In the last year, General Growth Properties has failed to properly maintain Faneuil Hall Marketplace in accordance with the lease, says the Boston Redevelopment Authority.
(John Tlumacki/ Globe Staff/ File 2007)
BRA: Faneuil Hall leaseholder in default on several provisions
General Growth Properties is given 30 days to meet obligations or face action
In the last year, General Growth Properties has failed to properly maintain Faneuil Hall Marketplace in accordance with the lease, says the Boston Redevelopment Authority.
(John Tlumacki/ Globe Staff/ File 2007)
The Boston Redevelopment Authority is accusing
Otherwise, General Growth, which is trying to sell the lease to pay off its debt, will be in default, according to a copy of the letter obtained by the Globe, and the city could try to void the lease.
The City of Boston owns Faneuil Hall Marketplace, one of its top tourist attractions, and leases it to General Growth, the second-largest US mall operator.
Over the past year, General Growth has failed to properly maintain the marketplace in accordance with the lease, including providing insufficient lighting, security staffing, snow removal, and leak repairs, according to the March 3 letter from BRA director John Palmieri. Marketplace tenants were the victims of at least two armed robberies in December, and a customer was allegedly injured in a fall because of inadequate snow removal, the letter stated.
The Chicago real estate investment trust, which owns the Natick Collection as well, also has violated the lease by failing to provide the city proof of general public liability insurance and other insurance requirements. The letter, addressed to General Growth's interim chief executive, Adam Metz, and the company's senior vice president of asset management, Sharon M. Polonia, also accuses General Growth of not complying with other provisions in the lease.
The city issued an ultimatum: "If the Lessee does not deliver the sworn statements and written assurances described above, the Authority shall treat such failure as an Event of Default," according to the letter.
David Keating, a spokesman for General Growth, said no one at the company has seen the city's letter and it would be inappropriate to make any comments.
Late last year, General Growth warned it may file for bankruptcy and planned to sell off malls as it struggles to refinance nearly $1 billion in debt. About six potential buyers have toured Faneuil Hall in recent weeks, according to several merchants, and the company may be nearing a deal. One local official said interested buyers have included Westfield Group,
Faneuil Hall Marketplace consists of four buildings owned by the city, including Quincy, North, and South markets. The city owns and runs the fourth building, Faneuil Hall, once a historical venue for some of the nation's most prominent orators.
General Growth began leasing the property from the city in 2004 after buying the previous manager, and it is offering to sell the rights to operate Faneuil Hall Marketplace, along with two other well-known tourist destinations, South Street Seaport in Manhattan and Harborplace & the Gallery on Baltimore's Inner Harbor.
Local merchants and Boston officials have fought for years with General Growth over the direction of Faneuil Hall with national chains replacing many local businesses.
Brenda McKenzie, the BRA's economic development director, said the city wants to make sure it has the chance to meet with potential buyers before a deal is made "so they can understand the importance of the property to the city and to hear from them what they intend to do with the property."
If the company fails to comply with demands outlined in the letter, McKenzie said, the city will consider taking legal action that could put in jeopardy General Growth's ability to sell the lease.
"The City of Boston is the ultimate landlord of this property, and it's great they're looking out for us and the future of the marketplace," said Carol Troxell of the Faneuil Hall Merchants Association.
Jenn Abelson can be reached at abelson@globe.com. 
© Copyright 2009 Globe Newspaper Company.
