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By Paul Feely Union Leader Staff
Saying they no longer have the money to proceed with the “critical and much needed” major Manchester transportation infrastructure improvement project, city officials plan to ask aldermen next month to apply for a Tax Increment Financing (TIF) bond to cover an extra $20 million in construction costs.
Without the $20.8 million in funding expected to be generated by the TIF, the city would be required to pay back the U.S. Department of Transportation the $5 million in current reimbursements it has received and forfeit the remainder of the $25 million grant, officials said.
Construction costs associated with the project have increased from $30 million in 2021 to approximately $50 million currently, city officials said. Cost increase drivers include CSX rail acquisition fees (50% of cost increase), inflation (30%), public input design changes (15%) and cost to address site conditions (5%).
Details of the bond request are included in a presentation expected to be given by Manchester Deputy Public Works Director Owen Friend-Gray on Wednesday at a meeting of the Board of School Committee’s Finance and Facilities Committee.
TIF districts are a way to finance infrastructure construction by allocating increased revenue from property taxes toward the payment of debt. A municipality establishes a geographic district and determines the taxable value of the property within that district at the time of establishment, Friend-Gray said.
Manchester officials received word in 2021 the city would receive a $25 million Rebuilding American Infrastructure with Sustainability and Equity (RAISE) grant to transform the South Millyard area.
The third time was the charm for city officials applying for the grant, marking the first time the Queen City successfully secured funding. Manchester was the only city in New Hampshire to receive a RAISE award in 2021, and the $25 million is the most money awarded by the program to any city in the U.S.
The RAISE Manchester: Connecting Communities project includes roadway, bridge, bicycle and pedestrian infrastructure improvements at a cost of $30 million. This includes a $5 million local match, combined with the $25 million RAISE grant. All funds are to be spent by 2029.
The project is expected to include:
- A new pedestrian bridge over Granite Street connecting Commercial and South Commercial streets.
- A new road and bridge extending from South Commercial Street behind the baseball stadium over the active railroad to Elm Street.
- A new road extension on the opposite side of Elm Street, where the new bridge terminates at Gas Street, to provide an alternative connection to South Willow Street with a new bridge over the abandoned railroad corridor.
- A new pedestrian and bicycle path along the abandoned railroad corridor connecting Queen City Avenue and Elm Street.
- A new roundabout replacing the intersection and signals at the Queen City Avenue-South Willow Street intersection.
The proposed TIF district would run from Granite Street to the north to Queen City Avenue to the south, bordered by the Merrimack River to the west and Beech Street to the east.
The proposed district includes 832 parcels, representing a mix of residential (523 parcels), commercial (221) and industrial uses. Eighty-eight of the parcels are tax-exempt sites.
The total assessed value of the parcels in the proposed TIF is $652.8 million, according to public works officials.
Based on potential property values from new developments, the TIF could potentially yield $20.8 million in bonding capacity, assuming all projects are incorporated, according to Friend-Gray’s presentation.
RAISE funds must be obligated (a signed construction contract) by September 2027, with bids expected by the winter of 2026-27. Construction must be completed by September 2032.
If no additional funds are secured by fall 2026, the city would lose the full $25 million grant and be responsible for repaying federal transportation officials the $5 million already paid to the city to date.
