“The issue he raises is the cost for public accommodation, because it adds to the burden of a development project.”
BRA Director Mark Maloney, 11/10/04
“Maloney also said city officials hoped that the Pritzkers would donate to a Boston cause -- perhaps to the Rose Kennedy Greenway -- the $2.5 million that Karp and his partners, Boston Properties Inc. and Related Cos. LP, forfeited by pulling out of the deal.”
The Boston Globe, 11/10/04
Question: Why does the BRA ask Fan Pier property owners to apply a $2.5 million deposit to the Rose Kennedy Greenway while at the same time considering a renegotiation of the public amenity package on Fan Pier due to excessive cost?
To read a related article about Fan Pier, click here.
© Copyright 2004 Globe Newspaper Company.
Published in The Boston Globe, November 10, 2004
Flaherty blasts BRA over Fan Pier
Idea of changing public benefits to speed plan hit
By Thomas C. Palmer Jr., Globe Staff
Boston City Council President Michael F. Flaherty yesterday lambasted the Menino administration's suggestion of a compromise on public amenities on Fan Pier in an effort to speed up development of the languishing land.
"People have fought hard for years to ensure public access to the waterfront," an animated Flaherty said in a telephone interview. "I'm offended by the idea that we're all of a sudden now going to change the requirements."
Flaherty was reacting to comments by a Boston Redevelopment Authority official following the news, made public yesterday, that developer Stephen R. Karp and his partners had pulled out of a tentative deal to purchase the prime 21-acre site in South Boston. The Karp team was the second prospective buyer of the land, owned by the Pritzker family of Chicago, to fail to make a deal on the land in the past two months.
On Monday, Boston Redevelopment Authority director Mark Maloney told the Globe that a combination of the $125 million price tag for the land and the enormous upfront cost of developing the site were making a deal impossible to complete. And although he denied government officials had asked too much of the land's owners in exchange for development rights, Maloney said that, in view of the two failed purchase deals, some of the requirements might have to be reconsidered.
"Maybe we should entertain a conversation about the timing of the public accommodations not accruing quite so quickly," Maloney said Monday, "maybe having them reviewed and refined." Maloney also said that "A good plan that cannot be built is not good enough."
But Flaherty said he thought the city was ready to give up too much.
"I'm never willing to compromise public interest for private gain," he said. "Knowing people paid hundreds of millions of dollars to clean up Boston Harbor, now we see the BRA willing to back off public access to benefit a guy from Chicago. I'm offended."
Nicholas J. Pritzker, chairman of Hyatt Development Corp., appeared to side with Flaherty.
"We don't know where this talk of change is coming from," he said in a statement. "Hyatt is not asking for those changes. We are committed to seeing the Fan Pier developed consistent with our current approvals and commitments to the city."
Asked whether he wanted to risk requiring so much of a developer that the Fan Pier land might be empty for several more years, Flaherty said: "You're talking to a pro-development councilor who wants to get to 'yes.' At the same time, that development has to be sensible, and the result has to be done right."
Maloney said he didn't think he and Flaherty were much in disagreement -- and he pointedly said he thought the price that was negotiated is too high.
"The issue he raises is the cost for public accommodation, because it adds to the burden of a development project," Maloney said. "The big issue is the collision between that and the purchase price of $125 million. That's above market value -- if it weren't, the property would have been sold."
Maloney also said city officials hoped that the Pritzkers would donate to a Boston cause -- perhaps to the Rose Kennedy Greenway -- the $2.5 million that Karp and his partners, Boston Properties Inc. and Related Cos. LP, forfeited by pulling out of the deal.
Karp, the second prospective purchaser of Fan Pier since August, pulled out Monday, just before a deadline when he was to deliver a check for $10 million. Karp considered the cost of developing the land and the price he had tentatively agreed to pay to be too much for him to reasonably expect a good return in the current market, Maloney said Monday.
A Florida-based team led by Lennar Corp. had agreed to purchase the land but missed a late-September deadline.
Vivien Li, executive director of the Boston Harbor Association, said she was not surprised the Karp deal was not consummated. Li said it was less the cost of the public amenities than the high cost of upfront construction that has made a deal elusive.
Part of those early development costs are the public amenities that the Pritzkers agreed to over the past few years, as city and state officials drove a hard bargain for parks, a marina, a Harborwalk, space for civic institutions, and extensive public access to the site.
"When you start off paying more than $100 million for the land before you even put any concrete down for foundations, it's extremely hard for anyone to be able to make a go of it in the short term," she said. "Development on the waterfront is extremely expensive, for underground parking, the sea wall, site preparation.
"Frankly, I think when Steve Karp did his number-crunching he just felt it would be many, many years before the project would pay for itself."
Flaherty cited the John Joseph Moakley United States Courthouse, next to Fan Pier, as a building that was rushed and should have been more architecturally inviting to the public.
"The building has its rude backside facing the community and a beautiful glass facade is on the water," Flaherty said.
He said that on Fan Pier he did not want to "slap down development just to get a shovel in the ground."
"My interest is not providing more value for a guy from Chicago," he said. "The waterfront should be an amenity for the whole city."
Thomas C. Palmer Jr. can be reached at email@example.com.
© Copyright 2004 Globe Newspaper Company.
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