On Monday afternoon, Lowell’s Urban Development Rock Star (aka Assistant City Manager/Director of the Department of Planning and Development) Adam Baacke guided 60 City Managers from across the nation on a 90-minute tour of the downtown and Hamilton Canal District. The group is staying in Boston this week attending the International City/County Management Association’s annual conference.
Baacke told the story of when he first started working for the city in 2000 and was nearly laughed out of town when he asked others in the Planning Department where they go to get lunch — there was, essentially, nowhere to go.
That restaurant desert was irrigated though the development of more residential units downtown, as well as low-interest start-up loans through the Lowell Development Financial Corporation to new businesses that were otherwise “unbankable”. Baacke acknowledged that those businesses were a risk, but two-thirds of them did stay in business for five years or longer; in the general retail/commercial market only one-third of small businesses survive that long, making it a risk worth taking.
He also explained that because the LDFC is a private non-profit consortium made up of eight lenders, the amount of capital put up by each lender is not substantial, so the loss to any one lender when a loan is defaulted upon is minimal, and written off by the lender.
The other big piece of the city’s redevelopment can be attributed to the use of state and federal historic and new market tax credits. They way that works is the developer sells the tax credits to large companies, such as an insurance company, at less than the dollar value; this provides immediate capital to the developer while giving the big business a tax break.
“When you hear those stories of big companies not paying taxes, it is because they buy up a lot of these tax credits, which are actually an investment back into communities,” said Baacke. “I think it is a better use of funds than they way the federal government generally spends money.”
The largest chunk of financing for the 130-unit Appleton Mill redevelopment, which the group visited, was funded through state and federal historic and housing tax credits that were purchased for $42 million by insurance giant MetLife Inc.
Several of the City Managers on the tour were ready to abandon their hometowns and move to the Appleton Mills by the conclusion of the tour.