Developer may alter plan for Filene's site
One idea: Add rental units
By Casey Ross, Globe Staff | May 6, 2009
Developer John Hynes is exploring yet another plan to build his stalled Filene's project, one that would reduce the cost by $250 million and add back 250 residential units to the proposed complex in Boston's Downtown Crossing.
This version is intended to make the development more attractive to lenders, who have been unwilling to fund Hynes so he can resume construction. Hynes, managing partner of Gale International, was forced to halt work on the site in November.
Since then, he has been tinkering with the components of the development, first cutting the number of floors to 32 from 39 and eliminating 150 luxury condominiums. Hynes said yesterday that the new version calls for 38 floors, about 250 rental units, and a more slender design. That would cut the cost to $450 million, from $700 million.
He emphasized, however, that he is only brainstorming and would propose a formal change only if credit markets improve and he is able to attract interest from lenders.
"All we're doing is exploring our options," Hynes said. "We're trying to find a formula that works."
Hynes is still looking for loans of at least $200 million. Currently, the large financial institutions that typically provide such loans are not lending in those amounts. Most institutions are lending less than $50 million, and few are willing to join with other banks to pool funds for a single project, because of concerns about each other's balance sheets.
That has forced Hynes and other developers to seek funding through public sources. Hynes said yesterday that he is seeking tax-exempt bonds through Boston Connects Inc., a nonprofit agency that provides government financial assistance to projects that benefit economically distressed city neighborhoods.
He has also applied for federal stimulus money the state government is distributing to commercial developers, and financial assistance from Boston officials.
"Maybe we can get $100 million from the state, another $50 million from the city, and a bank could step in and provide the missing piece," Hynes said. "We're trying to chip away at it and find something that works. This is new territory for everybody."
John Palmieri, director of the Boston Redevelopment Authority, said the city would entertain requests for assistance but has not received a formal request from Hynes, whose partner in the project is Vornado Realty Trust, a New York City investment firm.
"It's too early to predict what financial assistance we might look at," Palmieri said. "But we would keep the door open to any such proposal, based on the positive features of the plan and its economic impacts."
Casey Ross can be reached at
cross@globe.com.
