Council OKs arsenal tax breaks

AUGUSTA -- Members of the Augusta City Council on Monday unanimously approved the largest property-tax break in city history for a North Carolina company that proposes to redevelop the 175-year-old riverfront Kennebec Arsenal.

State officials and Tom Niemann, owner of Niemann Capital, the company that promises to renovate the National Historic Landmark at a cost of about $9.6 million, both said a contract for the state to sell the former federal arms manufacturing site has not been agreed upon and no sale price has yet been set.

The amount paid for the 22-acre property could affect the figures for the city tax break.

But Niemann told councilors he hoped to come up with the terms of the sale of the property from the state within the next two weeks.

Niemann said he expects the initial payment of the sale to remain at the $280,000 first discussed, possibily with a subsequent payment when a second phase -- to build a complex of 60-70 apartments and condominiums at a cost of about $10 million -- begins in two to three years.

Still, a spokesman for the developer, Josh Parker, said the city's agreement to help pay for the project by returning most of the property taxes it would otherwise have paid over the next 25 years was the final piece of the financing package necessary to begin once the terms of the sale are nailed down.

"We still plan to start (construction) in the fall," Parker said after the meeting Monday. "This was the last financial question."

The city tax break joins historic-preservaton tax credits for the project from the federal government and a special $2 million historic-preservation tax credit from the state to help fund the effort.

"I feel it's going to create a renaissance along the riverfront in Augusta and it's going to do nothing but benefit the city of Augusta," Mayor William Dowling said just before the vote.

The project received strong support from city officials and City Manager William Bridgeo as well as from a number of councilors and residents who spoke in favor of granting the so-called tax-increment financing package.

The proposal, hammered out by Dowling with the developers, returns to the developer all of the property taxes the project would have generated for the first seven years of the project and three-quarters of its property taxes for the remaining 18 years of the deal.

The council Monday approved an amendment to the proposal added late in the negotiations that limits the total payment to the amount needed to repay a bank loan Niemann Capital plans to take out based on the tax refund. That cap was set at $4,331,546, also by a unanimous vote of the council.

"It only seems reasonable to cap that at what they need and what their projections showed they needed, and any further money would be returned to the city," said Councilor Michael Byron, who helped come up with the idea for the cap.

Helen Nasberg said many people, particularly older residents, live on fixed incomes in Augusta and already struggle to pay the taxes on their homes without allowing more properties to avoid taxes. She noted that the planned apartments and condos could also generate new students for the city's schools.

"Our taxes are already so high, we're one of the highest-taxed cities and state in the country," Nasberg told the council.

City officials, however, pointed out that the arsenal buildings are already owned by the state and therefore are currently tax exempt.

They said Niemann also made further promises Monday to offer work on the project and housing in its residences to local people first, if possible.

But Byron, a supporter of the project who voted Monday to approve the tax break, wondered if more public education was needed before a council vote.

"I get a sense from some of the public testimony tonight and what I have heard on the street that people say, 'It sounds pretty good, but I'm not sure how it works,' " Byron said.

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