Millennium Tower (Filene's) | 426 Washington Street | Downtown

Status
Not open for further replies.
Re: Filene's

There's a video inbedded in the link.
http://link.brightcove.com/services/link/bcpid1185143625/bctid14269131001
The billions of dollars the US government has pumped into banks and the economy have not found their way to the Boston skyline. Developers report that lenders are still refusing to finance large commercial buildings.

If anything, lending conditions have only gotten worse since the $700 billion federal bank bailout began, some developers said, with construction financing becoming even more expensive and difficult to obtain.

"It's an outrage. Banks have money, and they're not lending it out," said David Begelfer, chief executive of the Massachusetts chapter of the National Association of Industrial and Office properties. "That's a big problem in Boston and across the country."

The funding freeze has saddled the city with empty work sites and prompted some developers to scale back their plans, in hopes that smaller projects would be easier to finance.

No such luck. The developer of the Filene's block in Downtown Crossing, who temporarily halted construction on the mega-mixed-used project in November and trimmed seven floors from his tower, is now planning for a longer shutdown, as are the builders of a $300 million biotechnology lab in the Longwood Medical Area, who also stopped work in November.

Several other developers are slowing preconstruction work, fearful they won't be able to get loans.

"I had hoped that with the new [Obama] administration we would see a more positive lending market, but if anything it's gotten even tighter," said Tom Alperin, president of National Development, which is building the Longwood Center biotech lab. "It's a really tough dynamic right now."

Alperin had hoped to resume construction by spring. Now, he's just hoping to get going by year-end.

Yesterday, the Federal Reserve said that loans of $50 million or more for commercial development in New England remain "virtually nonexistent." Overall, lending for development projects is down 19 percent nationwide since passage of the government bailout in October, according to the US Treasury.

As economic conditions worsen, the Obama administration is preparing additional measures to get banks to resume lending. One initiative calls for the government and private investors to spend up to $1 trillion to buy so-called toxic assets from banks to improve their balance sheets. A separate program would spend another $1 trillion of government money to provide funds for investors to buy loans and related securities, thus providing new capital for additional lending.

In the meantime, the largest lenders for commercial real estate in New England - Bank of America Corp., Wells Fargo & Co., Anglo Irish Bank Corp., and others - remain largely on the sidelines when it comes to financing skyscrapers and other large mixed-use projects, according to developers and commercial bankers.

Anne Pace, a spokeswoman for Bank of America, said the bank loaned $7 billion for real estate in the fourth quarter of 2008. But she could not say how much of that was allocated to commercial building projects or to developments in Massachusetts.A spokeswoman for Anglo Irish, which did not receive US government funds but has benefited from Irish government aid, declined to comment. Wells Fargo, which purchased Wachovia Corp., another major lender to Boston developers, did not respond to a request for comment

"I'm talking to a lot of people in the capital world right now, and they're basically out of business," said Boston developer Ron Druker, who is trying to proceed with an office development on Boylston Street. "We're in a major trough in the market right now."

There are several explanations for the retrenchment. One is that banks, which used to team up to provide loans of $100 million or more, are now reluctant to do so because of uncertainly about one another's solvency.

Moreover, banks are dealing with their own individual financial problems, making it difficult to negotiate uniform terms for a syndicate of lenders. While one bank might be willing to put up $50 million for a project, others might want lesser amounts and more stringent lending terms.

Another problem is the lack of a secondary market where banks can sell the deals they make with developers. In 2006, the securitized lending market accounted for more than $230 billion worth of deals. But it nearly vanished after huge losses related to subprime mortgages and other bad loans scared off investors. Last year, securitized lending dropped to $20 billion nationwide, and many bankers believe the market will not reemerge 2009.

"The entire business model of making commercial loans and selling them has failed miserably," said George Fantini, a principal in the mortgage banking firm Fantini & Gorga.

Typically, banks rely on their ability to repackage and sell loans to investors to replenish their capital and lend out more money.

On the streets of Boston, the credit crisis is making life uncomfortably quiet. The Filene's block downtown is an idle construction site with a big hole in the ground. The developers of the massive Columbus Center project over the Massachusetts Turnpike, where construction was stopped almost a year ago, have gone from one delay to another as they continue to hunt for funds to resume the $810 million development.

Elsewhere, the builders of a proposed 40-story tower over South Station have held off, as has developer Joseph Fallon on the second office building at his 21-acre Fan Pier site in South Boston.

