[ARCHIVED] Harbor Garage Redevelopment | 70 East India Row | Waterfront | Downtown

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The way it works:

Zoning exists (430,000 square feet)
Developer wants more (1.3 million square feet)
Developer says, well, I'll settle for less (900,000 square feet) but I need a tax break to make the numbers work
City says, Okay!

Developer proposes tax break for waterfront towers
By Dan Adams, Boston Globe

Developer Don Chiofaro has raised the possibility of receiving a tax break from the city to help subsidize the two-tower development he has been trying for years to build on Boston’s downtown waterfront, according to e-mails obtained by the Globe.

The tax break was broached during a meeting in July with Boston Redevelopment Authority officials on his plans to replace the Boston Harbor Garage with a hotel, residential, and office complex. The discussion was detailed in an e-mail sent by a senior BRA official, one of 2,500 messages the Globe obtained through a public records request.


“We met with the Chiofaro team last week and they believe they can make a project work with the height and FAR [floor area ratio] proposed with tax incentives,” BRA waterfront planner Richard McGuinness wrote in an e-mail to colleagues and consultants retained by the city.

BRA officials later confirmed a tax break was discussed ...
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Article continues ...
 
Did you expect anything less at this point? Everybody else does it.

Why don't they just give him the 1.3 Million or come close on where he doesn't need the tax breaks.
One of the issues I have realized on this garage is why even build it? It would be better for the city----but too risky for the developer at this point.
 
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TheRifleman said:
Did you expect anything less at this point? Everybody else does it.

Why don't they just give him the 1.3 Million or come close on where he doesn't need the tax breaks.
One of the issues I have realized on this garage is why even build it? It would be better for the city but too risky for the developer at this point.
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You have perfectly identified the reason for a tax break. It's better for the city if it gets built, but not if what is built is something financially viable for the developer. The only way the city gets something better than the garage is by sweetening the deal, thereby also gaining some leverage over the final product.

  • The developer gets a viable project.
  • The city gets a beneficial development with future tax stream upside.
  • The residents no longer have to look at that eye sore.
It's win-win-win!
 
I agree with Rifle. Instead of the city leaving $$$MILLIONS$$$ on the table, why not just give him the square footage he needs to build a viable project? That's the only true win-win-win scenario. Boston needs that money.
 
Yeah i don't get why the city wouldn't just say fine build it as originally proposed without any tax breaks... it would make a lot more sense.
 
Politics. Walsh doesn't want to piss off the Harbor Garage people too much. Rich wealthy folks are exactly the kind of folks that come out in Boston elections.
 
Some appear to be forgetting that its not the city that calls the shots on the Harbor Garage, its the Commonwealth. And the Commonwealth is holding to a position of no new shadows on Long Wharf at the end of October. Leaving the city and Chiofaro to figure that out.

Interesting that the city has hired Utile as its consultant on this project, and the city has possibly spent more money designing Chiofaro's project than he has. Chiofaro conceded to the BRA he doesn't have the financing to do this project, --sounds like a reprise of Rosenthal on the other side of town.

An Update from John Rosenthal:

At long last, after close to ten years of community planning and the City and State permit and approval process, the first phase of the Fenway Center mixed use, transit and sustainable energy oriented development project should finally be underway in 2012.
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The Fenway Center website.
 
Rifleman has it right. Forget the tax break and let him build the full 1.3 million. Would be better for all involved.


I would love to believe this project will happen, but I am not counting on it

overregulation thwarts the greater good once again
 
stellarfun said:
Some appear to be forgetting that its not the city that calls the shots on the Harbor Garage, its the Commonwealth. And the Commonwealth is holding to a position of no new shadows on Long Wharf at the end of October. Leaving the city and Chiofaro to figure that out.

