News
Columbus Center still in limbo by Linda Rodriguez
managing editorThursday May 1, 2008 More than a month after developers requested an 18-month moratorium on construction and with the fate of the massive Columbus Center project still undecided, the developers said this week that they’d continue to work on the site in order to "keep the site in play."
"We’re securing the site and we’re going to continue to do minimal work there so as not to completely shut the project down, so that when the funding issues are resolved, we will not have to start over from ground zero," said Alan Eisner, a spokesman for Winn Development, part of the team behind the project. Eisner did not know what kind of construction would be taking place at the site.
When exactly those funding issues will be resolved is up in the air. While Eisner said the developers are "hopeful" the money will come through soon, he acknowledged that the current economic outlook is somewhat dismal. "We are working with MacFarlane and Partners, which is our equity partner. They’re going over all the options at this point," he said.
While the developers have said that it has been a "perfect storm" of financial woes - the current economic climate and skyrocketing costs of construction coupled with the recent loss of $30 to $40 million in state funding - that has derailed the project for the time being, funding has long been a problem for the project.
The massive seven-acre project, which includes a 35-story hotel building, several multi-story luxury apartment complexes, retail space, and the deck built over the Turnpike, ballooned in cost from $300 million in its initial proposal more than a decade ago to its current estimated $800 million. In the last two years, Anglo Irish Bank, a major funding source for the project, backed out of a $437 million construction loan, forcing the developers to find other investors.
Despite concerns over funding, construction on the project began in November 2007, digging up a portion of the parcels in front of Cortes Street. That same month, the Massachusetts Turnpike Authority (MTA), which holds the lease to land the project sits on, gave the developers an ultimatum: Secure $500 million in funding by Jan. 15 or risk having the project suspended. When the developers missed that deadline, the MTA gave them a 30-day extension. By Feb. 15, the developers still didn’t have the funding, missing another deadline. That time, however, the MTA had waived the ultimatum, saying then that they were confident the project would find funding. Not long after, on Feb. 19, the developers agreed to an amendment of their lease with the MTA, guaranteeing they would build the deck over the Turnpike. The agreement indicated that the developers had at least $270 million with which to build the deck and that should they for some reason not build it, a $15 million letter of credit to the agency was built into the amendment. Spokesman Eisner said in March that the developers had secured around $310 million for the project.
However, construction was put on hold at the end of March after the developers asked the MTA for an 18-month moratorium. At the time, developers said they were waiting on funding from the state and could not move forward on the $800 million project without it. On April 7, the Patrick administration announced that because the developers had halted construction, that funding would not be available; specifically, the $10 million MORE grant, which developers had claimed was an essential part of their "capital structure," would be parsed out to other projects in the state (See "Columbus Center Hits Another Snag," April 10). On the heels of that announcement, MassHousing announced that it would no longer be closing on $20.6 million in loans it had previously approved for the project.
The situation has some wondering why the city and state had approved construction on the project without, it seems, being sure that the developers had their funding in place.
"What really upsets me about the Columbus Center project, more than anything else is that the city and the state allowed them to start construction when they didn’t have financing in place," said Peter Hill, a chiropractor with a business on Columbus Avenue, who said that he initially supported the Columbus Center project. "They basically destroyed the neighborhood without knowing that everything was set up."
During a tour of the Cortes Street section of the construction on April 10, a resident of the street put a similar question to Mayor Thomas Menino (See "Menino Says He’s Waiting On Answers From Columbus Center Developers," April 11). Menino replied then that he didn’t have an answer for that, adding that "it’s for the developer to answer that." Menino, accompanied by District 2 City Councilor Bill Linehan, Boston Redevelopment Authority director John Palmieri, and Boston Transportation Department Commissioner Tom Tinlin, also told residents that putting the street at least back to the condition it was in before construction was a priority.
Those issues are currently under discussion with city and state agencies: A spokeswoman for the BRA said that the agency would be meeting with the developers on Thursday, May 1, to discuss where the developers are in finding financing and what steps they will take to mitigate the current situation in the neighborhood. A spokesman for the MTA said Tuesday that his agency is also in talks with the developers regarding the clean up of the site and hopes to achieve a resolution soon.
Aaron Michlewitz, an aide to Speaker of the House Sal DiMasi, who has long been a vocal critic of public subsidy for the project, said that the developers need to come to the neighborhoods and meet with residents. "The community is in limbo in regards to where this development is headed and I don’t think its fair to the South End, Bay Village and Back Bay, it’s not fair to the residents to have to sit and guess what the next step is," he said.
Even as the developers meet with the city and continue to look for other funding, residents and business owners remain concerned about the empty parcel of overturned land in their neighborhood.
"It is creating a dead zone," said Hill, noting that local business, including his own, are feeling the brunt of several major construction projects underway in the same area.
"It’s upsetting for the residents and the businesses ... people are looking out on this huge construction project," continued Hill, adding that while construction is part of living in any major city, residents and business owners put up with it "because you know there’s a light at the end of the tunnel."
"Nobody knows there’s a light at the end of this tunnel," said Hill.
Linda Rodriguez can be reached at lrodriguez@southendnews.com
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