Greendale Mall

Drove by today. The parking lot, along side the highway, was hosting a huge carnival. Is there no surer sign that a mall is in trouble when they can rent out half their parking lot to a mall.

Still stand behind my Best Buy will close by the end of the year.

Governor Cristie

love this guy

Pharmasphere

March of 2008 was the planned ground breaking when the parcel was awarded for $1.   May, 2010 they have not taken title and not one penny of taxes has been paid.    I am sorry.  The more and more I see the results of our RFP Process (Mason Street being another), I say lets just auction the property to the highest bidder.

Downtown

Great news on UNUM signing a lease.   Lets see what happens next.

Another observation.  City View restaurant....   Looks very nice.  Is very nice.  Simply the wrong restaurant right now for this location.   Don't see it making it through the summer.

Airport Prediction

By the end of the year we will have two additional commercial airlines.

Public Hearing on Job Growth

The Mayor’s Work Group on Job Growth and Retention invites Worcester businesses and the community at large to attend a public hearing to share their input on how The City of Worcester Can support existing businesses and recruit new businesses to locate here.


Date: Wednesday, May 26th 6-8pm
Location: City Hall – Levi Lincoln Room
Contact: Isabel Gonzalez-Webster – 508-799-1153

Airport Sale

I did not notice any revenue sharing in the press releases; for example a percentage of parking fees or a per dollar amount for each passenger or freight?    Right now when parking, passenger and freight is low at ORH, it would be a good idea to ask for this.  As ORH takes off, literally, it would provide some annual income back to the City of Worcester.

How can 2.6 million for us keeping the industrial park land be counted towards $17 million package.  Assume you have a house worth an empty lot next to it that is.  If you sell the house for $200,000 and keep the empty lot that is worth $50,000, the total sale package is not $250,000.   The sale package is $200,000 and you kept the empty lot.

It appears to me that the true number is 14.4 million and we were able to keep the Industrial Park land.

Airport Details

Total Package valued at $17 million
Click here:


Mass Colege of Pharmacy bought Crowne Plaza total package valued at $16.8 million.
 click here

Despite the fact I think we would have received a better return, if we had done a 99 year lease.  This is great news for ORH and Worcester. 

49% of the Southgate Place has been given away

As much as I am against Southgate Place,we have no choice but to deal with it and make the most of it.   The silver lining is that although the project cost $7,000,000, there is only about $1,000,000 that has to be paid back so there should be a positive cash flow for the South Worcester Neighborhood Center to reinvest back into the neighborhood.

The thing is only 51% of the profit goes to them.  The the other 49% goes to their other partners.     What exactly did they put up to get 49% of the profit?  Nothing.   True they did alot of work up front, which they had to float until the grants came through.  Now they have been paid for their work and get 49% of the profits.  

You get 49% ownership in a 7 million dollar project and you don't have to put up one dime.   Puts new meaning into Robert Allen's Nothing Down Real Estate books.

Two great opinion letters this week

Dick Chernisky--capping affordable housing

Robert Z Nemeth--on the Arizona law

Great job by both

DHCD Subsidized Housing Chart

Click here for the latest numbers on the percentage of subsidized housing by municipality.   Worcester at 13.6% according to the latest numbers, meanwhile Newton is at 7.7%.

jeff has take the list and ranked them, click here. 

Dan Gaulin

There was a post the other day to one of my blogs from a Dan Gaulin.  I commented that I thought there was a Dan Gaulin involved in the project so I sent an e-mail to him to confirm that it was in fact him that added the comment.   He got back to me yesterday and confirmed that it was him, Dan Gaulin owner of Elmwood Homes LLC of Newton, an affordable housing consultants for the developer.   He did tell me in the e-mail that Patriots Environmental was another local contractor hired, but did not explain what was no true about my other statements.



Here is the blog again:


No-Lo Tour Stop 3


City Builders, now Southgate Place, is the stop today. Wonder if the Telegram story will note:

• all the abutters were against this project
• nobody from the neighborhood will be present since they are all against Little Plumley
• the cost of the project is 7,000,000 million dollars for 25 units or $270,000 per unit,
• 100% low-mod income apartments-no market rate housing!!!!!
• no worcester contractors have been hired, so much for Buy Worcester (stand corrected the plumber, Grassechi, Patriots are two local contractors)

Dan's Comment 


I was there.

