by David Dahlbacka in All Ages, Assembly Square, Beat Reporter, City Finances, Development and Zoning, Environment and Open Space, Events, Orange Line
Posted on May 1, 2011 at 3:34 pm
Last Modified on May 3, 2011 at 10:46 am
| May 2, 2011 | ||
| 7:00 pm | to | 10:00 pm |
| May 3, 2011 | ||
| 7:00 pm | to | 10:00 pm |
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Special BOA Meeting (1) on Assembly Row DIF Bond Issue
Mon. May 2 7:00 – 10:00 PM
Tues. May 3 7:00 – 10:00 PM
Somerville City Hall
Aldermanic Chamber
93 Highland Ave.
Somerville MA (map)
These are two back-to-back meetings being held under Section 24 of the City Charter to discuss “Matters related to the $25,750,000 Assembly Square DIF Appropriation and Bond.”
This is the final discussion and vote on the DIF bond issue. The City should issue these bonds only with a signed commitment to the “best effort” of Federal Realty to bring R&D/office into Assembly Square.
For more information, see Assembly Row District Improvement Financing Program.
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E-mail from David Dahlbacka to Board of Aldermen, 5/1/11:
Re: Assembly Row DIF bond issue
Dear Aldermen:
This note is with regard to the Assembly Row DIF bond issue, which is coming up for discussion and vote at the special BOA meetings scheduled May 2 and 3, 2011 at 7 PM in the Aldermanic Chambers at City Hall. Shortly thereafter, on May 4, the Assembly Square Orange Line will come before the Massachusetts Department of Transportation Board as item #8 (“Request of MassDOT Legal and Planning Departments to authorize the execution of a Public Funding Agreement for the construction of the Assembly Square Station on the Orange Line”).
The direction being taken by the development in the DIF area itself — residential and retail — is enough to pay back the DIF bonds, but it is inadequate to provide the tax revenue Somerville needs to sustain its future. What is needed is high-value R&D and office development. The Assembly Square Orange Line T-Stop is necessary for such development, and according to the agreement among the State, City, and Federal Realty, the Assembly Row DIF bond issue is necessary for the Assembly Square Orange Line T-Stop. I therefore support the Assembly Row DIF bond issue, with the following reservation:
By itself, the Assembly Square T-Stop is not sufficient for high-value development in Assembly Square. I therefore ask that the Board of Aldermen issue the DIF bonds only with a signed agreement from Federal Realty to give its “best effort,” in partnership with the City, to find high-value R&D/office tenants for the rest of the site. Not “reasonable effort,” not “if possible,” not “if the market allows,” but “best effort.” Anything less than full commitment is likely to give us more of the same, which is inadequate for Somerville’s needs now and in the future.
Thank you for your hard work on this issue.
Sincerely,
David Dahlbacka
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David, what difference would such a signed agreement make, assuming that language such as “best effort” won’t be legally enforceable?
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“Best effort” is strong language. People who know about such things believe it would be legally enforceable (of course, Somerville would have to summon the political will to take them to court — always a problem).
The argument would be over whether Federal Realty had tried hard enough. Bottom line: FRIT couldn’t just kick back in the Lay-Z-Boy, shovel more residential development into Assembly Square, and say “the market made us do it” without producing solid evidence of trying to do better.
One good thing about this requirement is that it’s in FRIT’s long-term interest to put in R&D/office. Lots of money to be made there. Furthermore, once the T-Stop is in, the landscape changes. FRIT and the City would no longer be selling a future based on a transit project that hasn’t happened and could be canceled; they will be selling a future based on actual iron and concrete. That’s a big difference.
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What “solid evidence” would prove FRIT was making a “best effort”? And what would distinguish that from a “reasonable effort”?
Couldn’t the city better control the types of development through zoning ordinances – so as to stipulate the ratio of residential to office/R&D?
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Ordinances stipulating the ratio of residential to R&D/office are what I’d prefer, but that’s not happening, and is highly unlikely to happen. This is not Cambridge.
I believe my friends who tell me that if the Orange Line T-Stop doesn’t go through, Assembly Square will dead for another generation. Therefore we have to be all in, or out.
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Why are zoning ordinances out of the question if the type of development is so critical to the viability of our investment?
Why would an agreement for vaguely defined “best efforts” be more palatable than a zoning ordinance?
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A friend tells me that “best efforts” is a fairly strong legal term, and that best-efforts obligations may be hard to enforce, but they are also hard for companies to defend.
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How can a legal term that is hard to enforce or defend be considered strong?
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Don’t you think that FRIT will naturally do everything humanly possible to attract high-value tenants to Assembly Square? I cannot fathom how their commitment to this project is even being questioned.
They’ve invested over one hundred million dollars over more than ten years to get to this point. Can you imagine how badly they need this project to succeed in order to justify this kind of investment to its investors?
Some folks in Somerville seem to be so afraid of getting screwed that they cannot recognize that FRIT’s interests and Somerville’s interests are very closely aligned.
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John, no doubt FRIT will try its best to attract tenants. The question is whether those developments will provide the necessary commercial tax revenue the city depends on. It appears office/R&D would be better for the city than residential, but FRIT is likely to go for what’s most profitable for them rather than what’s best for the city, and the two things might not align closely at all.
