Columbus Center: RIP | Back Bay

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Shorter building heights and "affordable housing" as well are seldom in the interests of the rest of the city.
Something I've often wondered is: how does affordable housing benefit the NIMBY community already living in a place?

Do they want their mama-in-law moving into the new building next door? Do their hearts bleed for the poor who can't live in an upmarket 'hood? Do they long for a little more slice-of-life to watch?

Or is it just another weapon in an arsenal of deception and hypocrisy meant only to stymie the next development?
 
"Affordable housing" simply means keeping part of the neighborhood affordable by its current residents as the rest of it gentrifies. I see nothing wrong with this concept.
 
Ablarc, I think the issue for many people is that they're renters. Personally, I have never stayed more than a year or two in one place, so I don't really understand how renters come to think that they have a right to be somewhere, but that mindset seems to be at work.

For owners, it's clearly in their monetary interests to see prices go up. I don't know if they also tend to demand "affordable housing" or not. Although I have never owned a home, my sense from people who do/have is that owners typically want to see their house price go up more than almost anything else, given that 42-43% of average household net worth is locked up in people's homes.
 
"Affordable housing" simply means keeping part of the neighborhood affordable by its current residents as the rest of it gentrifies. I see nothing wrong with this concept.

The problem is that "affordable" is a relative term. Affordable housing in NYC is luxury level most other places. Everybody is for it but no one can agree on the definition.
 
What is so bad about affordable housing? The two people that I know who purchased affordable units are architects. They care about their units, community, etc. What's wrong with some diversity (economic, etc.).
 
Because it means taking tax dollars from all to support a politically chosen few. Let people live where they can afford to, and you don't have the frustration, artificially raised prices (the middle-class, relative to the neighborhood -- which sometimes may be upper middle-class but at least is a relatively intermediate step in the socioeconomic ladder -- is always the one that gets priced out) or distorted scenarios (why on earth would someone making little money want to live in an expensive downtown location? you can't afford anything, so you demand subsidized commercial rent, and the whole thing is a rigged-up mess before you know it) that come with the likes of Boss Menino and the BRA playing the role of market genie.
 
"Because it means taking tax dollars from all to support a politically chosen few."

This was the argument many had against subsidizing Columbus Center.

And as far as "can't afford anything", affordable housing is not being given to the poor. The two people I know who bought affordable units can afford to shop (groceries, clothing, eat out, etc.) in the city.
 
And they were right -- I don't think it's good policy for private real estate developments to be subsidized. But as Van recently suggested, I'm all for the city building the decks if they can then sell the land rights to developers who can build with their own money. If it's feasible, it is by all means in the city's interests to monetize these air rights by getting the decks built, then selling them at a profit to developers.

Re. the architects: If they're not poor, then why are they being given subsidized housing? If land is really valuable in the center of the city, let it be given over to uses that value it as such, and can fill the city coffers with the taxes they pay so we can all have better transit, schools, etc. I don't see why people who have good jobs and can afford a place in JP or Somerville should be given special privileges to live in a more-desirable area.
 
Itchy, I think your notion of affordable housing is confused with Section 8 housing or Public Housing. The most common type of affordable housing incorporated into private development is designated for "Low Income" (up to 80% of Area Median Income - HUD defines all this). For 2009 the 80% threshold was $46,300 for a single occupant household. That means an affordable unit can charge up to $1,175 in rent & utilities per month for a 1BR or studio.

So, in Boston at least, it's the middle class - those you claim to be getting priced out - that are actually the real beneficiaries.

FYI, developers can also get affordability credits for pricing up to 100% of AMI. Meaning the rents landlords can charge are even higher than those listed above.
 
Read the text at the top of the page. Companies were eligible for 5% of their private investment. So for Winn that was $7.5M. Not saying he didn't have other subsidies, but the link you gave implies a tax break of $7.5M.
 
Columbus developers can?t pay for cleanup
Partners tell Mass. they have only $2m in assets
By Casey Ross
Globe Staff / March 17, 2010
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Sending your articleYour article has been sent. E-mail| Print| Reprints| Yahoo! Buzz| ShareThisText size ? + Developers of the defunct Columbus Center development in Boston have told state officials they are running out of money and cannot afford to pay millions of dollars to clean up the abandoned construction site.