Interesting that the city has hired Utile as its consultant on this project, and the city has possibly spent more money designing Chiofaro's project than he has. Chiofaro conceded to the BRA he doesn't have the financing to do this project, --sounds like a reprise of Rosenthal on the other side of town.
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They should just sell/donate the garage to the aquarium and go build someplace else. If Chiofaro can pull together the financing, then he can pull together the financing for someplace the City actually wants a 600 to 700 foot tower.
 
tangent said:
They should just sell/donate the garage to the aquarium and go build someplace else. If Chiofaro can pull together the financing, then he can pull together the financing for someplace the City actually wants a 600 to 700 foot tower.
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But we don't want a f****** concrete monstrosity, eyesore, parking garage in this prime waterfront location. That is the whole point.
 
JeffDowntown said:
But we don't want a f****** concrete monstrosity, eyesore, parking garage in this prime waterfront location. That is the whole point.
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I think you need to get the residents of the two ugliest buildings on the waterfront to share that view.
 
HalcyonEra said:
I think you need to get the residents of the two ugliest buildings on the waterfront to share that view.
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OK, Agreed. But what those residents really want is an underground garage at this location with a park on top. (even the Harbor Towers residents can see that the garage is an eyesore -- they just don't see their own buildings the same way.)

"I got my waterfront, screw you!"
 
These are the dimensions of Chiofaro's problem.

He paid $155 million for the garage, and it remains mortgaged to the hilt.

Several years ago, IIRC, he said it would cost $175 million to bury the garage. So that's $330 million, right there.

Add other pre-construction soft costs, including legal, A/E, taking care of the Harbor Tower residents covenanted parking, and his total cost, before he starts actually building something above grade, is approaching $500 million. (Remember when he proposed building/buying a huge floating parking garage as an interim solution, but couldn't find a place to 'park' it?)

Add to the above, his construction financing costs, broker commissions, etc, and the post-construction soft costs climb as well.

A developer who proposed spending $1 billion on a tower(s) doesn't need a $30 million tax break from the city to make his numbers work. His 'rationale' for the tax break is that he is losing three years worth of garage revenue while construction is underway.

The Globe ran a story a few days ago on whether Boston was entering a phase where the supply of high cost housing exceeds the demand. If so, Chiofaro will have missed this cycle.
 
stellarfun said:
These are the dimensions of Chiofaro's problem.

He paid $155 million for the garage, and it remains mortgaged to the hilt.

Several years ago, IIRC, he said it would cost $175 million to bury the garage. So that's $330 million, right there.

Add other pre-construction soft costs, including legal, A/E, taking care of the Harbor Tower residents covenanted parking, and his total cost, before he starts actually building something above grade, is approaching $500 million. (Remember when he proposed building/buying a huge floating parking garage as an interim solution, but couldn't find a place to 'park' it?)

Add to the above, his construction financing costs, broker commissions, etc, and the post-construction soft costs climb as well.

A developer who proposed spending $1 billion on a tower(s) doesn't need a $30 million tax break from the city to make his numbers work. His 'rationale' for the tax break is that he is losing three years worth of garage revenue while construction is underway.

The Globe ran a story a few days ago on whether Boston was entering a phase where the supply of high cost housing exceeds the demand. If so, Chiofaro will have missed this cycle.
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Choices:
A. Give him the 1.3 Million square feet or something close enough.
B. 30Million in tax breaks
C. city can just say no.
Leave it at that.

So close to getting rid of this concrete garage:
Bottom Line: Chiofaro doesn't have to build--I actually think he would be crazy to build but this part of the GREENWAY would be priceless.
 
TheRifleman said:
Choices:
A. Give him the 1.3 Million square feet or something close enough.
B. 30Million in tax breaks
C. city can just say no.
Leave it at that.