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That doesn’t make sense. Office and R&D space is dramatically more profitable and therefore valuable as compared to residential (condos or rentals). Ignoring the difference in property tax rates (which is substantial), FRIT wants to pay a lot in property taxes because that means it owns really valuable buildings. Office and R&D users pay a lot more money for the same amount of space compared to a residential renter, and they sign multi-year contracts for the privilege. My company just relocated from Cambridge to Fort Point Channel because we couldn’t find low enough office rents for less than five years (we’re growing and will need to expand again). If I was FRIT, I’d want the whole place to be office space, but of course that would never work without a T stop nearby. It seems to me FRIT’s best outcome is our best outcome, really valuable buildings paying lots of taxes to us.
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John, if office/R&D is more profitable, then why does the initial plan for the DIF at Assembly Row include so much residential?
Furthermore, if both FRIT and the city want office/R&D, then there should be no opposition to rezoning the area that way, right?
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You have to have all types of uses to make it a mixed use project and to be successful. Residential is low-hanging fruit.
Nothing wrong with the rezoning I think. I guess the only risk would be that if no company wants to occupy space there, Somerville gets nothing at all. Developers build housing without tenants all the time, but most office developers have to have a tenant signed up before they even start to build.
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The Assembly Row DIF bond issue was voted through 9 to 1, 1 absent. The one opposing vote was Alderman Gewirtz, who stated that the developers were offering no guarantees that they would put any R&D on the site, that all they were really committed to were the shells of three buildings, and furthermore that they had originally promised to pay for the infrastructure and were going back on their promise.
I spoke afterwards with Don Briggs of Federal Realty, who said they had talked with Tufts, MIT, and other possible office/R&D tenants. They had not apparently talked with any possible partners who specialized in R&D (as Avalon Bay specialized in residential). He also said something to the effect that hopefully development would be “balanced.” (Which could, of course, mean a couple of token office buildings in a sea of residential. A fine neighborhood, but no source of tax revenue.)
According to Briggs, the T-Stop started out to bid today, on the signature of the Mayor, MassDOT, and FRIT on the tri-party agreement.
Anybody out there who knows a company looking for a central location, near the Orange Line, near Tufts, MIT, and downtown Boston, now’s the time to speak up.
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Thanks David for the update. Interesting that the Orange Line T stop went out for bid before this vote. For some reason I thought this vote was needed to send the T stop out for bid.
Alderman Gewirtz the sole dissenter. Wow. I am sure she must think that was a savvy political move for her given the upcoming re-election bid, but it will be interesting to see how she campaigns on the issue. There would be a little more strength to her argument if at least one other alderman agreed with her.
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Although not contingent on the vote, the timing of the bid release is certainly suspect as it probably put a “this is really happening” cloud over the heads of the Board of Alderman.
Alderman Gewirtz was in objection to the details of the covenant from the very beginning (the initial covenant was signed a few years ago) noting that there were little assurances made by Federal Realty, especially surrounding what R&D tenants they were placing in Assembly (if any), the warranty lengths that they would honor, and the fact that FRIT initially signed a covenant agreeing to fund the infrastructure, but stepped back with support from Somerville-so her vote last night was not surprising.
How will she campaign it? She voiced her concerns and stood by her vote admitting it was difficult to be the sole dissenter. Her constituents will understand and, truth be told, they mobilize on Election Day and vote for her (and have done so since 2005). I think she needs a lot more than Assembly to deem her unworthy of being reelected. Your thoughts, John?
Her concerns were echoed by Alderman At Large, Bill White, but weren’t deemed important enough [to him] to sway his vote. Other Aldermen expressed concerns over jobs, but were reassured when FRIT agreed to have a member of the Board at the table when contractors were being interviewed.
The vote was passed and now we wait to see if FRIT actually provides the infrastructure that it has promised and is so desperately needed to pay this debt off. Risk or opportunity? It’s anyone’s guess.
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Agreed, Alderman Gewirtz is well protected. But not all of her constituents will understand- I sure don’t.
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One thing I’ve been thinking is that we citizens can’t depend on a developer to provide what we need. And in my opinion, we can’t depend on our elected representatives either. What to do?
Well, the usual thing to do is sit around and gripe about our elected representatives. Come election time, we vote out the ignoramuses and put in another set of ignoramuses. Mind you, all this is entertaining, but it doesn’t get Somerville many jobs or much tax revenue.
How about this? There’s this new-fangled thing called “the Internet”. People from all over the state, heck, all over the world look at it, every day. Now just suppose we citizens decided we were going to find a tenant for Assembly Square that would be what we wanted. R&D, check. Lots of jobs, check. Lots of tax revenue, check. Good personnel policies, check. Local hiring, check.
How would we use the Internet to find one of these for Somerville? Any ideas?
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Let’s just face the facts. Alderman Gewirtz is just the smartest, most gutsy, most worldly, most business savy, independent, progressive and willing to do what’s best for the city Alderman there is.
Or she is so stuck in her own little world that she can’t see the forest for the trees and should step away from the podium and gavel she so loves and covets.
I go with the later.
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