State Hospital Project Is Finally Moving Off the Drawing Board

Efforts to redevelop the site of the former Northampton State Hospital are finally moving off the drawing board after more than two decades of seemingly endless talk, studies, and bureaucratic wrangling. The signing of an anchor commercial tenant - the Kollmorgen Electro-Optical Division - is expected to give the project needed momentum and credibility.

Gaining Ground

The arched portico of Old Main, the massive gothic centerpiece of the former Northampton State Hospital, fell victim to the elements this summer, collapsing under its own weight into a pile of loose masonry, twisted girders, and shingles.

The collapse served as yet another blow to preservationists who want to save the 150-year-old structure from the wrecking ball. Meanwhile, the pile of rubble - now cordoned off by a chain link fence - serves as a grim reminder of just how long Northampton has had to wait for some real progress in the effort to redevelop the 124-acre hospital grounds.

Now, it appears, the wait is all but over. Indeed, the project that has been seemingly buried under a mountain of bureaucracy is seeing signs of light.

In June, the state Executive Office of Environmental Affairs gave the green light under the Massachusetts Environmental Protection Act for phase one of the redevelopment project to begin, allowing for the development of up to 109 units of housing and 152,000 square feet of commercial space. Meanwhile, a purchase-and-sale agreement to convey the campus and buildings - in as-is condition, for $1 - from the state Division of Capital Asset Management to the developers is scheduled for Nov. 21, with the first demolition of the grounds - which will include the dismantling of the hulking old power plant - set to follow shortly thereafter.

Also, the Northampton Planning Board recently approved the city's first-ever "planned village zone" for the entire complex and issued a special permit for the project. Subdivision approvals still must be sought.

And in June came the stunning announcement that a long-sought anchor business had been found that would at last, in the words of Gerald Joseph, state director of The Community Builders (TCB), co-developer of the project, "jump-start commercial development" on what is known as Hospital Hill.

As it turned out, the economic white knight comes from across town. The Kollmorgen Electro-Optical Division, a high-tech manufacturer of periscopes and sophisticated electronic sighting and tracking devices, said it would relocate its operations and 230 employees from its aging plant on King Street to a seven-acre site on Earle Street on the south side of the state hospital campus. In so doing, it will free up 95,000 square feet of valuable real estate for retail at its current location.

The Kollmorgen move, which is planned but not yet official, is a double-dose of good news for the city. First, it offers strong hope that a major employer, one that has been making noise about leaving the city, will be staying put. Meanwhile, it provides the needed momentum that everyone aligned with the project has been looking for.

"Having Kollmorgen as a commercial anchor will give the project a lot of credibility and make it a very real destination for other businesses," said David Webster, project manager for MassDevelopment, the state's quasi-public redevelopment authority, which is the other co-developer of the project.

BusinessWest looks this month at the many signs of progress at a development initiative that has been a quarter-century in the making.

Moving Experience

Planning for and debate over the redevelopment of the main campus of the state hospital and its small city's worth of 70 buildings totaling 880,000 square feet of enclosed space has been going on since the downsizing of the hospital began in the late '70s. The first re-use plan for the property was issued in 1982. The institution, which at its peak employed more than 500 people caring for more than 2,000 patients, was closed for good in 1993. A broadly representative Citizens Advisory Committee was formed a year later and continues to meet.

The master plan for the site, adopted in 1999, envisions a 'mixed-use urban village' with an eventual full buildout of 207 units of housing (half market rate and half below-market, and about a 50-50 mix of rental and single-family units) and 476,000 square feet of commercial development on a combination of virgin land, cleared land, and rehabilitated buildings. About a fifth of the 880,000 square feet of space currently standing is expected to be rehabilitated, while the rest (including Old Main, unless a miracle occurs) will be demolished.

Commercial development is only one of various over-arching goals for redevelopment of the property - along with affordable housing, historic preservation, and open-space protection - but from the perspective of many city leaders, it is the most critical element because it promises to boost the city's rather anemic tax base while putting only a minimal additional burden on the beleaguered city budget. That's why Kollmorgen's interest in the site is such an important development.

"One of the objectives of the Hospital Hill development was to create jobs," said Joseph, who noted that in this case the jobs aren't new, but they are preserved. "The city has seen companies move out when they've reached the point where they needed more space."

