July 04, 2010

Hanover Theatre Story

In the Telegram, click here.

In 1987, I started working downtown in at 303 Main Street for the State Mutual sales office.  In 1990, the office moved to 10 Mechanic Street, where we ended up starting Advantage Benefits in 1992.  in 1997, we moved to our current location on Pleasant Street.  Bottom line we have been working downtown for over 20 years and have vested interest in the development of downtown Worcester.

In the newspaper today, I was quoted that "there is no economic spinoff to date" in regards to the Hanover Theatre.  I hope this changes over the next few years, but I stand by that quote.  The story goes on to quote city officials, who maintain that the theater has provided a considerable boost to restaurants around the city.  Let me get this straight we invested $4 million in tax breaks/subsidies and 13 million in federal/ state credits in this 32 million project to help the restaurants around the city?

Lets be honest.  There has not been the spinoff that was projected.  Not even close, but lets hope that the several major companies, who are interested in key buildings in the Federal Square area buy them and develop market rate housing as mentioned in the story.  Now if that happens, then that can be called "economic spinoff".

Here is a little problem that has been created.  The Goral block next to the theatre was bought for 1.2 million and some $1 million on renovations have been made, but the assessed value is $473,000?   Jahn, help me how do you buy a building for 1.2 million that is recorded in the registry two years ago, pull a permit and invest another $1 million and only get an assessment based on $473,000?   Meanwhile, one of the owners maintains that he did not over-pay and he has an appraisal to prove it.  Maybe he should send that to the assessor and get a higher valuation on his building? 

More importantly if I owned one of these key parcels on Federal Square and saw the Goral block sell for $1.2 million, what would I sell my building or parcel of land for to one of the major companies the City Manager mentions?  Answer--alot more then the market value.

What really bothers me more then anything, however, in this story is that the company that owns the Goral Block has been authorized for a $3 million federal "Recovery Zone" bond?  Personally I never ever heard of these bonds?   The Economic Development Office of the City of Worcester should hold an RFP and advertise these Recovery Zone Bonds, before they authorize anyone to get one penny of these monies.

Here is a press release on these bonds.   If you go to the bottom there is a link to allocations around the country (worcester has been allocated approximately 8 million).   In Billerica, for example, a Recovery Zone Bond, story here, is being used to attract a biotech firm to build a 70,000 square foot facility that will employ 75 full-time employees.   

In Worcester we intend to give $3 million of our Recovery Zone Bonds (almost 50% of our allocation) to an owner that can not yet find a "destination" restaurant as a tenant?  Not to mention owner just had another restaurant that they owned (55 Pearl) go bankrupt, another restaurant (City Park Grille) that they did not own just close within 4 months of opening  and the City of Worcester is about to sink some $250,000 (parking garage on MLK) into 3rd restaurant all less then a half mile away.  Seriously does anyone really think we should be investing 3 million dollars into another restaurant downtown???  

Maybe the next new growth business after affordable housing in Worcester will be subsidized restaurant development?   The only spinoff I really see from this project is now even more development projects subsidized with our tax dollars.

12 comments:

denholms said...

Bill, do you think it will turnaround and get better? I really hope. This city has some beautiful architecture, and it would be great to see it in better shape. The downtown area has so much potential. I just hope it comes back to life. If only some of the facades could be cleaned up, like where Toupins and Sharfmans were. It would be easier on the eyes.

Bill Randell said...

From office I walk down Pleasant to Main. If I turn right there are alot of good things happening. We really go to thank the Mass School of Pharmacy.

If I go straight or turn right, there is not much good happening.

Bill

Anonymous said...

Hanover Theatre's 2009 report to the community (look under About Us) says $6MM in spinoff benefits to Worc.

If $6MM is nothing in your book, I'd like to trade my nothing for your nothing....

Eric "Looking for Nothing" K.
Worc., MA

Bill Randell said...

Eric:

I do not see any real economic spin-off downtown.

If they are referring to 6 million of restaurant activity around the City of Worcester? Not sure how they measure that, but I will concede that.

My point was that this was the economic spin-off that was proposed. Not saying that it will not happen, but to date it has not.

Eric, do you think we should invest 3 million of the Economic Recoverg Zone bonds, nearly 50% of our allocation, to build-out this space to attract a "destination" restaurant?

Bill

Bill Randell said...

Eric:

Seriously how do they come up with the number of 6 million?


Bill

Anonymous said...

I agree with you Bill that very little real estate development spin-off in Federal sq area to date due to Hanover Theatre; but in the context of the current collapse of the real estate finance industry, where even good developers in desirable suburbs find it nearly impossible to get cookie cutter deals done, I wonder why anyone would feel it reasonable to have such an expectation for the long struggling Federal Square area?

Eric K.
Worc., MA

Bill Randell said...

Eric:

I agree with you.. As for my second question, do you think we should invest 3 million, neary 50% of the City allocation, or Economic Recovery Zone bonds into a building tying to attract a restaurant?


Bill

Anonymous said...

50%? my math says it's more like 35%! ($3MM/$8.5MM)

I think using it for a restaurant is an appropriate use but I don't know what the alternative investments might be for the Worc. $ so I can't say whether this is the best use of the money or not.

