Columbus Center: RIP | Back Bay

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Re: Columbus Center

Zombie horses ride again?

Boston Globe - Sept 4, 2008
Columbus Center may get a lifeline
2 developers to scour project's finances

By Casey Ross, Globe Staff | September 4, 2008

Two prominent developers have been hired to rescue the foundering Columbus Center project in Boston, an $800 million complex over the Massachusetts Turnpike that would reunite the South End and Back Bay neighborhoods.

Related Properties of New York and the Beal Cos. of Boston, which are building the luxury Clarendon condominiums nearby, said they will conduct a six-week, top-to-bottom review of the Columbus Center's finances to determine whether the long-troubled project remains viable.

"We're attempting to come up with a solution which may save the project and substantially reduce the cost," said Bruce A. Beal, chairman of the Beal Cos. "We believe we're headed in the right direction and may be able to do that."

Columbus Center is one of the most ambitious developments in Boston - a massive hotel, residential, and retail complex that would be built on a deck that will straddle the turnpike and link two neighborhoods now divided by the highway. It would occupy four blocks between Clarendon and Tremont streets where the South End borders Back Bay.

Both Beal and Related are major developers with considerable resources. But it remains unclear if the pair would invest in Columbus Center should they be able to find a way to move the construction forward. Columbus Center's owners, MacFarlane Urban Realty Co. and WinnCompanies, confirmed that they have hired Beal and Related as paid consultants to scour the project's finances.

In the 11 years since Winn first started planning the construction, Columbus's costs have soared to more than double its initial projected costs, from around $300 million to its most recent estimate of $800 million. Moreover, Winn and MacFarlane failed to obtain a package of $35 million in previously promised state subsidies after the Patrick administration lost confidence in the developers' ability to proceed. The project also encountered significant opposition from residents in the South End and the Back Bay over the size of the project and the use of public funds for what is mostly a luxury development.

Construction on the complex's foundation began earlier this year, but then stopped in March with the developers' latest financial troubles. Previously, Columbus Center was scheduled to be completed by 2011.

Columbus Center suffered a series of setbacks over the last year or so. Costs for construction materials, such as steel and copper, had soared on global demand. Meanwhile, a downturn in the US residential real estate market, especially for condominiums, coupled with turmoil in the nation's credit market, made it hard to borrow money for an ever-more expensive project. Late last year, one lender, Anglo Irish Bank, withdrew more than $500 million in promised funds. That left the developers scrambling to keep the project alive as neighborhood opponents declared it all but dead.

Boston Mayor Thomas M. Menino said last night that the involvement of the new consultants is a positive sign. "To have Winn and Beal come together at this stage is very important," Menino said. "This project needs a new infusion of equity."

Menino also said it would be better to build the project in phases, so the developers would not have to obtain the entire amount of funds to do all the work at once.

"The decking over the turnpike really drives the cost, so it has to be phased in," he said. "I would like to see this project saved. It fills a hole in the city of Boston and brings those two neighborhoods together."

Beal declined to detail his strategy for reviving the project, but he emphasized that he will not change any of its elements and will seek to build it under existing permits. He said the review will include an "A to Z" examination of all the project's costs and possible ways to save money.

"We're excited and encouraged by what we've seen so far," he said, declining to be more specific.

When Beal conceived of the Clarendon, a 33-story residential building now under construction, Columbus Center was expected to be a prominent neighbor that would enhance the value of his project and create a bridge over industrial property.

Instead, Beal's project is proceeding alone, while the Columbus Center site looks abandoned.

Beal's company has extensive experience with development across the region. The firm owns One Kendall Square, a 10-acre mixed-use development in Cambridge, and manages an extensive list of prominent buildings in and around Boston.

Related Properties is a national developer known for its success on dense urban projects similar to Columbus Center. It developed Time Warner Center in New York and projects in California, Colorado, Florida, and elsewhere.

"Related has a very strong financial reputation and has done a lot of very large projects," said George J. Fantini Jr., chairman of the mortgage banking firm Fantini & Gorga. "Along with Beal, their involvement adds some real value."

Columbus Center's developers, along with Beal and Related, are scheduled to meet with the city and the Massachusetts Turnpike Authority Sept. 15 to try to revive stalled talks over extending the lease for the Columbus Center property. The turnpike has leased the rights to build over the highway to Winn, so the authority must be consulted on any major changes to the project.

The developers have been seeking an 18-month extension to reconfigure their finances, but a deadline to reach an agreement passed last week. A spokesman for the Turnpike Authority said the authority is still committed to working with the developers.

"We hope to reach a consensus not only on the requested 18-month extension for the project, but more importantly on maintaining the [construction] site during that time period," spokesman Mac Daniel said.

Beal pledged to clean up the site and to remove fencing that has encroached on surrounding neighborhoods. Some of that work began last week, following multiple requests from neighbors, Menino, and turnpike officials.

