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This story ran in the Boston Herald on Friday, February 22, 2002.
© Copyright by the Boston Herald and Herald Interactive Advertising Systems, Inc.

Tax breaks seen for Southie hotel
by Scott Van Voorhis

Developer Joe Fallon is close to winning a coveted tax break from the city for his long-stalled plan to build hundreds of hotel rooms near the new South Boston convention center.

The Boston Redevelopment Authority recently voted to grant Fallon a 121A tax break for his $240 million hotel and apartment project. The deal could save Fallon millions of dollars over the next several years.

Fallon first rolled out his hotel plan in 1998, but struggled to nail down financing.

To win the tax break, he must work out the details of the deal with city tax officials, after which Mayor Thomas M. Menino is expected to approve it.

Under Fallon's proposal, the 18-story hotel would pay a third to half of the city's typical hotel tax rate in its first six years in business. The 440-room hotel would gradually escalate payments until it reached the city's standard commercial rate - 5 percent of gross revenue - after 10 years.

Fallon, in his proposal to City Hall development officials, argued that he can't finance his proposed hotel and apartment project amid a difficult economy without the tax break. He also cited extra expenses, such as the cost of cleaning up contaminated soil at the site.

Fallon's project involves a hotel, a 675-space parking garage and 460 apartments in two buildings wedged between Fidelity Investments' World Trade Center complex and the MassPort-owned Fish Pier.

A BRA spokeswoman said the 121A tax break, which several major projects have won over the years, appears needed to get the Southie hotel project done.

``He is very close to financing a hotel in a market that is very difficult to finance in,'' said Susan Elsbree, the BRA spokeswoman.

Fallon's project is seen as key to the $800 million South Boston convention center. Slated to open in 2004, the giant taxpayer-financed meeting hall has struggled to book conventions because of a lack of nearby hotel rooms.

Many proposed hotels for the area around the convention center near Southie's waterfront have faced serious challenges winning bank financing.

The proposed tax break is endorsed by convention center boosters.

``I think what is happening is that people are trying to be as creative as they can to move these projects forward,'' said Patrick Moscaritolo, head of the Greater Boston Convention and Visitors Bureau.

© Copyright by the Boston Herald and Herald Interactive Advertising Systems, Inc.

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