Columbus Center: RIP | Back Bay

[Ned Flaherty]

Re: Columbus Center

Does this mean you'd prefer not to have anything built over the Turnpike?

(My own personal preference: I'd like to see something built here. I'd prefer it to be built without major public subsidy. If subsidies are required, there are other better places to spend them.)

Hello, Ron.

No, not at all. As I?ve said since last August, I have wanted the entire turnpike developed since I moved here 18 years ago. I wholly endorsed the Turnpike Master Planning process. I want all 44 acres on all 23 vacant I-90 parcels developed, none more or less than any others, including Parcels 16, 17, 18, and 19 which have lain dormant during the 13-year (so far) Columbus Center juggernaut.

Like most citizens, I feel public funds should never pay for private costs and profits. Also like most citizens, I especially object to developers who promise in their written proposals to use zero subsidies, and then, after their revenues and profits rise farther and faster than their costs, seek massive subsidies using the excuse, ?We think our costs rose, but no, you can?t see the books.?

Several forum members mistakenly assumed that I ?oppose the project.? That is untrue. I have criticisms of both the proposed project and the public process. But all the flaws are correctable, so I am not unilaterally opposed to the project, in the way that some here are unilateral cheerleaders for it, even when they don?t have the proposal, didn?t attend the hearings, haven?t read the lease, and haven?t reviewed the subsidies.

 

[Ned Flaherty]

Re: Columbus Center

Home of the walking dead.
Those poor bastards. Doomed.

Statler,

Decades of research show up to 400% more illness, 50% more fatal heart attack, and 50% more fatal lung cancer, compared to people a few blocks away who are outside the toxic UFP zone.

So, not everyone is quite as doomed as you wrote. But for people who work or live in UFP toxic zones, the big question is this: ?Why risk far-higher-than-average odds here when risk is only average just a few blocks away??

 

[Ned Flaherty]

Re: Columbus Center

. . . I'm not worried about the killing fields. Consider that in many European countries, half the auto fleet is diesel and the densities are very high.

Hello, InTheHood.

Of course, no one should worry about just ?diesel? or about just ?density? because neither one is what makes UFP the worst environmental health problem in the modern world. UFP air pollution only becomes incredibly expensive, painful, and lethal when people work and/or live within the toxic zone, which is deadly in impact, but thankfully not huge in size.

 

[Ned Flaherty]

Re: Columbus Center

Again, fixing this "at the source" has nothing to do with a building and everything to do with the engine that generates the pollution.

InTheHood,

Technically that is true, but in practical terms, it is not.

While UFP matter does originate in gasoline and diesel combustion engines, thereby making them the ultimate source, there is not yet any feasible way to eliminate UFP at that source. On the other hand, UFP can be eliminated as the air carrying it passes through ventilation systems. Therefore, in discussions about cleansing UFP from air pollution, ?at the source? refers to the vents where the cleansing occurs, and not the to engines where the combustion occurs.

 

[sidewalks]

Re: Columbus Center

I know you've decided to be a martyr at the corner of Clarendon and Columbus, but why do you keep bringing this point up? I find it comic that you feel that you would somehow be incapable of advocating for your position if you lived, as you say, just a few blocks away? If the risk is so dire...move two blocks and save a life.

"...the big question is this: ?Why risk far-higher-than-average odds here when risk is only average just a few blocks away??

 

[Ned Flaherty]

Re: Columbus Center

. . . this project is not profitable, so it is on the shelf . . . the financial markets imploded and went into disarray just as steel costs skyrocketed . . . the financial decision to hold off on this project makes perfect sense . . . the project will be back -in all its beautiful, dense glory- when the markets recover.

Hello, Pellamhall.

On 19 October 2006, I met with Romney cabinet member Eric Kriss, who chaired the task force review of the Massachusetts Turnpike Authority and air rights development. It is unfortunate you were not with me then, because if you were, you would know today that this project?s past and present problems have nothing to do with profitability. ?It was stressed from the outset,? Kriss said. ?There?s little reason to think it will go forward.?

Less informed people often assume that any troubled project must be an unprofitable one, but that?s not always true. Columbus Center?s problems have nothing to do with steel costs or profitability; in fact, public subsidy applications show the profit itself as unusually lucrative. Instead, the problem is risk. Here are just 4 examples.

