Columnists :: City Streets
An RX for city’s finances? Follow the BRA by Shirley Kressel
contributing writerWednesday Jul 2, 2008 City Council has finished another budget review, an exercise in which, unfortunately, few councilors and even fewer citizens participate. And now that it’s all over, we still know little about the outlay of our $2 billion budget.
Although it is not the biggest budget item, one of the biggest factors in the city’s overall revenue picture is the Boston Redevelopment Authority. This year’s BRA hearing was scheduled for a very short time slot, not nearly enough to probe all the BRA’s many financial impacts. It was adjourned without opportunity for the public (in this case, only myself, perhaps because no public notice was posted for the hearing) to testify. Hopefully, the councilors will schedule a second hearing with appropriate public notice, inviting in the many people who may have comments to make about the BRA.
Here are some of the BRA-related financial questions that I think need to be examined - and unfortunately weren’t this budget season:
The BRA has, in its 50 years, drained untallied billions of dollars from the economy of Boston, and continues to do so with mayoral blessing. It gets millions a year in city capital funds directly, and takes many more millions from us indirectly. The BRA claims to be "self-funding," serving the city of Boston without cost; At-Large Councilor Michael Flaherty insists we must preserve the BRA because "we can’t afford a Planning Department." But the BRA has always been publicly funded, by federal money from its creation in 1957 to the mid-1970’s, and since then by city money, directly or indirectly (and without Council review).
The BRA testified that it sustains itself on land sales and leases, and on what Director John Palmieri called "kickers" from various projects. Where did the BRA get all that land? And what are these "kickers"?
The BRA began by seizing "blighted" land, for which the federal taxpayers paid compensation. Now, the BRA takes private property using city money. A few notable examples: in Chinatown, the China Trade building; and the Glass Slipper adult entertainment club, which the city gave the BRA $2.3 million to seize for the benefit of a developer (the BRA received reimbursement from the developer and was to reimburse the city, but the BRA has not responded to my request for the record of the payment to the city.
More problematic, it takes city-owned property and the Mayor waives compensation, bleeding our capital fund. Examples: City Hall Plaza: $400 million estimated development-site value. Hayward Place: $23 million bid value. Winthrop Square: city garage lease rights already taken; BRA says parking revenues are up to $1 million, but city only gets the maintenance bills. BRA will take the development rights next, worth hundreds of millions. Yawkey Way: BRA took lease rights from the City and collects all fees for Red Sox use of street; about $1 million by now, and growing. The Mayor also sells the BRA city land for token amounts: e.g., 24 parcels of land in Dorchester were "sold" to BRA by the Department of Neighborhood Development for a dollar and resold by the BRA for $2.4 million. An unknown number of takings and re-sale of city-owned "air rights" under building cornices have contributed to the BRA’s coffers. Indeed, the BRA has admitted to taking thousands of city properties. We need a list of them, and their current status.
The BRA collects a 2 percent "fee" on condo sales on land it had owned. Absent a service, this "fee" appears to be a "tax," and thus unconstitutional. How many such units have there been, where, how much have they paid?
The BRA collects fees from developers for proposal kits, etc. What are all these fees, and how much money do they bring in?
The BRA declares sites "blighted" to qualify them for tax breaks (and zoning relief). We should be able to calculate the amount of the public subsidy from legally required true assessments; instead, the BRA helps developers negotiate their preferred tax assessment, so we can’t even know what we’re losing, although councilors have asked many times. The BRA demands from owners $1 per square foot for transferring a 121A at sale; e.g., the One Beacon St. tower escapes about $4 million in property tax yearly, while BRA gets $1 million with each transfer.
"Blight"-based Tax Increment Financing (TIF) tax waivers went to Back Bay and seaport projects, to subsidize luxury condos, four-star European hotels, a glittering office tower, and a deal between landlord (Beal Company) and tenant (JP Morgan).
The BRA gets "anti-speculation fees" when it helps speculators. Thanks to BRA rezoning and a sweetheart deal on City land, developer Henry Kara turned $2.5 million into $14 million; the BRA’s cut was $2 million.
The BRA has amassed a huge real estate empire of leased property, by being both developer and regulator. Its property tax-exemption costs us unknown millions a year. Hundreds of acres cleared for "urban renewal" and still vacant have cost us decades of taxes. Why aren’t all BRA properties out in the private development market, as originally intended?
The BRA rezones many parcels in the city for tax-exempt institutions, transferring the tax burden of exempted properties to the rest of us. The BRA lobbies the legislature to pass state tax breaks for developers. The BRA piggy-backed its own 5 percent affordable-housing requirement onto the Mayor’s Executive Order for a 10 percent set-aside - but developers can buy out at $200,000 per unit, totaling, so far, over $10 million. What affordable housing has been built with this money?
The BRA, a self-funding quasi-private authority, occupies the 9th floor of City Hall rent-free. How many square feet of office space does it occupy, and what is a comparable rental rate? Does the BRA occupy other city buildings free of charge? The BRA says it gives the city free use of its own space. Where?
The BRA is an equity partner in several big projects (Rowes Wharf, Charlestown). What zoning relief and public contribution were provided? What are the incomes?
The BRA administers federal and state grants to Boston.How much does the BRA take in fees?
What is the BRA’s role in the Economic Development and Industrial Corporation (EDIC), and how much EDIC money is used by the BRA?
In 2004, Council voted to extend the BRA’s urban renewal plans, conditional on certain reporting requirements. The BRA has failed to comply. Since the BRA is impeding legally required oversight, the Council should rescind the vote and let the plans terminate as originally intended, ending the BRA’s urban renewal powers.
And even this list still doesn’t get at all the information we need. Council should have ongoing BRA hearings, with public input, until it understands the BRA’s grip on our city’s financial health.
Shirley Kressel is a landscape architect and urban designer, and one of the founders of the Alliance of Boston Neighborhoods. She can be reached at Shirley.Kressel@verizon.net.
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