Harbor Place, one of the largest development projects ever proposed for downtown, is poised to spark an urban renaissance along the Merrimack River.
A tired, old city block, anchored by the long-vacant Woolworth building at the corner of Main and Merrimack streets, will come tumbling down in the fall.
In its place will rise a five-story office building, anchored by a satellite campus of the University of Massachusetts Lowell; an 80-unit apartment building; new shops and restaurants; and a boardwalk to create new access to the river.
The project will be funded with a mix of private and public funds: $32 million in construction loans and equity financing from Bank of America; $19.3 million in state MassWorks grants to fund infrastructure improvements; and $1.2 million in tax breaks from the city.
Governor Deval Patrick, at a ceremonial ground-breaking last week, said Harbor Place is an example of progress that can be made when public dollars are used to lure private investment.
“The partnership is so strong here,” Patrick said in a brief interview after the ceremony Tuesday. “What we’ve been trying to do with MassWorks grants, and other state programs, is to catalyze private investment and job creation as much as possible. This is, particularly, a powerful example of that.”
Later on Tuesday, the Haverhill City Council approved a tax break, totaling $1.2 million over 12 years.
The tax break will apply only to the increased value of the development. The city will still collect $95,000, plus a 2.5 percent annual increase, that it now collects from the five properties occupying the block along Merrimack Street, said Mayor James Fiorentini.
“The community will always get the underlying taxes,” Fiorentini told councilors. “This is a bigger [tax break] than we’ve ever done in the history of the city. This is, in my opinion, the best project ever presented to the city in the past 25 to 50 years.”
The project is a joint venture of the Greater Haverhill Foundation, a nonprofit business group, and the Planning Office for Urban Affairs, a nonprofit housing developer affiliated with the Archdiocese of Boston.
Patrick announced a $10.3 million MassWorks grant for the project. That will boost the state’s total investment to $19.3 million, according to the governor’s office.
“It’s very exciting, but the money was not easy to get,” said Representative Brian S. Dempsey, a Haverhill Democrat and chairman of the powerful House Ways and Means Committee, which writes the state budget. “To the governor’s credit, he wanted to make absolutely certain that the infrastructure investment will lead to a transformative development.”
MassWorks grants are available to fund infrastructure improvements for economic development projects in cities and towns. Haverhill has been trying for decades to redevelop the old Woolworth site, which has been vacant since the store closed 45 years ago.
The building, which is next to the river, had no parking. The council also approved an agreement to sell Harbor Place 182 parking permits for a municipal parking garage across from the development on Merrimack Street.
“The reason the building was vacant wasn’t that people didn’t try. It was because there was no parking,” Fiorentini said. “This [development] has all of the potential to transform Haverhill. But that . . . could only happen with public infrastructure investment.”
Some of the MassWorks funding already has resulted in progress. A $4 million grant awarded in 2012 was used to raise the height of a flood wall along the river by two feet to comply with a federal mandate.
Most of the state money will be used to create public access to the river by constructing a board walk, public paths, and other infrastructure.
“We are reclaiming the river,” Lisa B. Alberghini, president of the Planning Office for Urban Affairs, said at the ground-breaking. “We’re bringing commerce back downtown, educational, residential, retail, and recreational opportunities.”
Along with UMass Lowell, Haverhill Community Television and Pentucket Bank have agreed to lease space in the new building.
The bank will lease the fourth floor for its operations center there, chief executive officer Scott D. Cote said.
“We are running out of space, so when this opportunity came up, we thought it was natural for us to reinvest in downtown,” he said.
Cote said the bank will tear down its current operations building, located across from the proposed Harbor Place, to create parking for about 20 vehicles.
The residential component of Harbor Place will include space for retail shops and restaurants on its first floor, with 80 apartments above.
Thirty of the units will be market-rate housing. The other 50 will be so called “workforce housing,” affordable rents for working people.
“The rents will be low, below market,” Alberghini said. “But there will no subsidy involved. People will have to pay the rent. By definition, you have to have a job to pay that.”