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In a letter released yesterday, a lawyer for WinnCompanies and the California Public Employees? Retirement System told state officials the business partnership has only $1.5 million to $2 million in assets remaining, less than half what the state estimates it will cost to restore the property along the Massachusetts Turnpike in Boston.

The lawyer, Adam Hundley of Goulston & Storrs in Boston, acknowledged the shortfall but asked the state to ?bear in mind that in addition to the enormous time and effort they have invested in this failed project, the [developers] have already lost in excess of $125 million?? trying to build it.

?We understand that there is no perfect resolution that can erase the years of frustrations and losses all of the parties have suffered over the course of this project,?? Hundley wrote. ?However, the [developers] believe that litigation will benefit no one.??

Last week Calpers, the main backer in the $800 million Columbus Center venture, officially declared the long-dormant development dead after a 13-year effort to get it built and said it would be winding down operations.

Massachusetts officials are now trying to get the developers to restore parts of the construction area, which they estimate will cost $4 million to $5 million. A spokesman yesterday reiterated that the state still expects the developers to pay the full cost of the cleanup, but would not comment on whether it will sue to recover those funds.

The project was to be one of the biggest and boldest in Boston?s history, calling for the construction of a six-building complex, including a 35-story tower, that would have straddled the turnpike between Arlington and Clarendon streets.

Following its failure, transportation officials said their first priority is to clean up the project?s dusty construction lots, which sit adjacent to Bay Village neighbors who have had to live with the stalled project for the past two years.

They are also asking the developers to pay for the removal of Jersey barriers they installed that narrow the highway near the project site, among other fixes.

In his letter, Hundley asserted that even if the state does pursue reimbursement in court, it can only collect from the development partnership created for the project, not from WinnCompanies and Calpers themselves.

?The [development partnership] has proposed to pay all of their remaining net assets to the [state], which is all the [state] could recover even if it were to prevail in litigation,?? Hundley wrote.

Casey Ross can be reached at cross@globe.com.



This is a classic. Why don't they look down Dianne Wilkerson Bra for the rest of the money.
 
Why can't the state seize whatever local assets it needs from WinnCompanies in order to do the needed cleanup? Or put a lien on any WinnCompanies real estate?
 
I'm sure Toby can speak more to the legal specifics, but the Columbus Center JV was organized as an independent LLC. So, the state can make no claim on anything other than the ownership stakes of the partners in the LLC (which it sounds like are virtually worthless). This is the same logic behind why Donald Trump has a bunch of properties go bust every downcycle but he's still rolling in cash.

For an interesting local example, check out this article. Warning: it might infuriate you.
The New Way To Deal
How Kambiz Shahbazi Came Up Black By Putting Others In The Red


By Paul McMorrow

Banker & Tradesman Staff Writer

02/22/10


--------------------------------------------------------------------------------

Don't cry for Kambiz Shahbazi, at one time one of the most aggressive buyers of commercial property in and around Boston. His former 5 million-square-foot portfolio may be in shambles, but he's currently scouring the market, looking for something else to buy with someone else's money.

When times were good, Shahbazi assembled a mostly suburban, Class B portfolio that reached 5 million square feet. Some of it has already fallen to foreclosure, while other buildings are overleveraged and worth far less than the debt on them.

When it?s all said and done, Shahbazi may well lose more real estate in this recession than any other landlord, including New York?s Broadway Partners, late owners of the John Hancock Tower and Waltham?s Bay Colony Corporate Center.

But Shahbazi?s firm, KS Partners, is in fine shape. The company managed to suck millions of dollars out of properties now teetering on the edge of foreclosure. His strategy of putting other people?s money at risk instead of his own, while perhaps unscrupulous, has certainly proven successful.

King Of Class B

Shahbazi, one crowned an emerging ?empire builder? in area real estate by local media, made a killing during the market?s boom years by buying up properties few other investors wanted: 1980?s-vintage Class B office and R&D space in secondary suburban markets. He was a big player in Billerica, Chelmsford and Wilmington. He bought up aging office parks in Braintree and Dedham. And he did much of it with degrees of leverage that look obscene in the post-Lehman world, leverage that has largely shielded Shahbazi?s firm from the nasty commercial downturn currently battering the industry.