■ The total project size already exceeds California?s normal size guideline.
■ California?s required investment also already exceeds its normal risk guidelines.
■ The commercial banking industry ? local, national, and international ? has lending criteria which the project now does not meet, and has never met well enough to get funds disbursed.
■ Extraordinary insurance, financial, and legal liabilities could render the condominiums un-sellable.

I have not mentioned that 4th bullet before on this forum (which is about architecture) because it belongs on a forum about law.

But, here?s a summary. Post-construction sales are what re-pay the MTA, MBTA, and CSX landlords; California investors; yet-to-be-named bankers; sub-contractors; and other profiteers. If the sale prices materialize as projected, the project would be profitable; however, if the unique and extraordinary insurance and legal risks hamper sales, then everyone loses, and that?s a risk that bankers won?t touch.

Some of those insurance and legal risks were reported in ?Loophole could sink future owners of condo complex? (Massachusetts Lawyers Weekly / Exhibit A, 27 November 2007).

It?s a fascinating story for everyone who thought they already knew everything about Columbus Center. The issues remain unresolved, and are at the core of the re-negotiations between California and MTA-MBTA-CSX, just now starting into their third year since the 2006 default.

 

[statler]

Re: Columbus Center

and other profiteers.

Language is a funny and powerful thing Ned.

The word 'profiteers' usually carries some heavy baggage with it.
It historically has a far more negative connotation than "someone who stand to profit".
Who are these 'profiteers' and why did you choose this particular word?

 

[Ned Flaherty]

Re: Columbus Center

Hello, InTheHood.

. . . can you stop referring to CalPERS as "California" and this project as "California's"?

There are valid reasons ? not all of which are mentioned on this forum ? for naming the topmost member of the 6-layer pyramid. For example, CalPERS? legal name includes the footnote, ?A Component Unit of the State of California?.

. . . CalPERS appears prominently in the public record as an investor, while other entities are not disclosed . . .

That?s untrue; all entities are disclosed in my public records, as well as CalPERS.

. . . lead investors don't call all or even most of the shots . . .

Usually, lead investors do not; but in this case, they do. CalPERS wrote the 87-page Limited Liability Company agreement that created the Columbus Center, and it is unambiguous on two points: voluminous management reporting from CWCC to MURC, from MURC to CUIP, and from CUIP to CalPERS; and the fact that California controls all decisions made in CUIP, MURC, and CWCC.

Four years ago, CalPERS envisioned a more passive role; however, as the promises in the Winn Development prospectus unraveled, as the schedule fell behind by years, as the financing was found to never have existed in the first place, as the project was seen in the financial world as sub-standard, and as the assumed subsidies failed to materialize, CalPERS had to get much more actively involved in its losses.

. . . CalPERS invests alongside and through various general partners, in this case real estate funds, who do all of the spadework . . .

CalPERS funds 97% of the CUIP-MURC organization which controls CWCC. Spade work is done in CWCC, MURC, and CUIP, but decisions are controlled from CalPERS. For example, the decision on the original owners? 44-page investment prospectus was made in CalPERS.

They sure as hell don't get involved in most of the minutia that we are discussing here.

True minutia are largely left to lower layers; however, the proposal?s most serious issues discussed in this forum also are discussed in CalPERS:

■ 2006 default on 99-year lease
■ project?s inability to meet global bank lending criteria
■ unresolved question of who owns tunnel walls, ceilings, and roofs
■ unknown cost of tunnel inspection, maintenance, insurance
■ lease re-negotiations (now entering year #3)
■ guarantees in amended lease
■ unresolved question of rent owed to CSX freight railroad
■ city, state & federal subsidy guarantees

 

[Ned Flaherty]

Re: Columbus Center

. . . if one literally adopt's Ned Flaherty's proscriptive siting, all proposed park areas at Columbus Center should be eliminated, as they are sited within a so-called 'toxic zone', regardless of any venting and scrubbing . . . all . . . developments . . . within Ned Flaherty's so called toxic zone.

Stellarfun,

It is true that California has not set a separate standard only for UFP (yet), and thus has nothing to regulate (yet). Nevertheless, for years, that state?s top air pollution agency has recommended that projects designed and sited the way Columbus Center is either be built with UFP mitigation, or else not be built.

