Re: Filene's
This could end up becoming an upcoming drama series on TBS
Tension builds over Filene?s site project
Developers, city at odds over Sept. 26 deadline for resumption of work at Downtown Crossing
Funding problems have prevented a Downtown Crossing project that originally was to include a 39-story tower with offices, a 250-room hotel, 166 condos, and stores from getting off the ground. (David L. Ryan/Globe Staff/File 2009)
By Casey Ross
Globe Staff / August 28, 2010
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E-mail|Print|Reprints|Comments (20)Text size ? + The developers of the stalled Filene?s redevelopment are refusing to acknowledge the city?s Sept. 26 deadline for resuming work on the massive construction crater they left in Downtown Crossing, intensifying a very public fight with Mayor Thomas M. Menino.
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?PDF Filene's developers' letter to Boston officials
Developers John B. Hynes III and Vornado Realty Trust sent a letter to the Boston Redevelopment Authority disputing the city?s claim that their approvals will lapse on that date, arguing they have the authority to proceed and that stripping their permits will cause further delay. The letter, received by the city yesterday, was obtained by the Globe.
?Any action by the BRA at this time that adversely impacts the approvals we have received only serves to make finding a solution more difficult, and seems contrary to the best interest of the city and the BRA,?? stated the letter, which was signed by Hynes and Vornado executive Sandeep Mathrani.
The letter signals that the developers are girding for a possible legal battle with the city, as they stand to lose millions of dollars if they lose their approvals to build on the site. Vornado, the lead partner on the project, is weighing the sale of its stake or bringing in another financial partner, but those options become much more difficult without city permits.
John Palmieri, Menino?s director of the BRA, said he intends to begin a review of the developers? approvals on Sept. 26, the city?s three-year deadline for obtaining a building permit to proceed with an approved project. Palmieri initially informed the developers of the deadline in June, floating the possibility that the approvals could be revoked.
In yesterday?s response, Hynes and Vornado asserted that they obtained a building permit on April 8, 2008, and that it will remain in effect past the September deadline, although they did not indicate for how long. However, Palmieri said the BRA had given approval only to start demolition on the Filene?s site, and that a building permit was never issued.
?Their contention is not accurate,?? Palmieri said. ?They?ve had several years now to demonstrate the capacity to get a project started, and they haven?t done it. They?re really not giving us much to work with.??
The developers, who halted work on the $750 million project due to funding problems in summer 2008, also contended in the letter that a recently passed state law gives the BRA the ?ability and the applied intent?? to extend the developers? approvals so they can generate financing. But Palmieri said the law, meant to encourage development of stalled projects, does not supersede city regulations that require a further review if a development does not proceed within three years.
Hynes and Vornado initially won approval to build a 39-story tower with offices, a 250-room hotel, 166 condominiums, and retail stores, including a revitalized Filene?s Basement. But the global credit crisis, and resulting shutdown in lending for large real estate projects, left them unable to obtain financing to move forward. Since halting work, Hynes and Vornado have continued to search for funding, producing multiple revisions of their plans to try to attract new investors. However, they lost their main office tenant, the law firm Fish & Richardson; rents for retail and office space dropped; and the condominium market crashed. These factors make it extremely difficult to guarantee profits needed to justify the high cost of construction.
Meanwhile, Menino, whose administration has faced criticism for granting the demolition permit to the developers without adequate proof they could proceed, has repeatedly and harshly denounced the developers. The mayor has focused particular scorn on Vornado, accusing the New York-based firm of deliberately allowing the Filene?s site to become blighted in order to wrest financial concessions from the city.
?This development is too important to Downtown Crossing and to the entire City of Boston to be used as a bargaining chip to improve your bottom line,?? Menino wrote in a March letter to Vornado. In recent days, he has stepped up the criticism, chastising Vornado for leaving a hole in Downtown Crossing while it pursues a deal to buy the John Hancock Tower and build a skyscraper in New York.
Vornado has not responded directly to the mayor?s criticism. In yesterday?s letter, however, the firm asserted it has never stopped trying to advance the Filene?s redevelopment, noting it recently floated a plan to build more residential units on the site, reducing office space seen as less attractive to investors.
?We have been in constant negotiations with possible lenders and equity stake holders, and have worked very hard to find a suitable solution for the site that can be financed and meet the city?s goals for the area,?? the letter stated. ?. . . We hope that you will continue to work with us in finding a solution for the proper development of the site.??
But Palmieri said that hope is fading fast: ?We haven?t seen or heard anything from Vornado to indicate we?ll have anything to talk about between now and the end of September,?? he said.
Casey Ross can be reached at
cross@globe.com.
http://www.boston.com/business/articles/2010/08/28/tension_builds_over_filenes_site_project/