Since point 3 (100% low-mod)is the only true statement from your post, it was the only one that was mentioned this morning.

Jahn Post

He sent me an e-mail question how a project that cost 16-17 million dollars, 9 May Street, can be assessed at 1.7 million?  Good question. 

Telegram story on Southgate Place

$6.3M housing project breaks ground


WORCESTER — The South Worcester Neighborhood Improvement Coalition broke ground yesterday on Southgate Place, a $6.3 million affordable housing project on the former City Builders property.

Located at 104 Armory St. across from the Canterbury Street School, the project will convert a contaminated industrial parcel into 25 units of affordable rental units. The project is a public-private partnership between SWNIC and Needham-based Home & Johnson StepONE Architects, an architectural and development firm. The two organizations are developing the project through the Mechanics Guild LLC, in which SWNIC holds the majority interest. The project will be funded by low income housing tax credits, a brownfields cleanup grant from the U.S. Environmental Protection Agency, several other public sources, and some private loans.

The first phase of the property will involve cleanup of the property and demolition of several abandoned buildings. The site will house a three-story residential building and an outdoor bocce court. Construction is expected to be complete in early 2011, and rental applications will be available in March of next year.

The use for the remainder of the parcel has not been determined, according to a press release from the South Worcester Neighborhood Coalition, but possible options include a daycare center or affordable elderly housing

Owner of Southgate Place--not SWNIC

Although the land for the proposed Southgate Place (Old City Builders) is in the name of the South Worcester Neighborhood Improvement Corporation, they will not be the owner of the final rented project.   These parcels are only in SWNIC's name so as to secure political backing and obtain the grants and not have to pay back any of the EPA grants-- non-profits like SWNIC do not have to pay back EPA brownfield monies.  (Truth be told there is one parcel in the name of Mechanics Guild).

Once the project is complete it will be transferred from SWNIC and Mechanics Guild to  City Builders LLC.    Here is a better description.   .   If it was, in fact, City Builders LLC, trying to develop this parcel from the beginning, they would have 1) had to pay back the EPA brownfield funds and 2) would have had a more difficult time getting all of the grant monies.

No-Lo Tour Stop 3

City Builders, now Southgate Place, is the stop today.   Wonder if the Telegram story will note:

• all the abutters were against this project
• nobody from the neighborhood will be present since theyare all against Little Plumley
• the cost of the project is 7,000,000 million dollars for 25 units or $270,000 per unit,
• 100% low-mod income apartments-no market rate housing!!!!! 
• no worcester contractors have been hired, so much for Buy Worcester (stand corrected the plumber is local)

No-Lo tour stop 2

Never made the newspaper or did I miss it?

Office Space

Guy stopped by my house selling magazines, bought three.  Reminded me of one of the greatest movies ever "Office Space".


one more

Phil Palmieri on Polito show

Phil was on WTAG talking about some of the good work the CDC's do.  In particular CDC (not sure which one) new construction housing that sold with to employees of UMass, who received down payment assistance from their employer.   I am 100% in agreement with Councilor Palmieri!!!   These are good projects, promote home ownership and help stabilize neighborhoods.  In fact I would even call this work force housing. 

Problem is many of the recent projects are not like this:

• May Street- 100% rental to low mod income
• Piedmont Street--100% rentals to low mod income
• City Builders-100% rental to low mod income
• Hadley:  90% rentals to low mod income
• 90 Grand Street-I believe this will be 100% low mod income

High density,  rental units that cost on average over 300,000 per unit with either 100% or close to it requirements for low mod income do nothing to improve our neighborhoods.

Jim Polito

Been listening to him lately on WTAG.   He is right on target.

Pharmasphere

Remember this parcel was awarded in the South Worcester Industrial park for $1 versus an abutting who offered $50,000.  The reason being it was a better project and that they would break ground immediately, that being March of 2008.     It is now May of 2010 and the winning bidder has yet to lay down their $1 and take title.

Business 101

Lets just take where the the market value of an owner occupied new construction duplex/townhouse is $140,000.  If you are a private developer you need to:

• find a cheap parcel of buildable land that you hopefully do not need any variances
• build it
• pay all the permitting and water/sewerage fees

Lets assume the expenses come in at $125,000 or less.  If you were to sell the property for $140,000 less broker fees, you may $10,000 to $20,000.   Bottom line alot of risk for not a hell of alot return.