Everyone agrees that details such as coastal meteorology and quantities and types of vehicles differ, which is why UFP should have been included in the Environmental Impact Report. It would have, except the developers dishonestly omitted it from the scope list of environmental harm.

. . . . . . if one literally adopt's Ned Flaherty's proscriptive siting, all proposed park areas at Columbus Center should be eliminated, as they are sited within a so-called 'toxic zone', regardless of any venting and scrubbing . . . all . . . developments . . . within Ned Flaherty's so called toxic zone.

That?s not the recommendation at all. California?s recommendation ? and mine ? is that either UFP should be mitigated, or else building within toxic zones should be avoided.

 

[Ned Flaherty]

Re: Columbus Center

. . . if the risk is so dire . . . move two blocks and save a life.

Sidewalks,

I agree that people can advocate for UFP mitigation from anywhere. However, no homeowner can legally or morally sell or rent property already inside a UFP toxic zone without disclosing what they know about the scientifically proven effects of UFP. When I disclose what I know (as required by law), there are no takers because any would-be renter or buyer can get the same thing several blocks away, without the risk of a life-threatening illness.

Reputable brokers, once they are aware of UFP and its effects, also are required to fully disclose if property sits inside a toxic UFP zone, just as they must for property inside a toxic waste dump or over a nuclear waste storage facility.

The only practical option is to correct the UFP issue. That is what I am working toward.

 

[pelhamhall]

Re: Columbus Center

To say that the project is "unusually profitable" and then in the same breath say that is is "extremely risky" boggles my mind. The relationship between profit and risk is the very model that all business transactions are based on.

So this could be an unusually profitable, unique opportunity... or it could be a total risky failure and a bust - um, yeah, that's kind of the point of capitalism (or "profiteering" to the Soviets).

So Columbus Center was in a precarious situation to begin with. Now, you throw in a massive, almost historic, upheaval of the world's financial and credit markets and while the enormous risk of this project remains, the potential profits have now plummeted.

I maintain my prediction that this project will get built, as-is, when the markets calm down and capital is accessible again. It's a no-brainer - the site is too good, the project is too valuable and the development enjoys broad-based, city-wide support - something that's not easy to do in a city of Boston.

 

[Ned Flaherty]

Re: Columbus Center

. . . Who are these 'profiteers' and why did you choose this particular word?

Hello, Statler.

The word ? I use ?profiteers? because that defines not just persons who profit, but persons who do so in ways or amounts that the general public sees, under the circumstances, as unreasonable.

The verbal proposal, the written proposal, and the Boston Globe interview about those proposals all reflect the developers? oft-repeated promise ? made just to get their approvals ? that zero subsidies would be used.

The developers argued that they must build 1,467,600 square feet precisely because the project would be 100% privately owned, operated, and funded. They argued that the extraordinarily large size would guarantee that no public subsidies got consumed. And California?s subsidy applications filed since 2003 show that projected revenues and profits have risen even farther and faster than projected costs, so no subsidy was necessary in 2003, and there is even less need for subsidy today.

■ In 2003, the owners promised that no subsidies were needed and none would be used.
■ In 2005, they got caught requesting city, state, and federal subsidies, telling a different story to each agency.
■ In 2006, the owners admitted, ?From the get-go, public support was always built into this project? (Winn spokesman Alan Eisner, in ?Columbus Center wins tax credits worth millions?, Boston Globe, 30 June 2006).

Governor Patrick has on his desk this morning three folders: 9 state subsidy requests totaling $116 million; California?s demand that Patrick ?guarantee? disbursement; and the Inspector General?s confirmation that the project was proposed, reviewed, and approved as subsidy-free.

Under these circumstances, the term profiteer is correct. Most informed citizens feel it?s too mild.

The people ? The profiteers participating in the subsidy scam are: CalPERS, CUIP, MURC, and CWCC. I exclude their roughly 75 sub-contractors, who didn?t perpetrate the subsidy switcheroo, and probably are charging routine prices for their services.

 

[statler]

Re: Columbus Center

You have no idea how badly I wish you would spend this much time and effort on the Drucker proposal for the SC&L block.

If you could dig up half the information on Drucker as you have on this project we could probably save an urban gem.

