City hit over its land deals: BRA collects on condo sales
By Scott Van Voorhis
Boston Herald Business Reporter
Thursday, December 7, 2006 - Updated: 06:25 AM EST
As Mayor Thomas M. Menino has pushed for a big boost in housing construction, City Hall?s development arm has quietly cashed in.
The Boston Redevelopment Authority, which controls hundreds of acres across the city, has been selling some of its real estate empire in recent years to spur new housing construction.
But as it sells off real estate, the city authority is also cutting deals that give it a cut of condos sold on those sites, Paul McCann, a top BRA official confirmed.
City Hall?s development arm began cutting these deals 15 years ago, but these actions have not been widely known.
The practice gives City Hall a piece of the condo market action across the city, from sales of downtown high-rises to new two- or three-family homes squeezed into odd lots in Dorchester and Roxbury.
The BRA?s McCann defended the deals, saying they have helped spur housing construction.
The agreements, however, are not popular with everyone.
?It?s incredible,? fumed Shirley Kressel, head of the Alliance of Boston Neighborhoods. ?The whole city is like a fee farm for them. It?s like a hidden tax all over the city.?
Beyond the prices of the lots it sells, the BRA makes at least half a million a year on condo sales and resales, McCann said.
The typical agreement calls for a 4 percent chunk of the initial sale, followed by 2 percent of every resale.
At developer Ron Druker?s posh Atelier/505 in the South End, the city gets 2 percent of every resale of the multimillion-dollar units there. There?s also the Charlestown Navy Yard and the Metropolitan in Chinatown, a tower that mixes market rate condos with subsidized rentals. The city takes 2 percent of resales at both projects.
Beyond large downtown projects, the city authority is also getting a cut of sales and resales from the literally hundreds of condos and homes built on small lots sold in city neighborhoods.
That may amount to $250,000 a year, the BRA?s McCann estimates.
He says the deals help spur construction because the BRA gives would-be developers a break on the upfront land costs in return for a longer-term payout.
But some activists question whether the built-in profit incentive may prompt the city authority to back projects it shouldn?t.
Roxbury resident Julie Yee is battling plans by a neighbor to build a triple-decker on a small lot next to her home. The neighbor plans to sell the three units off as condos. But Yee says the triple-decker is a bad fit in a neighborhood of one- and two-family homes.
?No matter what, they will always make their money,? Yee said of the BRA.