Kollmorgen has been pressed for space on King Street for some time now and has been exploring a number of expansion alternatives. Staying in Northampton has been a stated priority, but viable options are few, and the hospital grounds are considered the company's only hope of keeping a Northampton mailing address, said Teri Anderson, the city's economic development coordinator.

Michael Wall, vice president of operations for Kollmorgen, said the company expects to make a final decision on relocating to the state hospital grounds early next year at the earliest. The company remains committed to moving to the hospital site, and the city is doing everything it can to make that move happen, but there are many planning and regulatory "wickets," as he called them, still to clear.

Indeed, making the move will be a complicated maneuver. In a straight cashless "swap" brokered by city Realtor Patrick Goggins, commercial developer Pearson Systems Inc. of West Springfield has agreed to build Kollmorgen a new, two-story, 100,000-square-foot building on Earle Street on the state hospital grounds, in exchange for Kollmorgen's King Street building and the 5.1-acre site it sits on, the choicest retail property in the city.

This so-called 'tax-free exchange,' also known as a 'like kind exchange,' allowable under title 1031 of the federal tax code, saves Kollmorgen from having to pay capital gains on the King Street property, currently assessed at $3.1 million, a lot more than when the factory was first built in the 1950s.

Before the deal can be finalized, Pearson must get two site plans approved by the city - one for redevelopment of Kollmorgen's King Street property as a new retail shopping center, and the other for Kollmorgen's proposed facility on the hospital grounds.

City officials indicate that Pearson is focusing on King Street first. The company has been talking with the city planning office about submitting a plan for the King Street site that would be in conformity with new zoning regulations governing development on that road. Those regulations - geared toward giving the city's main commercial artery a more urban appearance - set a 90,000-square-foot limit on building size, offer incentives for the construction of multi-story buildings placed close to the street, with parking in the rear, and require a minimum amount of open space to be set aside.

This is in contrast to the typical shopping center design where single-story buildings are located at the back of the site and parking areas are located in front.

As for the hospital site and its commercial development component, officials say Kollmorgen's arrival will give potential tenants that still have doubts about the property pause to look at the site in another light.

"Kollmorgan will set the tone," said Anderson. "This is a stable, high-tech manufacturer that has been in the city for years. It is also a clean industry with high-paying jobs."

Addressing a Need

While pieces of the puzzle are coming together on the commercial-development aspect of the hospital project, real progress is also being made on the residential component of the initiative.

TCB, which specializes in affordable housing projects, has been putting together complicated housing-financing packages using varying combinations of government subsidies, low-interest bank loans, federal tax credits, and other mechanisms to bring the price of at least half the new units into the range of affordability.

TCB recently named Goggins to do the marketing of a 27-unit housing subdivision (six of the units will be affordable) that will be developed a mile west of the main campus on the hospital's outlying, 39-acre Ice Pond site.

On the main campus, just a little south of Old Main, TCB has begun the grunt work to put together a $10 million project to create 52 units of rental housing, 19 new townhouses, and 33 one-, two-, and three-bedroom rehab apartments to be located in the former nurses' dormitory and so-called "south employees residence." Ten of the apartments will be set aside for clients of the state Department of Mental Health, thus honoring another of the city's stated goals of the redevelopment effort - to apportion 15% of new housing on the former hospital grounds for DMH or former DMH clients.

Joseph said TCB has received a $313,000 federal grant and is about to close on a low-interest bank loan to subsidize one-third of the 52 units of combined new and rehab construction on the main campus.

He told BusinessWest that while the commercial component of the project provides jobs, the residential aspect of the plan will provide the capital to drive the larger initiative.

"The strongest market is for housing," he said. "Revenue from residential development will help underwrite the commercial development."

Grounds for Optimism

Those working on the development of the old hospital grounds still use the future tense to describe the anticipated components of the project - as they have for more than 20 years now.

But, finally, talk is evolving into action. By next spring, construction of housing units and a new plant for Kollmorgen could be underway. Those will be welcome developments in a city that has waited patiently for this historic site to be put to productive use.

Time may be running out on Old Main, but as that book closes, new chapters in the history of Hospital Hill are being written.

This article was published by BusinessWest on Wednesday, December 7th 2005 and NOT owned by nor affiliated with opacity.us, but are recorded here solely for educational use. The photographs featured in the article are randomly selected from the Northampton State Hospital galleries on opacity.us unless noted otherwise; they may not directly relate to the article subject matter except for the site location - any other relation is purely coincidental.