The funding delays have prompted Mayor Thomas M. Menino to ready a $40 million pool of loans to restart development, targeting projects that have financing gaps.

At the state level, the slowdown is threatening to undermine Governor Deval Patrick's plan to use federal stimulus money to trigger a slew of private building construction. The governor wants to use some of the expected $5 billion to $6 billion for bridges, roads, and other construction near private development, but it would have limited impact if those builders can't move forward.

"We're clearly in the down part of the cycle right now," said Greg Bialecki, Patrick's secretary of Housing and Economic Development. "We will still have about $500 million in new road and bridge money. But admittedly, it would be a better thing of those dollars were a catalyst for private developers to build their buildings."

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

http://www.boston.com/realestate/news/articles/2009/03/05/the_quest_for_cash/?page=2
 
Re: Filene's

Mr Hynes feels bad for that fact that there is a giant hole. He wants you to know that he is deeply sorry, and if he could fill that hole and get his $100M+ back he would.


Two downtown projects want a piece of a $40 million loan fund offered by the city of Boston, but a trio of other high-profile developments have yet to apply.

In an effort to jump-start commercial real estate construction in Boston, City Hall is offering commercial financing at low interest rates. Under the Boston Invest in Growth Fund, a Department of Housing and Urban Development-funded loan pool will provide Section 108 money to jump-start construction projects and create jobs.

But the city has not heard from developers of three projects that Mayor Thomas M. Menino identified in his announcement, including the stalled Filene?s redevelopment, Fan Pier and the 30-story Residences at Kensington Place, a 346-unit rental housing project proposed for the city?s Theatre District.

- tgrillo@bostonherald.com

Hrmmm...
 
Re: Filene's

A PORTION of $40m would accomplish absolutely nothing for One Franklin. It is a $400m project. There's no point to applying for any of that. It's like getting 20 bucks to help on your mortgage payment for this month.
 
Re: Filene's

Think of the financing as a stone archway - every little piece of financing is crucial to hold together the rest of the financing. Even if they only get $10M from the city, they can get another $10M elsewhere, and piece by piece, bit by bit, they are constructing the financing 'arch' - they already have several pieces of large debt put together for the property - they are searching around for the missing chunks, not the entirety of the $700M. Every little bit of money they can find makes other lenders view the property more favorably.
.
 
Re: Filene's

A PORTION of $40m would accomplish absolutely nothing for One Franklin. It is a $400m project. There's no point to applying for any of that. It's like getting 20 bucks to help on your mortgage payment for this month.


Especially losing tenants? ?Fish & Richardson.? This project might not get built in this environment.
 
Re: Filene's

Nationalize the banks. If the taxpayer is going to give them money, he's a de facto investor and needs an equity share.
 
Re: Filene's

If it's the people who are giving the money who need an equity stake, then it's the Chinese "taxpayer" who "owns" not only the banks, but half of the American government.
 
Re: Filene's

When the bank lends you money to buy a house, it's the de facto owner of your house. It can boot you out if you don't perform.
 
Re: Filene's

Do you really want the same people who do such a marvelous job running the RMV, Turnpike Authority, MBTA, ect. running your bank?

Congress hasn't run a realistic balanced budget in over three quarters of a century. Somehow I trust the crooks on Wall Street more, given that their ledgers haven't had as an embarrassing of a record as Congress.
 
Re: Filene's

Rather than nationalization, we might be better off mutualizing the banks -- converting them to depositor-ownership. (We used to have many more mutual banks. I don't know why demutualizing was ever allowed.)
 
Re: Filene's

Congress hasn't run a realistic balanced budget in over three quarters of a century. Somehow I trust the crooks on Wall Street more, given that their ledgers haven't had as an embarrassing of a record as Congress.

I don't want to turn this into a political discussion or take it off topic, but the federal budget was balanced from 1998 to 2001. In fact, there was a record surplus of over $236 billion in fiscal year 2000. See FactCheck.org http://www.factcheck.org/askfactcheck/during_the_clinton_administration_was_the_federal.html
 
Re: Filene's

He qualified his comment with the word 'realistic' which now allows him to define 'balanced' any way he sees fit.
 
Re: Filene's

'Realistic' meant the budget is accounting for existing and future debt service. Boasting about a short term surplus is meaningless when one still has a massive debt compounding interest in addition to unfunded liabilities, like social security, which need to be paid out in the future. I don't think there has been a realistic budget since the federal income tax was cemented by President Wilson and the government got into the habit of spending massively on credit.

