Schumm to revive proposal for multistory downtown condo project, will seek tax breaks
Longtime businessman and former City Commissioner Bob Schumm has confirmed that he is renewing his request for a set of tax incentives for an upscale condo project on Vermont Street. You may remember that in December, the City Commission on a 3-2 vote rejected Schumm’s request for property tax breaks for a multistory building that would include ground-floor commercial space, a floor of office space and a dozen condominiums.
The project — which is slated for the vacant lot in the 800 block of Vermont Street just south of the old Headmaster’s Salon building– ran into multiple hurdles at City Hall. One of them was the approximately 2,500 square-foot penthouse planned for the top story of the building. Schumm had said he likely would live in that unit. The penthouse unit was included in the property that would receive a sizable break in property taxes. Several members of the public did not like the idea of a developer getting a tax break on the home that he would live in.
To address that concern, Schumm is modifying his proposal. He said any unit that he would live in at the project would be ineligible for a property tax rebate. The other 11 condo units — plus the two floors of commercial space — would be eligible for 10 years worth of property tax breaks. Technically Schumm is asking for a property tax rebate under the Neighborhood Revitalization Act. As proposed, the city would rebate 75 percent of the property taxes for 10 years. He’s also asking for industrial revenue bonds that would allow him to not pay sales tax on the several million dollars worth of construction materials needed to build the project.
But perhaps the bigger issue the project faced at City Hall was a concern that the development wasn’t providing enough public good to justify the tax break. Schumm is hoping commissioners have had second thoughts about that issue. In December, the City Commission was in the midst of approving a new policy related to tax breaks for projects. It is now approved, and Schumm said he thinks his Vermont Street project checks many of the policy’s boxes. Schumm noted several benefits, including: It promotes downtown density, it revitalizes an underutilized piece of property and it will help attract retirees.
The project also has an affordable housing component. Schumm will agree to sell one of the condo units at a reduced rate and enroll it in the Lawrence Community Housing Trust program, which will place restrictions on how much it can be sold for in the future, as well. In December, Schumm had said the unit would be a one-bedroom condo, and it would sell for about $95,000.
In December, commissioners weren’t sure that type of condo development really met the definition of affordable housing. Technically, Schumm’s proposal doesn’t quite meet the affordable housing requirements of the city’s new policy. That policy requires that small housing projects that are seeking a tax break designate 10 percent of their units as affordable. That would be 1.2 units for this project. Schumm, however, is asking the commission to round down and require just one unit rather than two.
It will be odd, however, if this project hinges on the affordable housing component. City officials really can’t believe this is about affordable housing. It is one unit in a market that has tens of thousands of homes. The estimated value of the tax breaks for the project are around $1.2 million. There obviously are much more efficient ways to add a single unit of affordable housing to the community.
Instead, I believe, the issue is about: 1. Whether the City Commission wants more residential development in downtown; and 2. What they believe they have to do to entice developers to build such projects.
I think there is broad agreement on the first point. More people living downtown increases downtown’s prospects for long-term viability. The key issue on No. 2 may hinge on what you believe about parking.
Yes, I’m getting to the point about the $52,000 parking bill. Schumm’s project would include 22 underground, private parking spaces for the residents of the condo development. (One space per bedroom.) Schumm previously has told me the parking would cost about $52,000 per stall to build. He doesn’t think he can pass along that full cost to the owners of the condos.
Downtown’s unique zoning code would allow him to build the condo project without providing any off-street parking — downtown properties are allowed to use the public parking lots — but he doesn’t think he can get people to buy an upscale condo without private parking.
Other developers have said the same thing, and past commissions have agreed. The most prominent example is the apartment project at the northeast corner of Ninth and New Hampshire, which received a sizable tax break to help it pay for its underground parking.
Schumm’s project will help us better understand what this current commission thinks about the issue. It could be it buys the argument too — but not at the price developers are seeking. In other words, commissioners may have approved the tax break if the request was for something less than 85 percent. This group has seemed more comfortable with tax breaks closer to the 50 percent range.
If that’s the case, then the question bounces back to developers: Will they still take the risk on downtown projects? It is not a given that they will. Schumm, in his conversations with me, didn’t show his hand on whether he would be willing to take less. But he said he was willing to play the long game on the project, meaning he’ll be back again if it doesn’t win approval this time. He thinks these types of projects are critically important for the future of downtown.
“I think this is the type of project that will attract long-term residents who have a strong desire to live in downtown,” Schumm said, contrasting it to an apartment project that has a higher turnover of residents. “I would like to have more people living in downtown for the long term. They can really participate in the arts and everything else in downtown that makes it vibrant.”
No word yet on when commissioners may consider the issue.