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© Copyright 2005 Globe Newspaper Company
The Boston Globe
June 25, 2005
Letter blasts Pritzkers on development pace
By Steve Bailey, Globe Staff
Mayor Thomas M. Menino yesterday threatened to challenge the valuable city approvals the owners of Fan Pier have been granted on their property, and even their ability to continue making millions parking cars on the land, unless they move quickly to spur development on what has long been considered the jewel of the South Boston Waterfront.
In a letter and in an interview, Menino made it clear that his patience has run out with the Pritzker family, the Chicago owners of the Fan Pier for the past two decades, and that he is willing to use a stick to force the sale of the 21 acres of land that has become a symbol of disappointment on the waterfront.
''Why can't we develop anything? Why can't it move forward? What is the problem?" Menino said in an interview. ''I think they are procrastinating. They are saying, 'Someday when we are ready.' It is not when they are ready. It is about the city -- jobs, housing, and revenue."
The Boston Redevelopment Authority was supportive of the Pritzkers through a difficult four-year permitting process. But in a letter yesterday at Menino's behest to Spaulding & Slye Colliers, the Boston consultant to the Pritzkers, BRA director Mark Maloney said the city is ''exploring its options," in particular whether those permits for about 3 million square feet of office, residential, and hotel space may soon lapse. Under Boston's zoning regulations the city approvals can be reviewed under certain circumstances if a project does not get underway within three years. That three-year period would expire in November, the BRA says.
The approvals allow for development over the equivalent of nine city blocks, including residences, hotel, office, some retail space, and a significant amount of cultural and civic space, including a new Institute of Contemporary Art as well as a marina, Harborwalk, and parks. The detailed permits allow for considerable flexibility and conversion among uses, depending on market conditions, and the Pritzkers and potential buyers recently have talked about increasing the residential component at the expense of office construction.
Without those approvals in hand, the Pritzkers or another developer would have to spend several more years, and millions of dollars, to secure permission to build on the land.
Recently, the Pritzkers have been shopping Fan Pier, but two preliminary deals -- one with Lennar Corp., a national homebuilder, and the other with Boston developer Stephen R. Karp -- fell through. Both bids were believed to have been in the range of $120 million, and in both cases, the Pritzkers were able to pocket the deposits of $2 million to $3 million. ''That is a pretty good way of paying your tax bills," said an unhappy Menino.
Beyond the development approvals, the city says it could move on the Pritzkers' parking franchise. For instance, the property is permitted for 1,530 parking spots, but that parking permit expires in December, and the BRA is now suggesting it may not be a sure thing for renewal. In addition, the proposed project was permitted for an increase in parking to 2,400 spaces, but the city is saying that, too, could be at risk.
Spokesmen for both Nicholas Pritzker, chairman of Hyatt Development Corp., and Spaulding & Slye Colliers declined to comment. Any attempt to revoke development or parking permits could wind up in court. But R. Jeffrey Lyman, a real estate attorney with Goodwin Procter who has no affiliation with Fan Pier, says the Pritzkers should be concerned.
''That is hardball, serious hardball," Lyman said. ''I would sit up and pay attention if I got a letter like that."
The Fan Pier has a long and tortured history going back more than 20 years, when the Pritzkers won it in a legal dispute with Boston restaurateur Anthony Athanas, who died last month. Development booms have come and gone, but Fan Pier has remained a surface parking lot, as has 24 acres of adjacent land controlled by the owner of the Los Angeles Dodgers, Frank McCourt.
If the city were able to rescind the development approvals, the Pritzkers' land would be much less valuable, real estate executives say, and any new approvals could take years.
Despite the disappointment over some of the high-profile properties on the waterfront like Fan Pier, Pier 4, and the McCourt land, development has been moving ahead in the area. This week, there was a topping off for the Westin Hotel beside the $800 million convention center and a long-dormant site on D Street was sold to a developer who hopes to begin construction within a year on 700 units of housing and a massive garage.
In addition, Manulife Financial Corp., which acquired John Hancock Financial Services, is moving 1,500 workers into its new building on the waterfront. Boston developer Joseph Fallon is in the ground with his apartment complex and a hotel. The new Institute of Contemporary Art is going up fast. A developer has been picked for the so-called Core Block, which will become the retail center of the district, and McCourt has partnered with the giant Related Cos., raising expectations about development on his land. New office construction remains unlikely because of high vacancy rates.
It is Fan Pier, however, that most bothers Menino. ''Some developers, they get their rights and sit on them," he said. ''That's wrong."
Steve Bailey can be reached at firstname.lastname@example.org or at 617-929-2902.
© Copyright 2005 Globe Newspaper Company.
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