Edited because the thread will probably get split and Ablarc, Statler, Disurbanist, Csz, CatStevens, Tobby, Keith, Ron, and anyone else whom seems to enjoy these discussions will probably descend into a friendly debate:


The balanced budget of the late 1990s was predicated on gutting the defense budget and the economy growing at an amazing rate which, for once, outpaced the rate at which government spending was increasing.

Getting back to what I had said previously, the banks had been making a profit for themselves and investors for how many years in comparison to the government running up debt for its investors otherwise known as taxpayers?
 
Last edited:
Re: Filene's

Boston Globe - March 26, 20009
Rushing to a standstill
City allowed developers to skirt requirements in stalled $700m Downtown Crossing project


By Donovan Slack, Globe Staff | March 26, 2009

Boston officials, eager to pump new life into the fragile Downtown Crossing neighborhood, set aside key elements of the city's zoning code and overlooked the absence of mandatory developer submissions in accelerating the $700 million commercial and residential project at the old Filene's site.

A Globe review of city files shows that officials forged ahead furiously through the early stages of the market downturn and the credit crunch in late 2007 and early 2008, even allowing the developers to demolish a key city block before filing necessary forms with the Boston Redevelopment Authority, including a required statement of financial interests.

When the credit markets collapsed and the economy imploded in the fall of 2008, the city was left with a massive hole in a high-profile district, one historic building shorn in half, and a wall of another, Filene's, stripped away. The site has sat dormant for the last four months, like a bombed-out block in a war-ravaged city, laying bare a truth about building in Boston: Developers working on private land are under no obligation to rebuild blocks that they have already torn down.

With anger growing among residents and business operators, Mayor Thomas M. Menino has asked city officials to search for ways to resume work at the blighted site.

"This is the nucleus of that neighborhood," Menino said.

Menino also asked city planners to rethink their practice of pushing through permits for development projects without closer scrutiny of financing and extracting stronger commitments from developers. There are no requirements that the city secure performance guarantees from developers, and such guarantees are typically not required in other US cities, which also have partially completed projects because of the economic downturn, specialists say.

"The mayor will not countenance holes in the ground," said John Palmieri, director of the Boston Redevelopment Authority, the city planning agency. "He has made it abundantly clear that he will not tolerate this blighting of the downtown."

But in the case of Downtown Crossing, the city does not appear to have much leverage, and Menino, who is preparing a potential reelection bid this year, is finding that he can do little now to force the developers to fulfill their grand promises.

"They're trying to figure it out," Palmieri said of the developer, a partnership of New York-based Gale International and Vornado Realty Trust. "What we've told them is, 'Let us know what you need.' We'll be as responsive as we can."

The Globe review of public records shows the city has already cut corners repeatedly. The review also found the developers contributed to Menino's campaign fund, a common practice among developers in the city.

Campaign finance reports show that Gale and Vornado executives contributed a total of $1,550 to the mayor's coffers during the review process; that included $500 in the weeks before they first applied to do the project, $250 on the same day they received a demolition permit, and another $500 one month later. They gave $300 more last November, after work had stopped on the project.

A spokeswoman for Gale International and its chief executive, John Hynes III, declined to comment for this report, as did a spokeswoman for Vornado Realty Trust, whose earnings report shows net income of $395 million in 2008.

The mayor said he had nothing to do with accelerating the Filene's project, and any campaign contributions he received were coincidental.

"I didn't have any role in pushing this forward," Menino said.

Palmieri, the BRA executive director, said that even if every step had been followed to the letter by the agency and the agency had scrutinized the project's finances more closely, the result arguably could have been the same. He said there was no way the agency could have anticipated the economic recession that halted progress on the project.

Nevertheless, Palmieri said he is following through on Menino's order that the agency review finances more rigorously. Such reviews previously have included informal conversations in which developers tell city planners how they intend to finance construction.

Palmieri said he is also putting a stop to practices that have allowed construction to begin before projects are fully vetted.

"We'd like to look at this as an opportunity to tighten up the way we conduct reviews," Palmieri said.

Records show the developer first applied to construct the project in November 2006, outlining plans for a sparkling condominium tower flanked by a hotel and a refurbished Filene's building that would house retailers on the upper floors and place the renowned Filene's Basement back into its old space. The plans were especially sensitive because Filene's is listed on the National Register of Historic Places.

