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Mill redevelopment in Lawrence, Lowell, Haverhill coming back strong after recession

By Katheleen Conti
Globe Staff / January 12, 2012
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When plans to turn the old Wood Mill in Lawrence into luxury condominiums fell through in 2007, city leaders held their collective breaths.

The embattled city had finally started reaping the benefits of recent mill conversion projects, including the much lauded Riverwalk office complex, and this setback had some observers wondering whether Lawrence could lose its footing at the infancy of its revitalization.

Developer Robert Ansin of MassInnovation was suddenly unable to get financing, said Shaw Rosen, the company’s chief operating officer. It was a precursor to the looming recession that all but obliterated the construction industry and condominium market for the remainder of the decade.

Ansin didn’t give up on the project, but to keep it alive he switched from condos to rental apartments, and, most importantly, succeeded in getting the 105-year-old mill building put on the National Register of Historic Places. The move allowed him to apply for federal and state tax credits that, combined, can cover up to 40 percent of the costs of rehabilitating historic buildings. Now the 204 loft units at Monarch on the Merrimack, as the project is known, could be ready by next month, Rosen said.

These tax credits, which can be sold to institutions with large tax liabilities, such as banks, have made mill cities like Lawrence, Lowell, and Haverhill very attractive to developers capitalizing on the back-to-the-city and loft-living trends.

“It’s expensive to redevelop a mill,’’ Rosen said. “Between the National Park Service federal tax credit and the state program you can really make a dent in those costs. . . . It’s a very, very good feeling seeing it built after all the troubles and travails.’’

Mill and factory buildings that supported gateway cities like Lawrence, Lowell, and Haverhill during the industrial era are once again the key to their economic future, according to leaders in those communities.

More than 1 million square feet of former textile mill space has been or is in the process of being redeveloped in Lawrence within the last eight years, said Patrick J. Blanchette, the city’s chief economic development director. Combined, the recent mill developments are estimated to bring in more than $800,000 in additional annual tax revenue to the city, he said.

“These mills were always the engine of our economy,’’ Blanchette said. “In Lawrence, they definitely have gone through the oil change because the engines are back and full of life.’’

Rezoning mill areas in 2003 to allow for residential construction was critical for redeveloping Lawrence’s underutilized mill buildings, said Maggie Super Church, project director at Lawrence CommunityWorks, the nonprofit that developed Union Crossing, a recently completed project that includes 60 affordable apartment units in the former Southwick Mill on Island Street. The project’s second phase will include the redevelopment of nearby Duck Mill into approximately 70 apartment units with commercial space.

“Steady progress is the name of the game in Lawrence,’’ Super Church said. “None of this is easy or quick, but there is a lot of opportunity and investment in the city of Lawrence right now.’’

From 2004, when the first round of state historic rehabilitation tax credits was issued, to 2010, a combined 40 projects in Lawrence, Lowell, and Haverhill applied to receive them, according to Preservation Massachusetts, the nonprofit that led the way in drafting the original legislation.

“Before the state credit was passed in 2003, the federal credit was really underutilized, and a lot of developers didn’t think it was worth it,’’ said Preservation Massachusetts president James W. Igoe. “The whole concept of being able to do a restoration of these properties, and community revitalization, and economic stimulus - that’s happening. It’s exciting.’’

“These mill cities are the original smart growth,’’ said Andre Leroux, executive director of the Massachusetts Smart Growth Alliance. “For the first time in a long time, the real estate market is starting to blow wind into their sails. . . . Over the last 10 years, people more and more want to live in vibrant communities where they can walk around in.’’

Nowhere is that more evident than in Lowell, which is widely considered a national model of mill redevelopment. By the late 1970s, there was 5.1 million square feet of vacant mill space in downtown Lowell, according to Adam Baacke, assistant city manager and director of planning and development. Today, 80.4 percent of that has been developed.

“We think in about five years from now, we’ll have 94 percent of the mill space redeveloped and reoccupied,’’ Baacke said, adding that even during the recent recession, construction was ongoing at Lofts at Perkins Park, Lawrence Mills, and Appleton Mills. The key, he said, was the tax credits.

“It’s been valuable to Lowell on a number of levels,’’ he said. “Most importantly, it has been symbolic in changing the image of the city in a very positive way.’’

Since 2000, Lowell has netted $2.4 million in new tax revenue from the conversion of vacant buildings downtown, the majority being mills, Baacke said. And with a handful of mill projects currently or about to get underway, Baacke said the city anticipates more than $1 million in additional tax revenue. Many of those projects, including Boott Mills on John Street, are part of the 15-acre Hamilton Canal District, an $800 million initiative promoting the creation of commercial and residential development in the heart of the city. Construction on the Boott Mills rental units is scheduled to start this spring, said Larry H. Curtis, president of Boston-based WinnDevelopment Company, which took over the project after another developer’s condominium project failed.

“The old mill towns have a competitive leg up over suburban communities for several reasons. One, there’s a back-to-the-cities movement,’’ Curtis said. “Two, they have this great potential housing stock in the old mills that can be done quicker and more competitively than building in [the suburbs].’’

Like Lowell, Haverhill has transformed its downtown to allow mixed uses in old factory buildings, to the point that the area now has a 95 percent occupancy rate, said Mayor James J. Fiorentini. Most of the old shoe factories along Washington and Essex streets remained unused until around 2004 when the city rezoned the area. Shortly after taking office that year, Fiorentini held a developers’ conference to showcase the empty buildings located near the commuter rail stop and discuss various tax credit opportunities. Today, after $150 million in investments, developers have turned those factories into 500 new residential units. City officials estimate the downtown developments have brought in approximately $557,000 in new annual property tax revenue.

Fiorentini is now setting his sights on a couple of old factory buildings in the city’s Bradford neighborhood, as well as the Ocasio building on Merrimack Street, which he hopes to feature during a new developers’ conference this spring.

Dennis DiZoglio, executive director of the Merrimack Valley Planning Commission, said mill redevelopment will not be a passing fad for the cities lining the Merrimack River, as they focus not just on mill conversions, but on creating sustainable communities with ties to the past.

“In all of these communities they’re talking about riverwalks and using old abandoned rail tracks as walking trails,’’ DiZoglio said. “In the old days, they used to turn their backs to the river; they used it as the sewer system of the city. Now they’re turning around.’’

Katheleen Conti can be reached at kconti@globe.com. Follow her on Twitter @GlobeKConti.

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