Banker & Tradesman conducted a portfolio-level examination of 3.6 million square feet of Shahbazi?s properties believed to have problems with performance or excessive degrees of leverage. It included three deals, totaling 2 million square feet of commercial space, financed by commercial mortgage-backed securities (CMBS), and six other acquisitions, covering 1.6 million square feet.

The investigation revealed Shahbazi?s firm took out far more money from those properties than it ever put in, mostly through leveraged acquisitions and timely refinancing. Shahbazi excelled in riding values upward and extracting profit from real estate through transactions, rather than operations.

Tidy Profit, Disastrous Deals

KS Partners? three CMBS deals covered 2 million square feet of commercial space, and totaled $156 million in mortgage debt. All three deals are now either in default or foreclosure. But leverage, payments from equity partners and a condo conversion at one Boston property put KS Partners in the black by $42.5 million.

Those properties financed by whole lenders haven?t hit the auction block yet, but they?re now worth far less than the debt they carry. That group, which totals another 1.6 million square feet and $187 million in debt, includes major acquisitions in Boston, Wilmington, Newton, and Dedham, as well as a rather disastrous-looking 2007 suburban refinancing by GE Capital.

In three of the six acquisitions in this group, Shahbazi?s firm took more cash out of the properties it bought than they put into them, and two others were leveraged above 95 percent, putting Shahbazi on the hook for only a small equity stake. The GE deal alone netted KS Partners $21.3 million, thanks to generous underwriting and exploding commercial values.

Same Ol?, Same Ol?

Even if Shahbazi lost all those properties, his firm will have still netted nearly $52 million ? simply by buying, and potentially losing, 3.6 million square feet of commercial space.

KS Partners? chances of staying in its buildings will largely depend on the firm?s willingness to sink new capital into its properties, something the company hasn?t demonstrated a great appetite for. Shahbazi does have breathing room in these deals, though, as GE has been reticent to do anything that would affect the book value of its commercial loans.

But Shahbazi isn?t content to sit back and watch his empire crumble. He?s seeing what other investors see ? the chance to scoop up distressed commercial properties at historically low prices. To that end, he has raised a new equity fund ? ?A couple hundred million,? one source told Banker & Tradesman and is now actively scouring the area, looking for new properties to buy.

His first post-bust acquisition, a 275,000-square-foot foreclosed office property at 75 Sylvan St. in Danvers, is reportedly under agreement for $11.75 million.

According to an industry source, it?s an all-cash deal.

Through a spokesperson, Shahbazi declined to comment on this story.
 
Isn't it fraudulent to organize an LLC this way for the purpose of evading legitimate debt obligations? Seems like a court could go either way on this issue.

As for Shahbazi, it doesn't look like his actions actually harmed anyone (the towns, the office tenants, etc.)
 
Ron, it's no different than any other ownership structure. If Pepsi goes bankrupt, its creditors can't go after its shareholders. If a law firm goes bust, its creditors can't go after the partners. If the John Hancock tower gets foreclosed, its creditors can't go after Broadway Partners. The exception of course is if any of the debt is secured by any of the owning partners. In this case that doesn't seem to be the case.

Good point on Shahbazi. He really only hurt the institutions that were foolish enough to lend to him.
 
nice green lawn (for now,weeds,trash ect to follow)! Today sitting in traffic on the pike!
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Columbus Center project dead, for now
by Kate Vander Wiede
South End News

viewimage_story.php


Cones sit next to mangled fence sections on the cordoned-off strip of land between Cortes Street and the Massachusetts Turnpike. Tree stumps line the sidewalk where 24 mature trees were removed years before. Signs instruct visitors to wear safety protection. After more than a decade, the big project that couldn?t now sits doomed.

The corner of Cortes Street and East Berkeley Street is just one of the five parcels of land that would have been a footprint of the Columbus Center, now owned by developer California Public Employees? Retirement System (CalPERS).

Back in 1997, Boston-based WinnCompanies won designation rights to add a 35-floor skyscraper, a parking garage, luxury condominiums and other mid-rise buildings to the South End and Back Bay community. In the 13 years since, money problems and community outrage have wrought continuing controversy around the site, which eventually passed into the hands of CalPERS.

But, in a move that brought about the beginning of the end of the Columbus Center, the Massachusetts Department of Transportation (MassDOT) officially terminated the developer?s lease last week. MassDOT told Columbus Center developers last month that they were in default of their 99-year lease of the property for a number of violations, including failing to complete proposed building projects on time and maintain the construction sites to Department of Transportation standards, and gave them one month to come up with a viable business plan. No plan was hashed out.

