Down Payment Process Eased for Developer of Skyscraper
May 21, 2007
By Thomas Grillo
Mayor Thomas M. Menino is backing away from a timetable that requires a developer to make a substantial down payment for a city-owned parking facility.
Trans National Properties, or TNP, had been facing a June deadline for a payment of up to $20 million to the city of Boston for the Winthrop Square Garage, the proposed site of a 1,000-foot tower.
But the mayor now says the date is ?changeable? and he expects the city will operate the lot for at least two years before it is sold to make way for the skyscraper.
?We are not selling the garage now,? Menino told Banker & Tradesman. ?Why would the developer pay us any money if he?s not going to run it??
The terms of a Request for Proposals issued last year calls for a 1 percent payment upon a developer?s tentative designation to build the tower and another 25 percent upon the completion of the public review process ? but no later than June 30. The city estimates the value of the garage at between $70 million and $100 million.
At issue is the $1 billion, 80-story tower that TNP?s Steven B. Belkin hopes to build in Boston?s Financial District. Dubbed ?Tommy?s Tower? by Boston?s two daily newspapers, Menino wants to transform the crumbling parking garage into the city?s tallest building, with 1.5 million square feet of office and retail space as well as an acre of public space.
In November, Boston-based TNP was the sole respondent to the Boston Redevelopment Authority?s RFP for the project at 115 Winthrop Square. In a carefully worded press release in January, the BRA recommended to the city of Boston the ?tentative designation? of TNP as the developer of the site.
Paul McCann, the BRA?s acting director, said the payment schedule is triggered by the designation, which he insists has not happened.
?We have not tentatively designated anyone, so you can?t expect someone to put up between $10 million and $20 million when we haven?t taken that step yet,? said McCann. ?I?m sure the developer will perform all the requirements when the first trigger happens. We drafted the RFP kit nearly two years ago and figured that the June date would allow plenty of time, but there?s all kinds of issues that have to be resolved. The June 30 date is an impossibility.?
The Boston Finance Commission, or FinCom, an independent agency that monitors the city?s finances, has raised questions about the deal. Jeffrey W. Conley, executive director, said while the dates in the RFP were ?ambitious,? the city is not allowed to change them.
?The BRA has to comply with the public bidding law, Chapter 30B. They can?t change the terms,? Conley said. ?No one made them set those terms. They put it out to bid; let?s stick with the plan. Belkin?s the only bidder and he agreed to pay the 25 percent no later than June 30. It?s that simple. It?s in the city?s best interest to keep to those dates.?
Belkin declined to comment.
?All Wrong?
Last month, FinCom released a highly critical report on the BRA?s disposition of the Winthrop Square Garage. FinCom said the proceeds from the sale of the garage and future revenues from the operation of the facility should go to the city of Boston and not the BRA, an independent agency with its own budget.
The report said the city?s handling of a similar parking lot deal on lower Washington Street cost taxpayers millions and warned the same thing could happen again.
While the city owns the garage, it has been operated by First Federal Parking Corp. Under the terms of the lease dating back to the 1950s, the city receives $76,875, a modest amount, the FinCom report said, given that the garage produces about $2.5 million annually. The lease is set to expire on June 30 and the BRA has yet to issue an RFP for an operator.
Conley said he fears that the BRA?s sale of the Winthrop Square Garage will mirror mistakes made on Hayward Place, a city-owned surface parking lot in Downtown Crossing. The BRA took that property by eminent domain in 2001 and later sold the lot to Millennium Partners-Boston for $23 million.
Millennium made a down payment to the BRA of $13 million. The other $10 million has not been paid. For the first two years of the lease, Millennium made annual payments of $537,000 to the city. Now, the company operates the parking lot, but the city receives none of the proceeds. In addition, because the BRA owns the parcel, Millennium is not required to pay any real estate taxes.
Last fall, the BRA approved Hayward Place at the site, a $200 million mixed-use development that will include 277 housing units as well as create 19,000 square feet of ground-floor retail space and below-grade parking. But plans are stalled for the 155-foot-high building and construction may not commence until 2013.
But BRA officials insist that they will not make the same mistakes. Within weeks of FinCom?s report, Menino said he planned to use revenues from the Winthrop Square Garage to meet the needs of the city?s public housing developments and fund the Boston Housing Police for the next two years.
But Conley remains skeptical. The proceeds of the sale of the Hayward Place Garage were supposed to fund a new school in Chinatown, but construction is not in the planning stages, he said.
?It?s Hayward Place all over again,? Conley said of the Winthrop Square Garage proposal.
Jack McCarthy, a spokesman for the Massachusetts Office of the Inspector General, said communities typically are held to the dates in RFPs, but there are exceptions. If there were a violation of the state?s bidding law, the office could recommend that action be taken by the Massachusetts attorney general.
?As a rule, cities and towns can?t change the advertised dates,? McCarthy said. ?But there can be extenuating circumstances that might allow it.?
Menino denied any wrongdoing. ?FinCom?s got it all wrong again,? he said.