The requirements for winning approval of such a large development are laid out in city zoning and building codes, which spell out each step developers must take and criteria the project must meet.

Among the first of those steps is submission of a statement of financial interests in the proposed project, listing who will benefit from the project and to what extent. That form, according to the zoning code, is to be signed under penalty of perjury and filed with the city clerk, among other entities, to "foster public understanding" and confidence in the city's land-use decisions.

The Filene's developer filed no such form with either the city clerk or the Boston Redevelopment Authority, the Globe review found.

Nevertheless, based on the rest of the hefty application submissions, the Boston Redevelopment Authority board of directors voted in August 2007, amid clear warnings of rapidly deteriorating credit markets, to give preliminary approval to the redevelopment plan.

The developer next was supposed to sign an agreement outlining what it would do to mitigate impacts of the project on the neighborhood.

An undated, preliminary mitigation agreement was drafted with public input in 2007 but was never finalized or signed. It would have required the developer to provide $2.8 million for improvements to streets in the area and set up a $250,000 endowment to help fund educational programs and preserve the nearby historic Old South Meeting House.

Conditional upon the signing of that agreement and other factors, the developer was supposed to obtain a certification of compliance affirming that each step in the approval process had been taken and each criterion met. It never obtained the certification.

The zoning code explicitly prohibits the city from issuing any building permit without the certification of compliance.

Nonetheless city planning officials authorized city inspectors in October 2007 to issue permits to demolish half the block, including the back side of a century-old building that housed a major glass and ceramics retailer and wholesaler, the Jones, McDuffee, and Stratton Co. The demolition also included the shearing off of one wall of the Filene's building.

Two months later, they signed off on the issuance of a permit to renovate and refurbish what was left of the Filene's building. And in April 2008, they allowed inspectors to grant a permit to dig the large hole and begin constructing slurry walls and part of the foundation of the tower.

The BRA's chief architect, David Carlson, who gave written authorization for the permits, said the Filene's project was allowed to skip steps in the process because the developer needed to meet a commitment to Filene's Basement that the iconic retailer would be able to move back in and reopen in 2009.

Carlson said such shortcuts happen "occasionally" in about 10 percent of proposed development projects.

The director of development review for the BRA, Heather Campisano, maintained that such practices do not violate the zoning code, because the permits issued were not for the "full building" of the project, but rather for small pieces.

"You can interpret it to mean any host of things," she said.

Donovan Slack can be reached at dslack@globe.com.
 
Re: Filene's

Oh great, because of this circus every two bit NIMBY is going to have one huge precedent for shooting down any future projects which have the potential of being fast tracked.
 
Re: Filene's

The reality of this problem could sink Menino's Political career. Boston Taxpayers will end up bailing out this project somehow. That is the only way this gets built with sometype of tax break or fixed rate loan.

Menino firing teachers in the hundreds but ends up fiddling the budget to make sure this developer gets a payday. It's all about who you know.
 
Re: Filene's

Don't you love how Boss Menino is all "oh, I have nothing to do with development decisions in the City of Boston" in this article??

I don't know much about Kevin McCrea who is running for Mayor, but I am loving his YouTube clips in and around Boston's real estate give-aways like Haywood Place and Winthrop Street Garage... worth checking out.

Footnote: The balanced budget of the late 1990s was a centerpiece and key pillar of Newt Gingrich's Contract With America - leading him to shut down the Federal Government twice in a Clinton showdown, rather than pass an unbalanced budget.
 
Re: Filene's

There was a good article about McCrea in the Phoenix. He is definitely pro-development downtown, because he correctly recognized how much it adds to the taxes for the neighborhoods, something self interested NiMBYs and their concern about height and shadows need to remember before they complain about teachers losing jobs. I don't know enough about him and his other policies to say he'd be a good mayor, but his involvement in the discussion can only be healthy.
 
Re: Filene's

None of us like what has happened, but I'd like to suggest turning the discussio towards answering this question: What could or should the Mayor and BRA have done differently regarding this development?
 
Re: Filene's

None of us like what has happened, but I'd like to suggest turning the discussio towards answering this question: What could or should the Mayor and BRA have done differently regarding this development?

Make sure the developer is fully financed before blowing a hole in the middle of the city.

BRA is a JOKE and is a waste of taxpayers money.
 
Status
Not open for further replies.

Back
Top