City incentives may encourage more to make the move
Published 12:00 am Sunday, April 13, 2014
SALISBURY — More people living downtown means more of just about everything good for the heart of the city, officials say.
More people calling downtown “home sweet home” means more investment and development to build apartments. More jobs in construction and renovation.
More revenue for restaurants and retailers. More demand for additional businesses. More activity at night and on the weekends.
Boosting the number of downtown dwellers has become so important, in fact, that the city of Salisbury is considering aggressive incentives to encourage developers to renovate more upper floors as living space.
“We are coming out of a recession, and we have a downtown that is doing well,” City Planner Janet Gapen said. “But we want to continue to support growth in the downtown, and promoting residential helps build a market base for restaurants and retailers.”
Gapen and other city staff have proposed several economic incentives that, if used together and in conjunction with existing grants and tax credits, have the potential to cover a significant percentage of the cost to create unique living space.
Since staff unveiled the incentives at the City Council retreat in March, at least three developers have shown interest, Gapen said. City Council will consider the grant programs during upcoming budget deliberations.
Skip Wood, principal with Sharp Capital, which owns the Kress Building containing five condominiums on South Main Street, said the proposed incentives got his attention.
“It sounds like a good partnership,” Wood said. “We would take a look at something along those lines.”
Sharp Capital does not own another building in downtown Salisbury, but if the incentives pass, the company would consider buying a building and adding more residential units, Wood said.
“Downtown residential plays a significant role in economic development in a downtown,” he said.
All five condos in the Kress have been purchased, including two by Sharp Capital. They contribute to a total of about 40 downtown living spaces, including 20 apartments in the Plaza.
Yadkin House Apartments has an additional 67 units for low-income seniors and people with disabilities.
Building downtown residential units in Salisbury is no cheaper than building them in downtown Charlotte, Gapen said. But apartments here will not command the same rent.
“The construction costs are the same, but the rents here are lower,” she said.
Incentives can help close the gap for developers, Gapen said.
“The goal is market-rate residential,” she said. “If that’s the product we want, we can create incentives to make that happen.”
She said the city would reap rewards from investing in downtown residential. A couple paying between $800 and $1,200 a month to rent a downtown apartment can pump as much as $18,000 a year back into a well-appointed downtown that has everything from restaurants to a medical clinic, according to the N.C. Department of Commerce.
“When people are living in downtown spaces, you literally have more lights on, more eyes on the street, more activity in the evenings and through the weekend,” Gapen said. “You are not depending on an event in the downtown to bring people. They are there 24-7.”
The proposed incentives could help lessen the blow if the state allows the historic preservation tax credits to sunset.
Renovating downtown buildings uses less material but more labor than new construction, which means more jobs, Gapen said.
Bringing more people to live downtown would mean more consumers for retailers and restaurants. Currently, downtown has a limited capacity for new businesses and needs more demand on nights and weekends, Gapen said.
“We have a certain capacity to support restaurants and retailers,” she said. “When one opens, we see that it’s taking away from one that’s existing.”
While downtown tourism is strong, businesses need customers year-round, not just seasonally.
Downtown is offering an increasing variety of arts and culture, which attracts younger residents, city spokeswoman Elaney Hasselmann said. The unique types of apartments and condos in a downtown, such as living spaces above Pottery 101 and the former Tastebuds coffee shop, also appeal to a changing demographic, Hasselmann said.
Developers have told city officials they are in better financial positions and are ready to act on developing downtown residential space.
After years of belt tightening, elected officials appear interested as well. The city of Concord is considering a $100,000 grant to help turn an old furniture store in downtown Concord into a $2.3 million apartment complex.
Concord City Council approved the sale of the land for $1 and also may award a grant covering 85 percent of the property taxes on the project for three years.
Salisbury leaders were enthusiastic about Gapen’s presentation at their retreat.
“City Council is ready to branch out into some additional initiatives,” she said.
Salisbury’s incentive grants could include:
• Downtown Building Rehab Grant
As proposed, this grant would encourage developers and property owners to rehabilitate buildings in the Municipal Service District, the city’s core already supported by an extra property tax.
Rehab grants would cover 25 percent of a building’s total rehabilitation cost and would be capped at $25,000. Total improvements would have to exceed $50,000 to qualify, and the grants would be awarded for commercial, residential or mixed use development.
The rehab project would have to respect the building’s “architectural integrity and historic features.”
• Downtown Residential Incentive Grant
Designed to promote the creation of new residential units in Municipal Service District or upgrades to existing units, this grant could be combined with the Building Rehab Grant.
The city would calculate the residential incentive grant at $7 per square foot of living space, with a cap of $100,000. Owner-occupied units and rental apartments both could qualify.
The project would have to meet minimum quality standards for upfit and finishes
• Fireline grant program
The city already has $50,000 budgeted to assist with fireline extensions within downtown that would serve multiple buildings or parcels.
The grant provides a 50 percent match of the cost of extending a fireline to a property with a focus in a six-block area where fire loops already have been proposed by the Salisbury Fire Department.
The loops would be installed at the backs of properties and would help address the costs of sprinkler systems for many projects.