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Council approves development agreement for Clare Crossing; consultant says incentives likely needed
Summary
Council adopted a development agreement for the Clare Crossing mixed-use project and accepted a Baker Tilly analysis that the project likely would not proceed without requested incentives, including a 1% CID sales tax and special benefit district financing.
The Gardner City Council voted to approve a development agreement for the Clare Crossing mixed-use project and to move forward with project incentives after a presentation from consultant Tom Kalinco of Baker Tilly.
The consultant’s analysis concluded that, given current market conditions and very high public-infrastructure costs, the project likely would not meet investor return benchmarks without the requested incentives. Kalinco said the total project cost rose from about $18.8 million in May 2024 to roughly $22.9 million because of higher public infrastructure costs and that the CID term being considered was extended from 15 to up to 22 years for reimbursement timing.
Project details presented to the council included a 58-acre site with 27.5 acres planned for commercial use, 18 acres for residential use and about 12.5 acres constrained for stormwater and infrastructure. The developer requested a community improvement district (CID) — a 1% add-on sales tax for up to 22 years to reimburse eligible costs — and a special benefit district (SBD) under which the city would issue general-obligation bonds to fund public infrastructure repayable via special assessments.
Kalnico said the consultant’s “but-for” analysis shows a without-assistance internal rate of return near 5.5%, which falls below investor benchmarks; the developer’s pro forma would require significantly higher pad-sale prices (125%–150% of original pro forma) to meet market returns without incentives. Kalnico noted the most significant challenge for the project is “the extremely high cost of public infrastructure.”
Developer counsel Bill Fleming and QTEC Rock representative Rick McConnell answered council questions about risk protections. McConnell said the development agreement includes preconditions before the city would issue special-assessment debt — for example, requiring CID formation, receipt of funds for off-site road work, and evidence (leases, land-sale contracts, letters of credit) that the special-assessment obligations can be repaid. Fleming said the developer is prepared to move in “baby steps” and that the agreement contains protections to avoid leaving the city with unpaid obligations.
The council adopted Resolution 2176 approving the execution and delivery of the development agreement for Clare Crossing (voting recorded as yes by members present).
