THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING
< Back to front page Text size +

Assembly Square a $25 million roll of the dice

Posted by Marcia Dick  April 15, 2011 10:05 AM

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

newjoe.jpg

Globe staff file photo

Just after being elected mayor in 2003, Joe Curtatone at a boarded-up building in Assembly Square.

Confusion, tension, and frustration filled Somerville City Hall Wednesday at a nearly four-hour meeting as the aldermen's Finance Committee debated whether to authorize a bond that could be the key - or the stopping block- for the long-planned development at Assembly Square.

Under the new proposal, real estate developer Federal Realty Investment Trust would build three blocks of the planned 10-block, 56-acre "Assembly Row" on the Mystic River for a total of 405 housing units, with a hotel to follow. Simultaneously, the state would build the Orange Line stop. The city would fund new streets and a storm water drainage system, necessary infrastructure in the underdeveloped area, which is currently a parking lot, crumbling buildings, and scrubby field.

Certainly it would cost a lot of money - $25 million, to be paid off until 2041 at about $1.6 million a year. (Somerville's FY 2011 budget is just under $180 million.) The financing plan uses new tax revenues from those improved blocks to pay back the loan.

But at times, the discussion raised the question of whether cautious aldermen wanted change without risk.

"We're going to invest $25 million of taxpayer money in hopes and dreams," Alderwoman Rebekah Gewirtz said.

Anne Thomas of the city's legal office reviewed an agreement that would cover the worst-case scenarios. If Federal Realty and its subcontractor, Avalon Bay, don't get the three buildings to the "core and shell" stage within three years, they have to pay the city back.

If the developers fold or back out after that, city assessments indicate the improved land already would be valuable enough to cover the yearly debt load.

And if federal funds come through - Representative Mike Capuano secured a federal earmark to cover these costs but the bill hasn't yet been funded - the city would be reimbursed up to $12 million.

Pages of financial stats didn't satisfy the critics, though. The shadow of NorthPoint hung over the room, exacerbated by Ikea's delay in starting construction in Assembly Square.

Gewirtz and fellow Aldermen Bill White - typically the most vocal skeptics on the board - questioned the methodology behind the city's assessment of the increase in property values.

Chief assessor Marc Levye said he used projections based on 22 years of past property values.

"Are these industry best practices?" asked Alderman Bruce Desmond, pointing out that no projection is a promise.

"They're not a guarantee," Levye said. "They are our best estimate," using "very cautious and conservative numbers." They didn't factor in, for instance, the fact that the buildings will use high-end, green materials and be on the waterfront.

The definition of "core and shell" caused particular consternation. Did that mean an ugly, useless frame or a nearly complete building ready for retail tenant build-out?

Don Briggs, president of Federal Realty Boston, said the buildings would be 75 point done at the core and shell point, and that Avalon Bay in fact planned to have one floor in each building completely done.

Gewirtz insisted vacant core-and-shell buildings would be an eyesore. It's not the same as a "bright, beautiful" building, she said.

At this, the businessmen in the audience shifted and murmured. "Yes it is, and it'll have one floor done," muttered Tom Bent, business owner and the city's representative on the powerful Boston Region Metropolitan Planning Organization, which funnels state and federal dollars to municipal projects. Briggs and his two colleagues whispered to each other.

Mayor Joe Curtatone stepped in to make his case. "This is very safe," he said. "If they don't build they'll hold us harmless." As for Ikea, "There have been no broken promises," he said. "Ikea has paid their permits in advance, nonrefundable. ... they can't build anyway until the infrastructure's completed."

The key point, he said, is that the state won't proceed on the Orange Line - which is ready to go out to bid - without the city's $25 million. "The T station will not be built if we don't put our money down. Nobody's going to build," Curtatone said.

"I want to know who at the state is saying we have to put up the money," Gewirtz persisted.

In this economy, if the city paying nothing,  "It's not going to happen," Curtatone said. The City of Quincy recently voted to bond $227 million to revitalize Quincy Center in partnership with real estate developer Street-Works.

Briggs, of Federal Realty, stood up. "We've invested over $110 million so far," he said. "We've reached a breaking point and we cannot afford to pick up the tab for 100 percent of it." He sat down.

At that, Gewirtz suggested calling Federal Realty's bluff, arguing they wouldn't walk away from $110 million.

Curtatone said, "I am asking you to take a risk ... a smart, calculated risk."

By the end of the discussion, the tide of aldermanic opinion seemed possibly to have turned.  "I understand where Alderman Gewirtz is coming from but … I look at this $25 million as an investment by the city," Desmond said. "No one's ever made this investment in Somerville for us." Indeed; if anyone had, that area would already have storm drains.

Bent elaborated on that outside the chambers. Near his office, 200 Inner Belt sat at the core and shell stage for several years, he said, and it didn't hurt surrounding businesses. Now Harvard rents space there.

Getting the state to pony up for the Orange Line took "a lot of maneuvering," Bent said. The MPO OK’d it with the understanding that "the City of Somerville was finally going to put up some money. ... They're all saying the same thing. 'Somerville, you've been talking about this for 20 years.' " He sighed. "All these other entities believe in us … do we believe in us?"

The committee decided to continue the discussion. The record will remain open for public comments through next Friday. Federal Realty's website has a want ad for an Assembly Square marketing chief. Responsibilities include "media invite for grand opening."

Contact Danielle at somervillescene@gmail.com.

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article