Second of a three-part series

BY KEITH EDWARDS

Staff Writer

CONCORD, N.H. -- Ten years ago, most people looking to build a home near the state capital built in the outlying communities, not in Concord itself.

Concord's property taxes were higher than those of neighboring communities.

The city's downtown, like many of New England's traditional, historic downtowns, was struggling economically, with many dilapidated, vacant buildings. Many of the city's streets were in disrepair because there wasn't enough money to maintain them.

Concord is a different place now.

"Our tax rate is now lower than in our surrounding communities," City Manager Thomas Aspell said. "We have the tax base that allowed us to decrease the tax rate.

"Now, we have a lot of high-end housing being built in the city. We have successful small businesses. Our downtown is very vibrant and strong. We've got a good school system, good transportation network, we have the amenities people want to have.

"We have all the pieces in place."

In some ways, where Concord was 10 years ago -- a place ripe for transition and reinvention -- is where Augusta is now.

Augusta's property taxes are generally higher than in the smaller communities surrounding it. Its downtown buildings and streets are in relatively good shape, but the downtown lacks the vibrancy it once had.

Commercial development at The Marketplace at Augusta and Augusta Crossing, both large shopping centers featuring almost exclusively large national chain stores, is adding to the city's tax base. And an expanded tax base has allowed the city to stabilize its tax rate.

But those same commercial retail developments have taken as they have given. As retail has grown in the outlying shopping centers, it simultaneously has shrunk in the downtown.

Augusta officials, with Mayor Roger Katz leading the charge, hope to reverse those trends.

One of the most important factors in turning things around in Concord, city officials said, was the city invested in itself.

SPENDING MONEY TO MAKE MONEY

Ironically, tax revenues from the large Steeplegate Mall that opened in Concord in 1990 and the numerous big-box stores surrounding it have helped fund the city's investments in its downtown.

But first the city had to invest in infrastructure for the mall. The city ran sewer and water lines out to the mall, which is separated from the urban part of Concord by a few miles, Interstate 93 and the Merrimack River.

"We spend money to make money," said Matt Walsh, the city's assistant for special projects. "The city sent utilities out there (to the mall), because we wanted the area to be developed."

It took time for the mall to get going and become the steady source of revenue for the city it is now. Walsh said the mall has done well, at least in part because other area municipalities had more restrictive regulations.

"Other communities have resisted growth," Walsh said. "They feel they are protecting themselves. I feel they are hurting themselves. Concord hasn't done that. (Steeplegate Mall) was about 500,000 square feet. Ten years ago, about half of it was vacant. Now, there is well over one million square feet of retail space out there."

Initially, there were concerns the mall could take shoppers out of the city's downtown district. While some stores, such as Sears, did leave downtown for the mall, the downtown still has a large number of locally owned smaller, boutique and specialty shops, ranging from comic-book sales to gourmet food.

They include Butter's Fine Food and Wine, owned by Keith Dickey, who was an investment banker in Manhattan until he opened up shop on Main Street in Concord in 2006. He said the mall doesn't have a gourmet-food store that he sees as direct competition.

His business is located in a historic, 1870s brick building with original tin ceilings, which was restored after previously serving as home to the local Radio Shack.

"This is a lovely Main Street and I really want it to do well," Dickey said. "It's beautiful, architecturally. There is no reason it can't be a classic Main Street. I live in Concord. It's fantastic -- a wonderful community."

AUGUSTA NEEDS PARTNERS

Augusta has some well-kept, even beautiful architecture downtown, too. A look up while walking on Water Street reveals intricately detailed stone and brick facades.

While many strong retail businesses remain a stalwart presence downtown, many of the buildings are mostly office space. Only a few contain apartments on their upper floors.

Augusta Development Director Michael Duguay said about 9,500 people work in the downtown district of Augusta.

"But there are very few opportunities, until recently, to live downtown," Duguay said.

More residents, Katz said, would help bring vibrancy to a downtown, especially after 5 p.m., when most offices close for the night. And more residents would also help bring more retail downtown, as they could be potential customers.

He suggested attracting students from the relatively nearby University of Maine at Augusta campus could be a great way to bring residents and life downtown.

"One natural partner in downtown housing should be UMA," Katz said. "We'd like to see young people, talented artists, musicians, living downtown. It turns out we have them here already (at UMA). There is a real natural synergy there we'd love to work on."

Concord resident Ken Hart, a business consultant and coach of the local Capital City Vipers, a team of 9- to 12-year-olds that won the Pop Warner New Hampshire state championships, has noticed the growth over the last decade.

"It's grown, people are trying to work toward excellence, a lot of good people," he said at a Concord City Council meeting at which the youth football team, which one of he and his wife's four children plays for, was formally recognized by the city. "Downtown seems to be doing OK. Especially from January to July, when it's extremely busy. They're putting the money and time into it."

STATEHOUSE A DOWNTOWN DRAW

The city's downtown is busiest when the state Legislature is in session, because the state capital is located nearly in the center of the city's downtown.

"Downtown, the statehouse is the focal point," said Caitlin Daniuk, public information administrator for state, and a former state representative. "Revenues here skyrocket. A lot of people's livelihoods are based on the fact the Legislature is here."

Indeed, many agree the downtown is doing well because the statehouse, and the state workers, tourists and other visitors it draws, is there.