So close to getting rid of this concrete garage:
Bottom Line: Chiofaro doesn't have to build--I actually think he would be crazy to build but this part of the GREENWAY would be priceless.
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I'll repeat.

a.) The city did massing studies and shadow studies to examine how high and how wide he could go before his building shadowed Long Wharf. Putting a single pencil thin tower on the SW corner of the site, and he could reach 600 feet. The pencil thin tower probably doesn't work because he loses too much of the available floor print on core space. Perhaps you ought to go back and read these studies; they were publicly released a few months ago.

b.) He has no financing commitments, so any talk of tax breaks is premature at this point. He could have $100 million or $200 million in tax breaks, and he still may not get financing. He apparently has so little equity built up in IP that he has no financial leverage. Nobody is going to finance Chiofaro to build his building on spec, with no tenants lined up. He is not a Skanska, or an Alexandria, who can build on spec and let the market come to them.

c.) It is not the city that has the final say. This property is governed by Chapter 91. The Commonwealth decides.

Here you go.
http://www.mass.gov/eea/agencies/ma...-the-massachusetts-public-waterfront-act.html

http://www.mass.gov/eea/agencies/ma...-9-00-massachusetts-waterways-regulation.html
 
stellarfun said:
I'll repeat.

a.) The city did massing studies and shadow studies to examine how high and how wide he could go before his building shadowed Long Wharf. Putting a single pencil thin tower on the SW corner of the site, and he could reach 600 feet. The pencil thin tower probably doesn't work because he loses too much of the available floor print on core space. Perhaps you ought to go back and read these studies; they were publicly released a few months ago.

b.) He has no financing commitments, so any talk of tax breaks is premature at this point. He could have $100 million or $200 million in tax breaks, and he still may not get financing. He apparently has so little equity built up in IP that he has no financial leverage. Nobody is going to finance Chiofaro to build his building on spec, with no tenants lined up. He is not a Skanska, or an Alexandria, who can build on spec and let the market come to them.

c.) It is not the city that has the final say. This property is governed by Chapter 91. The Commonwealth decides.

Here you go.
http://www.mass.gov/eea/agencies/ma...-the-massachusetts-public-waterfront-act.html

http://www.mass.gov/eea/agencies/ma...-9-00-massachusetts-waterways-regulation.html
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Stel -- a good thorough statement of the situation

da Don's The real problem is that da Mayah i.e. Menino delayed things for him for so long that now he's trying to get going in the "Autumn" of this development cycle

The window for a large new project is not yet closed -- but unless you are in a prefered situation such as:
  • premier occupant signed and delivered such as the Four Seasons Tower
  • financial position of a REIT like Boston Properties or Simon
  • and you've got a clean slate to build on -- don't need to tear down a garage before you can start building a foundation

There just is not enough of this development cycle left to be still at the exploring concepts phase

and ultimately to wait another 4 or more years to get going unfortunately for da Don he's not gettin any younga
 
whighlander, let's compare the economics of two projects. Chiofaro has a 1.3 acre site, on which he is being allowed to build 900,000 gsf (the city's limit) or 1.3 million gsf, (the Archboston allowance). But before he gets to build whatever he builds, his sunk costs are between $400 and $500 million.

Cross the Charles, and a developer gets to build nearly 3 million gsf on somewhere between seven and ten acres after the developer spends $400 million max for a new Volpe Center. nearly 3 million gsf in one of the country's hottest real estate markets.

Little point in asking which developer is going to come out ahead.
________

If Chiofaro puts residential into his tower, and the tower is no higher than 400 feet max, his sales prices will be constrained, IMO, by the Harbor Tower residences, which have the better view.

Rosenthal, at this point, is 13 years and counting; Chiofaro, eight, since his 2007 purchase of the garage. The Harbor Towers residents' parking easements expire in 2022. He'd be hard-pressed at this point to get anything completed by 2020, so why not spare yourself the very big hassle of dealing with the easement, and wait until 2022 to start construction? But as you say, he isn't getting any youngah.
 
stellarfun said:
c.) It is not the city that has the final say. This property is governed by Chapter 91. The Commonwealth decides.
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Then isn't the city's best move to simply say, "Fine, if you have financing the city will permit you to build as you've proposed. Take it up with the Commonwealth"?

Boston should simply remove itself from the equation. Unless of course you'd prefer this not be built.
 
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