Now add in the fact that you need to compete against a CDC, who spends $270,000 on their units, for the same buyer.  Here is the kicker, when they sell their $270,000 unit for $140,000, not only do they not lose 130,000---they make $37,000 ($370,000 development fee in the Sunday Telegram divided by 10).   

How does a private developer compete against a developer who should be losing $130,000 but makes almost $40,000?  Answer --they don't!!   They take their monies and invest in other areas.   Next time you see a private developer building anywhere else, but where the CDC's have control, you  now know why.

Worcester No-Lo Tour Stop 2

Let me set the record straight for the 10,000th time!  The CDC's have a vital role to play in the advancement of the City of Worcester and have done some very good work.   Right now, however, there is a complete over reliance on the CDC's, which has alienated much private investment as the RKG study warned 5 years ago.  

As the Worcester No-Lo tour continues, what I ask for is simple?:

1. Future projects by the CDC's need to emphasize home ownership in order to stabilize our neighborhoods! Building rental projects, because those are the only monies available cannot longer be accepted?
2. Rental projects, when built, need to be limited to no more then 15% low to mod income.  These latest projects that are either at, or close to 100%, low-mod only hurt our city never mind develop.
3. Any projects that receives, for example $100,000 or more from the City of Worcester, need to use the purchasing department of the City of Worcester to reign in their costs.   Costs from $250,000 to $300,000 per unit are a waste of the tax-payers money.
4. Put a cap on development fees to more then 5% of the project.
5. Opening the whole process to include private developers.
6. No longer should the CDC's be the "preferred" developers.  There is not one valid reason anyone can give me?

The CDC's success should be measured by their ability to attract private monies into an area, to the point where we do not need them anymore.    In other words a CDC closing down, because of private investment should be the goal of any CDC and  sign of their success.    Instead the goal of many CDC's is to accumulate as many properties as possible, land bank and treat the private developer as the enemy not their ally as evidenced by this Worcester No-Lo Tour.      

Fallon loses 8.5 Million in 1st qtr

Fallon is a great employer in the City, lets hope they turn it around.   Click here.  

Private developers part 2

Private developers who invest in real estate have typically four options:

1. Invest additional monies and then rent
2. Invest additional monies and then sell
3. Hold and pay the carrying costs
4. Sell right away

Sometimes you make money.  Sometimes you lose money. Sometimes you don't know if you made or lost money.   Another word for it is called "business".  

Private development tour???

People accuse me of being negative. If you don't know me and just read this blog, I can maybe understand that.   Let me be positive for a few minutes.  There is alot of private investment in District 4.   Look no further then fellow blogger Paul or myself (duplex I built on an empty lot on the corner of May/Bellevue that was sold to two first time home-buyers with jobs and without one penny of tax subsidies), but there are many many others.  Arthur Mooradian and Russell Haims to mention a very few on the residential side and Andy Serrato or Al Maykiel on the business side.  Trust me there are many many many more.   

We should be having a bus tour hi-lighting private developers, who are getting it done and listening to them as to how we may be able to help them do more?   Seriously if you had some money and wanted to invest into real estate and read either of these two stories:

1. Story about the City of Worcester having a bus tour hi-lighting private developers and how the City of Worcester is listeing and want to helps them do more.
2. Stoy about the City of Worcester having a bus tour hi-lighting CDC's and how they want to keep them as the "preferred" developer and not open up more to private developers

What story would make you want to come to Worcester?   Every two years we hear about making Worcester more business friendly.   When is the private development bus tour being scheduled?

Calling all bloggers

• Last week there was a bus trip to Beacon Oread to see all the affordable housing projects.
• Tomorrow there is a tour though Oak Hill.
• This week there is another ribbon cutting, 2nd maybe 3rd, for City Builders.

We need some name suggestions for this tour.   I came up with, instead of Paulie's NOLA Fest we could call it Worcester's NO-LO Fest.   We could even sell t-shirts, free to those are of no-lo income, listing the dates of the various stops on the bank with the picture of pajamas on the front.

Nemeth Story

I did miss this, click here.   Like Mr Nemeth I am also excited to see that the City of Worcester is out of the airport business.   Four years ago, or was it five, a group of us submitted a letter to the Airport Commission that he chaired expressing our opinion that we should privatize.   Basically we suggested that we put out a bid to lease the airport out long-term (99 years) like Newburgh, New York did when they leased Stewart out to National Express.   There was nothing about this idea that was "off-the-wall" from this silly blogger.  In fact our recommendation has become a reality, since the airport is being privatized through an outright sale to MassPort.  

