide the best answer to a problem, and author their own reports. They present directly to the city council. They have access to a database of all relevant documents the council deems fit for them to study.
In 2007, a Portsmouth Listens dialogue swiftly resolved years of wrangling about whether to renovate or relocate the middle school. A few folks were unhappy with the choice to renovate and started a petition drive afterwards. Fewer than 25 people signed because every household in town had been mailed an invitation to the study circles, 171 people participated in eight small groups, and it seemed everyone knew someone who had. The process was seen as open, honest and fair.
Housing Growth and Affordability- Seacoast Sunday May 6, 2018
The old Frank Jones Brewery off Islington Street was turned into apartments last year. The project opened for business in February and sold in a land rush – 33 of 40 smaller studio and one bedroom units were rented instantly even though occupancy was three months away. They were priced at an average of about $1,450 a month including heat and water.
In a city where affordable housing is scarce and rents have been rising, this was a bonanza. Eric Chinburg, who developed the property, told me recently that as he walked outside the new building, “I met a young woman who works in a Portsmouth salon, and another resident who has a house cleaning business – and I felt good about that.”
Portsmouth’s scarce and expensive housing has threatened our economy and health as a community for two decades. “The restaurants and small businesses that make Portsmouth ‘unique and amazing’ may not be sustainable as home prices go up faster than wages,” a report to the city said last year. Median rents have been leapfrogging toward $2,000 a month and are by far the highest in the state. Home prices are equally out of reach to working families.
But here’s the good news: city data shows housing construction – especially apartments — has been taking off. The free market may be late the party, but it is finally showing up.
Between 2010 and 2017, the supply of apartments increased by only 279– fewer than 40 per year. But between 2017-2020, Portsmouth will add 255 units or 128 a year, according to figures from the planning department. If condos are included, growth could reach 459 or 230 a year.
The growth really started four years ago – 113 units at Portwalk, and last year, 94 Veridian apartments near Southgate Plaza and Chinburg’s 68 units at Brewery Lane.
Looking ahead, a second Chinburg project will deliver 92 units where the old city yard was in the West End, and Deer Street Associates’ Foundry Place projects will add 48 (and another 67 condos). The Portsmouth Housing Authority has proposed 68 units of low-income housing on Court Street. Then there are two bigger projects awaiting application – a plan to build 80 units on the North Mill Pond, using old railroad property, and 124 units at the Frank Jones Center site on the Route 1 Bypass.
Peter Francese, a brilliant demographer retained at times by SMG, said, “if you could grow housing supply in Portsmouth 1% a year, the market would work.” For years, that’s been stubbornly difficult. It’s expensive and risky to build here. Land is scarce. Parking requirements are a major barrier. Zoning codes are complex. NIMBY neighbors fight multi-family housing near them, and applications can take not months but years.
According the census, the city has 4,820 rentals (2016 estimate). So growth of 1% in rentals would be 48 a year. This sudden surge in 2018-2020 is three times that. The market is playing catch up.
As developers explain to me, what will occur is qualified renters moving up to the new “Class A” rentals, creating more “Class B” vacancies whose landlords have to keep rents low to lure new tenants.
Affordable housing requires projects of 40-60 units or greater if we are to have a true socio-economic mix and a healthy local economy. What can keep this trend going? First, smarter zoning. Chinburg credits the new West End zoning with an easier review process that didn’t need waivers and variances.
Second, encouraging housing zones like Councilor Rebecca Perkins-Kwoka’s ordinance to convert dead retail space like K-Mart on Woodbury Ave to housing. These projects don’t impact neighborhoods.
Third, and most important, is our own community will. We need to support 40-60 unit projects when they are sited correctly and work as “urban infill.” We need to admit that we are a city and think like one (that includes public transit to ease the parking restrictions, but that’s another, topic).
While the right to quiet enjoyment of our neighborhoods is fundamental to all of us, we can’t reject higher density housing on the one hand, and mourn the loss of socioeconomic diversity and young families on the other. We can’t try to keep Portsmouth as a village in a snow globe while our small business owners lose their workforce. In that light, the Portsmouth Housing Authority’s proposal for 68 units of “urban infill” will be an important test. It will offer rents of $900-$1,200 a month for service workers, teachers, musicians and actors, and young families starting out. It will keep the current positive trend in supply moving in the right direction. It’s located between taller, urban buildings and will probably improve the streetscape. If we can invest $27 million to house cars at a new garage, shouldn’t we support a plan to house people