Third Suffolk State Representative Aaron Michlewitz, who has seen the project wither away during his time as an aide to former speaker Sal DiMasi and since taking over his former boss?s post last summer, expressed his relief that a decision had finally been made.

"The community was put in limbo for quite some time and while there is still a long process ahead, I think it is a welcome end to the uncertainty that has been surrounding the project from day one," he said.

The long process Michlewitz alluded to concerns the project?s clean up. Apart from the trash and fences surrounding the properties, electrical cables, cement road barriers, cones, an electrical station, and construction vehicles must be removed.

"We need to see the site restored to as close to the original shape, as close as possible," said Michlewitz.

The problem facing MassDOT and developers now is who pays for the clean-up costs. Adam Hurtubise, a spokesperson for MassDOT, said his organization and CalPERS are continuing ongoing talks.

"We received a letter back from them and we are going to discuss their letter with them. In the meantime we do expect the developers to pay for clean-up costs at the Columbus Center site," he said, estimating that costs could total up to $5 million.

Spokesperson Steve Sugerman of Stockbridge Real Estate Funds, a partner of CalPERS that has taken up the negotiations, said no decision had been made concerning clean-up costs or responsibility.

"We are continuing to seek a productive working relationship with MassDOT and the City of Boston to amicably close the site down," he said, echoing the statement his company provided days before.

The developers? most recent letter to MassDOT explains that the developers are willing to pay $1.5-2.0 million dollars "in exchange for which the parties to the Leases [will] each release one another from all claims under the Leases or relating to the project."

The letter states that the "primary stumbling block to resolution of this matter has been the Landlord?s desire to collect more."

"The Tenants have proposed to pay all of their remaining net assets to the Landlord, which is all the Landlord could recover if it were to prevail in litigation against the Tenants ... please bear in mind that in addition to the enormous time and effort they have invested in this failed project, the Tenants have already lost in excess of $125 million on this project. Moreover, MassDOT and the City have already received millions of dollars in benefits from the Tenants including $3 million in rent, the $2.3 million Austin Rounds parcel, and the $1.6 million in funding for Frieda Garcia Park," the letter continues.

The letter also expresses the developers? hope that litigation will not occur: "The Tenants believe that litigation will benefit no one, and that a settlement consistent with the Leases is the only sensible outcome."

As CalPERS, Stockbridge, and MassDOT try to find middle ground on the issue, residents remain waiting. Several community members who live around the site, who all declined to give their names, varied in attitude toward what should happen now.

One Cortes Street resident, who had only recently heard of the project, gestured to the construction site and grimaced.

"Well, I?d rather them not leave it like this," she said.

Another resident, who has lived in a Cortes Street basement apartment for 43 years, said that the trees should be replanted or that crews should "at least take the stumps out of the way."

An Appleton Street resident, whose window views would have been blocked by the Columbus Center construction, was relieved that the project had been "kiboshed."

"Frankly, I?m glad that whatever it is, it?s not just another high rise. ... It?s exhilarating when you travel down Clarendon and you see a city, but I like the squirrels and the birds and the trees," she said.

She hoped that the bad economy and decrease in condo purchasing would keep large developments in her backyard at a minimum.

But Clarendon Street resident Ned Flaherty, an urban planning activist who has followed the construction-or lack thereof-since its inception, said he wouldn?t mind a large construction project, as long as it followed the "master plan" guidelines provided in the Turnpike Air Rights Civic Vision written in 2000.

This "master plan" concerned several aspects of the 23 parcels of land subject to "air rights" above the city?s section of the turnpike-from the community process that development should follow to the specific buildings each parcel could hold. But Flaherty believes that even this plan-specifically the citizen advisory committees it discussed-needs to be tweaked.

"In 1997, the mayor agreed that every citizen advisory committee would have most of its seats owned by the developer and the construction industry ... so the developer always won. [The members nominated by the community] didn?t have a chance," he said. "It doesn?t do any good that you have a master plan if the review committee is going to violate it every time they take a vote."

Going forward, Flaherty still hopes that the last 13 years of difficulty will end well.

"I care deeply about the community and I hope for a good outcome," he said.
 
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