Also, I never expected millions of dollars in a windfall profit, but as a tax-payer I did expect "fair market value".   Is Mr Nemeth suggesting that is a bad idea?  Since we never actually put the entire airport out in an RFP or even got a valuation, instead we just listened to studies from consultants?    My contention has been, is and always will be, are we getting "fair market value"?   Neither Bob Nemeth, myself nor any other silly blogger will know, since we never put ORH in its entirety out for sale sale of long term lease.

My gut tells me that five years from now when ORH is cranking, a good thing for Worcester and due to MassPort, we will look back on the sale of ORH like the Indians did after selling Manhattan.

Kudos to Sutner

Story in Telegram today titled "City's housing development at issue".  Will comment on these stories all week as the low income housing tour continues all week throughout the city of Worcester. 

For the first time I have read a story that at least starts to ask questions about this and not merely issue press releases. We need more trasparency as to how these monies are allocated especially considering the amounts of monies in question.  As I have maintained for years this has become District 4's biggest business and the people who are receiving the bulk of the HOME funds do not want to see any changes in the current policy.   Even to the point that a group, consisting of our Mayor and the District 4 Councilor, have been meeting since last winter "to map out a strategy to combat what they saw as an imminent assault of low-income housing in the poorest neighborhoods."

Here are some facts.
1)   The new housing policy will broaden the pool of developers, including private builders, with the goal of attracting more affluent residents and spur business growth and not merely give monies to the CDC's as the "preferred" developer.   A good thing, right?  Not for some of the CDC's and private developers, however, whose business model relies on these funds to continue.   A broadening of the pool, to even include private builders, is in fact an imminent threat, thus the meetings.

2)  The new housing policy will cap developer fees charged by non-profit and for-profit developers.  A good thing, right?  Not for some.  The article details  the third phase of the Gardner-Kilby-Hammond project consisting of 10 units with a total cost of $2,700,000 million dollars.     Where else can you build units in the this area that cost you $270,000 per unit, sell for half the cost and still make $370,500?

3)  The new housing policy will favor a combination of both low-income and market-rate housing.   A good thing, right?  Not for the current developers, whose recent projects (May Street, City Builders, Piedmont Street and the Hadley) are either 100% affordable or close to it.   They are at 100% affordable, since monies associated with the affordable units are typically given in the form of grants that you do not have to pay back.  Although a combination of low-income and market-rate housing is exactly what the city needs, a project that limits affordability to say 15% will force the developer to find conventional sources (private monies) for their financing needs and not rely solely on government grants (public monies).

4)  The new housing policy will merely create more competition and no longer give carte blanche to "preferred" developers.   A good thing right?      If you are the Executive Director of the Main South CDC making $104,000 per year with additional $14,000 in benefits, any move toward including the dreaded private sector is not a good thing.

In closing "CDC officials argue that most private developers avoid publicly-funded projects because they don't want the income and other deed restrictions that come along with public money."   If that is in fact the case, then what are they worried about?

Governor Christie

Wish we had a governor like this!!

Rumor Mill

Best Buy to close at Greendale Mall.  I was big on this when I heard that they were opening the Route 146 location then it kind of died down.   Now that the 146 Mall has opened and the numbers are falling into place.  I am hearing Best Buy at the Greendale Mall is done.

Also the new WalMart is doing big numbers but not the numbers that they projected.   The weird thing is that their numbers seem to be spread all over the place.  In other words not just one store is hurting, but alot of stores have felt a little hit.  At the same time a hit that they expected and planned.

Unlike the Market Basket in Oxford which was a complete home run and still is, the Walmart in Quinsigamond Village right now is only a single.

Southgate Place

Just heard there is another ceremony next week. althought they had one last fall??  This is the site of the former City Builders, lets hope they discuss some of these facts:

• 25 rental units-all low mod income against neighborhood opposition
• total cost 8,000,000 or 325,000 per unit
• 7,000,000 are in the form of grants that do not have to paid back as long as you rent to low mod income people during the affordability period
• general contractor and all subs to date are from out of town
• in the end the profits are split between the South Worcester Neighborhood and out of town owners
• EPA money is used that does not have to be paid back since the property was transferred to the non-profit-South Worcester
• believe they used the Mass General Law below to have taxes waived on one parcel that they bought

Piedmont Court

Update

MGL Chapter 58 Section 8

Another hidden cost.