A neighborhood activist vowed to continue to scrutinize the project, especially any effort by the developer to obtain public funds. The developers "are still assuming that Massachusetts public subsidies will pay both their costs and their profits, so full financial disclosure is more necessary than ever," said the activist, Ned Flaherty, who lives around the corner in the South End from the construction site.

Beal said it is premature to discuss any sources of funding for the project until the review is complete. "Until we know the final cost, there is no point in addressing the financing," he said, adding that the review should be finished by mid-October.

Casey Ross can be reached at cross@globe.com.
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Re: Columbus Center

As hardly anything major is done in Boston without first checking with Da Mayuh, Menino probably raised or endorsed the idea of staging the project.

And IMO, Beal and Related are looking at the books to see whether they want to take an equity stake. CalPERS / MacFarlane and Related have done a deal before, another Columbus project, the Time Warner Center at Columbus Circle in NYC, where MacFarlane acquired a 49 percent stake. So it may be that CalPERS brought in Related and Winn brought in a fellow Boston developer, Beal.
 
Re: Columbus Center

This is what should theoretically happen:

Beal/Related finalize their review of the project's finances and they make their findings public: "Columbus Center is not a profitable development as designed, however, it can still be saved"

The buildings grow in size, the private park shrinks, some of the mitigation/extortion funds go away and they present the new and improved Columbus Center 2.0 and promise to resume construction in 45 days. Take it or leave it, Boston.

Related can do this, and Beal is a mayor's buddy, so this is very, very likely to happen.

If Columbus Center is profitable, it will be built. If Columbus Center is not profitable, it will not be built. All the other little story lines fall below that one.
 
Re: Columbus Center

It seems like one of the main and major reason why CC was unable to get off the ground was the inability to get loans caused by a loss of confidence from banks due to a downturn in the market. It has shaken both the consumer's confidence as well as the lender's confidence which has definitely doomed the project, not because of the so call "illegal" actions taken by CC. I guess the condition of the economy did play a major role, contrary to what Ned said.
 
Re: Columbus Center

Beal ISN'T mumbles' buddy, however the economic influence one's company has in the city, forces the political forces within the government to be civil in matters during economic downturns. Developers in this city have two schools of thought. Either buy themselves into close company of the entrenched political class, or they play a great game of economic chess to get what they want. Compare Druker's work to the Beal's and you'll see the difference.
 
Re: Columbus Center

While I am excited to see Related and the Beal Cos. come on to try and save this project, I am still going to stand by earlier point that, unless these developers can find a way to build this without public subsidy (which is probably unlikely at this point), I am unfortunately going to have stand against this project. I am keeping my fingers crossed, though, as if they can solve that problem, then I am all on board for this project 100%.

Here is another article, relating more to the clean up of the construction site rather than the new developers coming on board:

Developers clean up Columbus Center construction

by Linda Rodriguez
managing editor
Wednesday Sep 3, 2008

Dormant site has been bad for business, locals say

After nearly five months of e-mails and calls from local residents and business owners to city officials, the developers of the beleaguered Columbus Center have agreed to clean up the interior of their now dormant construction sites.

Representatives of the city and the developers met with a local business owner on Aug. 29 at Parcel 16 - the rock-strewn site that was to become Frieda Garcia Park, but has for the last few months been the inactive staging site of the Columbus Center construction. As they watched, contractors hauled away rusted scrap metal and lumber from the site, enclosed in chain link fencing and torn green tarp. Since the developers abruptly halted construction on the project in March, citing a lack of financial backing, the site has been essentially vacant.

"It?s dangerous, it?s unsightly and it?s hurting business," said Anthony Gordon, pointing to the fact that construction site has taken over the sidewalk on nearly all sides.

Gordon says his primary concern is that at a minimum, the developers should move the construction back to the original property lines and off the city sidewalks. Gordon owns and lives in a building that overlooks the dormant site; he rents the first floor of his building to restaurants 33 and Stix, which he says have both suffered since the site was abandoned and the project left to founder.

"This is not very nice to look at," he said, adding that Bertucci?s restaurant, which bordered the site, recently chose not renew its lease and the space remains vacant. "It?s tough for [the restaurants] and I want to make sure they don?t go out of business."

Gordon, who also served on the Columbus Center Citizen?s Advisory Committee when the project was first announced and the Construction Committee after, says he?s been with the project throughout its process and had expected a certain amount of discomfort during construction. His building, a red-brick former stables built in the late 19th century, is sandwiched between the corpse of the Columbus Center and the bustling Clarendon project. That project has been very responsive to the concerns of the neighborhood; the Columbus Center had been somewhat attentive, he said, before the project abruptly stopped.

"Right now, I?m just trying to get some normalcy while they try to revive the project," he said, adding that cleaning the interior of the site "should have been done a long time ago."

While city representatives said they could not speak to Gordon?s specific concern regarding the sidewalks and property lines, they did say that the Aug. 29 clean-up session was prompted by neighborhood concern.