"We have the added advantage of being the state capital," said Valerie Blake, vice president of the Greater Concord Chamber of Commerce. "The population doubles. It brings people downtown, which supports restaurants and stores."

Aspell noted being the state capital has other advantages. He recalled a recent incident when a holiday tree fell over on Main Street and he called the governor, at home, because he knew the state had a crane, but the city didn't. And, whenever legislation is being considered that could impact the city, officials and residents have easy access to convey their stance on issues to state leaders.

Additionally, locals said, being the state capital gives a place a certain cache with tourists and others. Not that being the state capital is all good, all the time.

CAPITAL CONCERNS

"That gold dome is probably the best marketing tool we have," Walsh said. "It's a bit of give and take. It's far more advantageous than not. Everyone downtown can trace some part of their business to the statehouse being here."

"But being the state capital cuts both ways," he said. "We have a lot of tax-exempt properties and an extra demand for services."

Like in Augusta and many other state capitals, Concord has to deal with playing host to large state buildings and other properties, none of which are taxable.

The state does pay an annual "fire and municipal services aid" fee to Concord, projected to be $125,000 for 2008, said Concord Finance Director James Howard.

However, with an estimated more than $450 million in state property in Concord, that payment is a tiny fraction of what the state would have to pay Concord if it was not tax-exempt. At Concord's total city, county and school tax rate of $19.63, the state's property could be taxed at nearly $9 million if it were not tax-exempt.

The city of Augusta does not receive payments in lieu of taxes from Maine state government. However, the state does lease and rent office and other space in Augusta. So the city does get revenue indirectly from the state, as the owners of that rented and leased space do pay property taxes to the city.

Finding a place to park downtown when the Legislature is in session can be challenging in Concord, too.

"Some get a little frustrated with parking here," Daniuk said.

Aspell, however, believes the city has addressed what was once a large parking shortage downtown by adding parking spaces.

COMMON GROUND

The city's most recent investment in parking, and its downtown, is Capital Commons. It is meant to provide more than just parking to the southern end of Concord's downtown.

Capital Commons includes a six-story office and retail building accompanied by a 516-space parking garage that opened last year.

The site and former 60,000-square-foot building there had been vacant since Sears moved to the Steeplegate Mall in 1990. The city, in an effort to spur development in that end of downtown, spent about $16 million to knock the old building down, ready the site, and build the garage. A private developer built the accompanying, modern-looking glass and steel, 102,000- square-foot office and retail mixed-use building.

The basement of the building contains a Red River Theatre. Other tenants include two law firms, a financial adviser and a first-floor bank. However, about 25,000 square feet of office space remains unfilled, as does space reserved for a restaurant location in the building. Numerous parking spaces also go unfilled in the garage on a regular basis, local residents said.

"It was a derelict site in downtown Concord," Walsh said of the joint public-private project. "We ripped it down and put a $16 million investment into it, to develop the site and encourage economic development in the area, to trigger redevelopment on the south end of Main Street."

BEYOND INFRASTRUCTURE

Augusta, too, has invested in increased parking in its downtown.

In 2004, the city built a two-story, $2.75 million, 160-space parking garage off Dickman Street, just above the central part of downtown.

Augusta Mayor Roger Katz noted the city's downtown infrastructure is in pretty good shape thanks to recent investments such as the parking garage and a grant program helping downtown building owners improve their building facades.

Augusta's downtown still needs investments in things other than its infrastructure, Katz said.

"Most of our past efforts so far aimed at infrastructure," Katz said. "As far as infrastructure, we're in very good shape. Parking is in good shape, most building facades are in good shape... In some ways that was really the heavy lifting."

"But there isn't confidence in our community about investing downtown," he said. "We need to do something to show the business community we're serious about our riverfront and downtown."

He's proposed $500,000 worth of projects aimed at improving downtown. They include lighting Memorial Bridge with decorative lights, providing wireless Internet service downtown and improving signage throughout the city, directing people to its historic downtown.

Katz recently told members of the Kennebec Valley Chamber of Commerce the city needs the business community's help with the investments he believes are necessary to revitalize the city's riverfront downtown.

PROTECTION AMID DEVELOPMENT

Concord also has made investments to ensure some parts of the city don't get developed.

Aspell said 27 percent of the city is protected from development, either through conservation easements with landowners or through the outright purchase of land by the city. Three years ago, the city approved a $5 million bond for open space acquisition, a fund that has been active but still has about $4 million in the bank.

"One of our plans is, within a five-minute walk, you can get to a hiking trail," Aspell said. "And we're pretty close to that right now.'

Carlos Baia, deputy city manager for development, recently moved to Concord from Florida. He said the city's mix of natural environment and vibrant economy were among the key factors that drew him to Concord.

"What attracted us to the city was the vitality of it being a state capital and its quality of life," Baia said. "It's a great mix of economy and conservation. We have all this open space but we still have a lot of areas where the city is encouraging and promoting (commercial) tenants. There is a buzz around Concord."

Former Mayor Michael Donovan, who did not seek re-election after serving six years as mayor and several years before that as a city councilor, told city councilors at his last meeting he hopes Concord's recent momentum can continue.

"We live in a great community, with a solid economic base, a good school system," Donovan said. "We have an attractive downtown and a beautiful natural environment surrounding us. Our challenge is seeing that it stays that way"

Keith Edwards -- 621-5647

kedwards@centralmaine.com