A few thoughts on these bonds...
1) I think a state agency is administering the program for Worc (I assume with input from Worc government), but I think it would better if Worc had the staff to administer itself rather than rely on someone who has to deal with all 351 towns.
2) This is a stimulus program - projects need to be shovel ready and they are still trying to figure out what the rules should be even though it only has 6 more months of life - hard to do some sort of RFP when you are not sure what the rules are, have a tight time frame and only shovel ready projects qualify.

Eric K.
Worc., MA

Richard Healy's said...

Denholms, I tend to agree that redoing a few facades would help the apearances in some areas. But what good is redoing facades whne the sidewalks & common are often over run with human debris? Additionally, blogger community reports the Neighborhood services dept that adminsters the Facade program doenst know if they got $1M left or if they are overdrawn, b/c their record keeping is a fiscal disaster.

I have suggested in previous posts that the proposed Hnaover Theatre rstaurant would in fact become the The Hand It Over Restaurant b/c they would come looking for gub'mint money for the restaurant. $3M...I mean WTH....!!!!!...for a ++++ing restaurant? You gotta be kidding, even if it was the best of times for the rest. bizz. If banks scratch their heads at fronting money for restaurants these days.........then please explain to me why my tax dollars s/b financing what is one of the most risky commercial loans......stand alone (no franchise) retail outlets.

Whats next they'll wanna take the Red Baron & SBSB by emiment domain? The RB still does exist........right?

Eric, assuming the city would be allowed to adminster this state money themselves, dont we already have an Econ dev'ment dept and a Neighborhood Services dept that I would think s/b able to administer this bond money? I think we really already have the depts (staff) that could do this? Dare I ask however who is on the hook if the borrower goes belly up. Please dont tell me this is the equivalent of Home Funds for restaurants?

This entire Hanover "experience" is basically the commercial equivalent of low income housing construction in Worcester and I dont care how good the acts are at the Hand It Over Theatre. Someone should go up to the Shine Pool on Vernon Hill and pass out copies listing all the gubmit subsidies for the Hand It Over Theatre...whilst these folks wait in the swelteting heat to take a dip..............zillions for the artsy fartsy Hand It Over crowd, 1/2 of whom are from the suburbs and sh+t for city pools. (For the record, I support a user fee for city pools)

Jahn said...

I just quickly read Sundays article on the Hand It Over Theatre posted here. I been away from Worc newspapers for 5 days...........what a relief...!!!!! Things were bustling at my visit to Shoppe Therapy, f.k.a. and/or a.k.a. Slap The Monkey.

Did Sutner mention how The Hand It Over Theatre after rec'ing millions in gubmint money then moved the real estate into a non profit holding company which is property tax exepmt? Who in City Hall dropped the ball that allowed thsi to happen after fronting The Hand It Over Theatre millions.

Any gubmint monies should have been advanced with the contractual language that precluded The Hand It Over Theatre from being rendered a non tax paying, non profit.

Betcha you'll never hear Pilot Payment Palmieri p+ss and moan about the The Hand It Over Theatre not making Pilot Payments.

I also want to know if the proposed restaurant will be hit with the onerous sewer connection fees that will be req'd when that property is conerted to a restaurant. My instincts tell me They'll be waived or deemed not neessary.

I cannot locate the non profit theatre on city list of properties, but to the best of my recollection, I figured the city left 100's of thousand of dollars on the table when the place went non profit.

I will give them that the timing for economic spinoff isnt exactly good lately......however.......I will also add that I heard the same bovine fecal matter spewed from the lips of those in power going back decades whether it was the Worc Center Mall, Union Station, the Centrum, Medical City, The Common Fashion Outlets, 3 makeovers of the Worc common. This why I will not be lead down the primrose path re Downtown Wocester. Until it actaully happens, I remain yours truly, from Missouri.

Hey Sutner, now we need a piece on the audit results over at 44 Front St. and I aint talking about McFaddens, Kudos are in order for bringing this Hand It Over Theatre fiasco to light. Take an extra weesk vacation this summer for a job well Dunne.

Rich Greenhalgh said...

I can’t argue that they bring in more people to local restaurants, parking revenues, and police details but how (albeit a different clientele) is this any different than what the Summer Nationals do/did? To pretend it’s something more to justify the taxpayer investment is disingenuous.

Jahn said...

How would any of you feel if you were vendor pushcart operators or you were the one behind trying to place a McD's at Main and Madison St 12 years ago?

Where does city gov't get off deciding to throw up all kinds of roadblocks to Pushcart and MD's operators and then deciding to Hand off a $3M loan for an as yet to be named restaurant? God, it could end being the Golden Banana

This is what happens when gubmint overreaches. Would I like to see see teh Burwick FurniTURE building be raZED ...no I would not.........would I like to see the Burwick Furniture building now place add'l burdens on my real estate tax bill........no way ....!!!!.......but that is exactly what happend with what is there now.

If city Hall would just legislate and stay the hell out of everyone elses business.

Do the Hand It Over enterprises have too much influence at City Hall. I would speculate yes