"The community brought these concerns to me in e-mail and phone calls," said Tabitha Bennett, the Mayor Thomas Menino?s liaison to the South End and Bay Village. Bennett, along with a representative of the Boston Redevelopment Authority (BRA), sent an e-mail to members of the Bay Village and Ellis South End neighborhood associations and residents of the affected streets, as well as to members of the Columbus Center Construction Committee, indicating that city would be holding the developers accountable to maintain the sites. The e-mail outlined measures such as the twice weekly monitoring of rat traps, trash removal inside the site, the continued clean-up efforts of Project Place on the outside perimeter of the project, and the replacement of torn and graffitied green fencing.

"The main role of the city has been sort of as mediator between the residents and the developers," said Nick Martin of the Mayor?s Press Office, also present for the Aug. 29 cleaning. "The mayor has made it clear that whatever the state the project is in, it still needs to remain safe and clean for the residents in this area."

Martin was unable to comment on the future of the project or what the clean-up efforts may indicate about its future. Likewise, the developers of the project, Winn Development and its California-based partners, issued a statement through a spokesperson that was vague on the project?s future: "The neighbors in the South End and Back Bay deserve to have a site that is maintained. In response to neighborhood concerns, and the Mayor?s continued desire to have a clear site, we initiated a clean-up operation last week, which will continue over the next several weeks. We feel this is an important interim step as we continue to make every effort to move forward on this project."

Though what the push to clean up the site augurs for the future of the project remains unclear, community members can expect answers soon: Mac Daniel, spokesperson for the Massachusetts Turnpike Authority, the agency that holds the lease with the Columbus Center developers, confirmed that the authority will be meeting with the developers of the project and with representatives of the city and the BRA on Sept. 25. South End News initially learned of the meeting from community members planning on attending, however, Daniel was unable to confirm whether the local residents would also be invited to the meeting. This would be the first meeting to include all interested parties at one time since the developers requested an 18-month moratorium on construction in April.

"I don?t know what is going to be discussed at this meeting, but certainly from the Turnpike?s perspective, we want to finally shore up the request for the 18-month extension," he said. "But more importantly, ensure that the most recent clean up around the site as well as future clean ups will continue if the extension is granted."

Daniel said that he was unsure what would be worked out at the meeting, but said, "We would like to see the site brought back to its pre-construction state if again, if the 18-month extension is granted."

Linda Rodriguez can be reached at lrodriguez@southendnews.com
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LINK
 
Re: Columbus Center

Looking at the design provided by the Globe, I was struck by how dated this project now looks. I hope if it ever gets built, it will go back to the architectural drawing board.
 
Re: Columbus Center

^ Insufficiently avant-garde, huh? How should it look? Is there a fresh new style I've overlooked?
 
Re: Columbus Center

I don't understand that comment either. What would make the project good in 2006 but bad in 2009?
 
Re: Columbus Center

Padre Mike, I think that its just because we have looked at it and debated it so many times, we are all just used to seeing it, making it seem somewhat stale. In reality, if this design for the Columbus Center was unveiled today, we would all probably have the same reactions as when we did back when this proposal was originally unveiled. I think what you mistake as an old and stale design is really the result of seeing the same thing over and over again, coupled with the realization that this thing is not moving forward (as of now).
 
Re: Columbus Center

Oh, don't worry Padre.

He said the review will include an "A to Z" examination of all the project's costs and possible ways to save money.
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Once they are done with the 'value engineering' it won't look anything like the rendering.
 
Re: Columbus Center

I think it's fair to say that once this thing gets built, it will not be exactly as currently prescribed. I have a feeling that the local activists will be crying out for the current proposal, when they see what Beal/Related propose to actual turn a profit. The pendulum has swung into the developer's favor now. They are in the driver's seat.

It's going to get interesting. I can't wait for them to come back and present their recommendations - fasten your seat belts!
 
Re: Columbus Center

I like the design of the hotel.

It's an encouraging development, the arrival of Related and Beal on the scene.

Are those jackhammers I hear?
 
Re: Columbus Center

What is "value engineering" ? I've never heard this term before.
 
Re: Columbus Center

Value engineering means changing a design so it costs less to build.
 
Re: Columbus Center

I read that as.... what is "sarcasm"? I've never heard of that before. Microsoft should start developing that into their next upgrades. A way to catch sarcasm through the typed word.

Otherwise.... yeah VE, means build for cheaper. Though I can tell you, from the engineers point of view. The last thing VE'd out, is the architecturally pretty stuff. First things to go are the blood and guts of the building, not the pretty skin.
 
Re: Columbus Center

^^ Really? How so?

Cheaper HVAC units and such? What else can an engineer skimp on that won't compromise the structural integrity of the building?

And no, that's not a sarcastic question, I'm genuinely curious.
 
Re: Columbus Center

Flooring, facades, windows, lighting, condo finishes, office finishes, etc.

The term engineering in value engineering isn't necessarily limited to what saving a structural engineer can find.

There are other things....post-tension as opposed to pre-tension. Driven piles (for the site over land) as opposed to cast piles. These the engineers do have control over. For example, driven is usually cheaper than cast, but Ned is going to have a nasty headache.
 
Re: Columbus Center

DeveloperClean-up.jpg
 
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