And no, I can't do it because I don't have nearly the time, resources or contacts at my disposal as you do at yours.

 

[Ned Flaherty]

Re: Columbus Center

To say that the project is "unusually profitable" and then in the same breath say that is is "extremely risky" boggles my mind. The relationship between profit and risk is the very model that all business transactions are based on.

Hello, Pelhamhall.

Yes, business transactions are based on both profit and risk. And, yes, they affect each other. But no, they are not the same thing. Owners consider both profit and risk, but bankers ? who just want their principal and interest repaid ? focus on the risk of repayment, with far less attention to owners? eventual profit. Over 13 years, no banker in the world has ever disbursed even $1 to this project, because those bankers apparently all share the same concerns.

. . . while the enormous risk of this project remains, the potential profits have now plummeted.

That?s untrue. Again, because risk and profit are different things, they do not always move in tandem. In the case of Columbus Center, the enormous risk does remain, but the profit projections in California?s certified public subsidy applications still are shown as unusually lucrative.

 

[InTheHood]

Re: Columbus Center

Dead on, pelham hall, but it may well take a decade for the combination of financing markets and real estate markets to rebound strongly enough for this to be built sans subsidies ... and by that time the political sands may have shifted, and politics can trump economics, at least in the medium term. Who knows? If I could predict the markets with any accuracy, I'd be retired and not posting here.

The discussion of "it's high profit" but "it just happens to be high risk" is frankly as ridiculous as the claim that "it doesn't cost more to build over a highway" or the claim that "we need a study" to determine that, or the discussion of partnership structures and certainty about who decides what based on a read of the filing footnotes. Ned's clearly a bright guy, and he certainly has a ton of energy and lawyerly attention to detail, and he presents his arguments clearly and forcefully ... but if you plow into financial and engineering documents with a bias toward conspiracy theories but no background in finance, engineering, or commercial real estate development, and apparently little inclination to listen to those who do, you're going to chase a flock of geese.

As for what appears to be an attempt to create some nexus that California=CalPERS and therfore that CalPERS must pull support because CARB (the California State Air Resources Board) is leading the charge against UFPs, I say, knock yourself out. No doubt there will be another public battle over this project when and if it resurfaces in several years. Personally, if I were determined to oppose this project and had no technical background but a ton of time and energy, I'd instead spend the time auditing some classes at MIT/Sloan, meeting some commercial developers, and learning about how the pieces fit together. A combination of stridency and naivete - for example, the demands for "full financial disclosure," which no for-profit developer could sign on for - just generate eye rolls and make the BRA folks and anyone in the room with a real estate background certain to consolidate ranks.

If all this energy had been spent focusing on perfecting the streetscape and sweating the details, we'd have a helluva project, nearing completion.

 

[pelhamhall]

Re: Columbus Center

There's always something to complain about when you don't want a project built. Let's play make-believe... Say the investor pulls out, and well-respected Boston Properties buys the site and they get moving immediately... now, the entire "California-profiteer" angle would have to be scrapped completely... but the activists will have something to complain about, they'll just start raking the muck on Boston Properties.

Can't you imagine the article in the Globe "Boston Properties Ownership Alarms Neighbors" - with a designated mouthpiece saying something along the lines of "Boston Properties has been a disastrous owner of the Prudential Center, pushing density and 'soaring' building heights all while completely ignoring the concerns of their neighbors. We simply cannot trust them with Columbus Center" etc. Of course, none of that is "true" but its enough for Tom Palmer or Scotty VH to quote and believe.

Then people would scrutinize every detail of the agreement and find some onerous clause or statement to blow out of proportion and trumpet to the world as a devil's handshake. Possible headline "Lease Clause Called 'Unfair' In Columbus Center-Boston Properties Transaction" It would just go on and on...

You can't play this game with these people. The project is approved and it'll get built. If you play their game, you can't win, because the rules of the game will just keep changing.

So it's best to just sit back and wait for a real developer, with a real portfolio of $1B+ projects to step in and finish the project. Winn simply can't handle a project of this magnitude, not in today's credit market. Due to the approvals and wide city support of this project, all it's going to take is a developer who knows what they're doing with some real financial backing, and the project gets moving again.

