Manchester aldermen to Millyard hotel developer: Why are you back?By PAUL FEELY
New Hampshire Union Leader
August 20. 2018 2:02PM
MANCHESTER — Aldermen have voted to approve an amended agreement with the developer behind a new Millyard hotel, which includes the city issuing a $3 million general obligation bond to help cover cleanup costs associated with contaminated soil at the site.
The amended agreement was approved contingent upon passage of a bond resolution at the Sept. 4 meeting of the Board of Mayor and Aldermen.
The amended agreement passed on an 8-5 vote last week, with Aldermen Kevin Cavanaugh, Tim Baines, Chris Herbert, Tony Sapienza, Dan O’Neil, John Cataldo, Barbara Shaw and Bill Barry in favor. Opposed were Will Stewart, Elizabeth Moreau, Joe Kelly Levasseur, Bill Shea, and Keith Hirschmann. Alderman Normand Gamache of Ward 11 was absent.
Peter Flotz, managing member of Bedford Lot Venture LLC and the developer behind plans to build a Tru by Hilton hotel, sent a letter to city officials in June seeking help with the $23 million project.
Plans call for a 116-room hotel and a parking garage for 254 vehicles to be built at the lot near North Commercial and Spring streets. According to Flotz, the project is “burdened with significant unusual costs that are directly attributable to the site,” and is appraising at $18 million — despite the $23 million price tag.
Several aldermen voiced their displeasure with the amended agreement prior to voting on it.
“On Central Street, there’s a hotel being built and the people are not asking for general obligation bonds,” said Shea. “Contrast that with this. First they wanted ‘A’, then they wanted ‘B’, now they want ‘C.’ I think we should be very cautious about how we approach this.”
“What changed?” asked Levasseur. “Mayor Gatsas tried to veto the deal. We overruled him, and your quote was you won’t be back in before us. I defended you hard, and took it on the chin from that mayor hard more times than I’d like to say, but you’re back. Why?”
“We expected, and hunted down for a year and a half, New Markets Tax Credits,” said Flotz. “We were expecting $6 million to come into the project that we would not have to pay back. That was our cushion for the site conditions.”
Flotz told the aldermen he was made aware of contaminants in the soil at the site in November 2016, when he was given a memo by the city’s brownfields consultant on the topic. He said his firm was pursuing funds to clean up the site through the New Markets Tax Credit program, in which developers sell tax credits allocated by the federal government for projects in low-income areas.
But when the U.S. Treasury on Feb. 13 allocated $3.5 billion for the program, New Hampshire was not one of the recipient states.
Flotz said Harvey Construction has solicited several bids to clean up the soil, which come in around $3.2 million.
Under the terms of the amended agreement, the city will issue a $3 million general obligation bond, to be released monthly to Bedford Lot Venture LLC for site cleanup work. Bedford Lot Venture LLC will them make annual payments to the city of $150,000 each year — beginning on the first anniversary of either the closing on the general obligation bond or the start of construction on the site.
After the third anniversary of the issuance of a certificate of occupancy, Bedford Lot Venture LLC can repay its obligations in whole or in part without penalty or premium.
The amended agreement also states that beginning April 1, 2020, and continuing through 2029, Bedford Lot Venture LLC will pay the city a minimum of $475,000 comprised of property taxes assessed on the hotel and parking deck, along with the $150,000 mentioned above. If the assessed taxes come in at less than $475,000, Flotz’s company is to make up the difference.
To ensure the work is done, the city will hold a $3 million letter of credit until a certificate of occupancy is issued for the hotel, and a written statement is received from the city’s public works director that the parking deck and surface parking lot have been “substantially completed.” At that time, the value associated with the letter of credit drops to $1.5 million and declines an additional $150,000 each time Flotz makes a payment.