Winn has had a hard time giving up because it's his dream project - his life's signature work... he can't walk away and cut his losses, it goes beyond the money and time invested, this is a "legacy project" for his company. It's not often you get your hands on a transaction that can be such an incredible and lasting benefit in the history of the city. If he looked at the project like a REIT, things would have been done differently I imagine, and the project would be open for business right now. It's part ego and part desire to leave his mark on the city's history that has him grasping at straws still.

The fact that other investors haven't been rushing in tells me that the project is unprofitable and/or too risky.

 

[statler]

Re: Columbus Center

You guys are right.

This project is on hold so this thread should be as well.

We'll pick up the discussion again when (if) it starts to ramp up again.

 

[SeamusMcFly]

Re: Columbus Center

Thanks for the welcomes everyone.

Sorry to keep a thread that was just labeled dead going, but figured it would be rude to not say thanks.

 

[sidewalks]

Re: Columbus Center

Sidewalks,

I agree that people can advocate for UFP mitigation from anywhere. However, no homeowner can legally or morally sell or rent property already inside a UFP toxic zone without disclosing what they know about the scientifically proven effects of UFP. When I disclose what I know (as required by law), there are no takers because any would-be renter or buyer can get the same thing several blocks away, without the risk of a life-threatening illness.

Reputable brokers, once they are aware of UFP and its effects, also are required to fully disclose if property sits inside a toxic UFP zone, just as they must for property inside a toxic waste dump or over a nuclear waste storage facility.

The only practical option is to correct the UFP issue. That is what I am working toward.

Whether you move or you don't is none of my business, but you keep making claims that are patently absurd. People rent and buy in your building ALL THE TIME. I just was in a new development on the corner of Cazenove and Chandler Street where the condos are selling for between $1 million and $2 million. Don't claim that you won't find any renters. I assure you, if you wish to sell or rent there will be plenty of people who will be glad to risk life and limb at 75 Clarendon Street. Disclose whatever you please to the buying public...I'm quite sure you will sell in spite of UFP contamination.

 

[stellarfun]

Re: Columbus Center

Stellarfun,

It is true that California has not set a separate standard only for UFP (yet), and thus has nothing to regulate (yet). Nevertheless, for years, that state?s top air pollution agency has recommended that projects designed and sited the way Columbus Center is either be built with UFP mitigation, or else not be built.

Everyone agrees that details such as coastal meteorology and quantities and types of vehicles differ, which is why UFP should have been included in the Environmental Impact Report. It would have, except the developers dishonestly omitted it from the scope list of environmental harm.



That?s not the recommendation at all. California?s recommendation ? and mine ? is that either UFP should be mitigated, or else building within toxic zones should be avoided.

Several final points from me re: UFP.

A.) The California handbook, which gives valuers for increased incidence of cancer, notes that the incidence is based on 70 years of exposure to those particle concentrations within a so-called toxic zone.

B.) The mortality and morbidity rates that were cited are not specific to UFP. Some are specific to particulates in general; others factor in exposure to other air pollutants. There is a good reason for this; there is precious little monitoring data on the concentration of UFP over time in any location.

C.) The California ARB has no recommendations for mitigating the concentration of UFP in the atmosphere, as an alternative to siting. For good reason: UFPs are emitted by every vehicle traversing Clarendon St.; how would you abate the effect of UFPs emitted by near gridlock on Boston's crowded streets during rush hour?

D.) Since when has Massachusetts classified certain areas as 'toxic zones' for UFPs? Is there a list of where these zones are located? Could somebody identify a citation in state law or city ordinance that requires a seller of property to inform a prospective buyer that the property is located within a so called toxic zone for UFP?

E.) Massachusetts does have an air quality standard for fine particulate matter (not the same as UFP). Massachusetts meets that standard. Does Massachusetts have an air quality standard for UFP? Does Massachusetts monitor the ambient concentration of UFP?

Unfortunately, so much of what Ned Flaherty has said about UFPs, California's suggestions to local communities re: siting of certain types of buildings, etc. is either a mis-representation, mis-statement, or fabrication that in my eyes, it undermines the credibility of his other statements.

Nobody here has the time or initiative to scour through the voluminous public records re: Columbus Center to check whether Ned is accurately and faithfully representing the information contained therein. The California record with respect to UFP is readily checked, as are several of the on-line scientific and medical journals cited. These sources do not support his assertions.