This very interesting law.  It says if you are going to build affordable housing that 75% of any back taxes and 100% of the interest can be waived. 

You find a lot that $50,000 is owed and the City of Worcester has it in tax title, which they will eventually own and auction off.   A developer of low-mod income housing can approach this owner pay them short money, since they have already walked, and get most of the back taxes waived.   How much could the city have gotten if they did take title and auction.

Better yet, you let taxes accumulate on an empty building then you approach the City of Worcester and tell them that you want to develop affordable housing and invoke Chapter 58 Section 8 to get your taxes waived. 

I would like to see a listing of all of these requests granted the past 10 years and the amounts. 

Hidden Costs

Many times I have commented here on the cost of construction some of the CDC's.  It is not unusual to see costs in the 250-300K range per unit, but there are many hidden costs that I would like to remind you of:

1. Property that was sold for pennies on the dollar through the EONS via direct negotiations.
2. What costs will the most recent projects like 48 units on May Street, the 14 units on Piedmont and the 24 units on Southgate (City Builders) will have to our schools and other social services.
3. Infrastructure improvements like sidewalk repairs and road resurfacing that accompany many of these projects.

If you have not seen my map, check it out and tell me that we have not done enough for low mod housing.

Mayor Takes Group Walking

Title of Telegram story, click here for link.

Check out Paul's comments--dead on right Paul.

Let me say that this was a very fair story and I like the part where it is accurately pointed out that this "pointed out one side of the housing development picture."     There are many things that confuse me in this story

1. There are many properties that have been updated and repaired that have not been done by private investors without any assistance.  Maybe we should take a tour of these properties?
2. How can the Mayor say that the new proposed Housing  Policy may result in a diminished role for the CDC's without the new process even being implemented.
3. CDC's know community needs better then private developers?  Again there are many private projects that have met the needs of the community as well, if not better then the CDC's. 
4. 80% of the city's $12,000,000 in HOME  funds go to CDC's--that is $9,600,000 dollars!!  That is an incredible percentage/amount and maybe we should know who gets the other 20% or $2,400,000.
5. I agree the CDC's have set standards.  Incredible variances,, above ground sewer lines, very expensive construction, purchase of city owned land for pennies on the dollar and now the removal of streets from the City map to name a few.

Now I have a couple questions.  

Question--What message does this send to private developers?  
Question--What happened to making our city more business friendly? 
Question---How can anyone question "improving participation in ways that create an open and competitive process"?  

Answer--Those currently benefiting from a close uncompetitive process and do not want it changed.

1-9 Piedmont Street

This project consists of 12 one bedroom apartments low mod apartments with  4 commercial/studio/retail spaces on the street level.   By code it would have required 48 parking spots but a variance was applied for to waive all 48 spots in December of 2005.  In the application (Book 38111 page 259), it was stated (Section 13) that there was adequate off street parking available.  In other words, there was no need to provide all of these parking spots off street, on the property.

No private developer would have ever gotten a waiver of 48 parking spots and I need to ask, if you know this area, where will these people park??  There is limited off street parking in this area and it completely backs up each morning and day already from the nearby school traffic.   The variance, however, was granted. 

Now that the project is approaching completion,  without many (if any), local contractors (note picture above HVAC company not even from Massachusetts but Ct.), I have been told that there is a petition to remove Piedmont Ct, which abuts this project and extends between Piedmont Street and Castle Street.     My guess would be that the developer of this project will then ask for ownership of this road once removed from the official map.  Ironically they will say that they need this property for parking, since there is not enough off street parking for the project contradicting their own variance for 48 parking spots. 

Bidding

Many people are aware of how the City of Worcester can not just pick and choose the contractors that they want to use.   We have  Purchasing Department that puts out RFP's (Request for Proposals), solicits bids and picks the winning bid while following the state procurement laws.   Check out the site on-line.   This ensures fairness and that the City of Worcester tax dollars are spent wisely.

What alot of people do not know is that the CDC's are not subject to this.  Originally I got to believe that the thought was that their projects would be small in nature so why make it cumbersome for them, which makes sense.    I highly doubt that anyone would envision the big business these projects have become.  It is not atypical to see projects in the 5 to 20 million dollar range.

My point here is that the City of Worcester should look into how they could require anyone receiving HOME funds over a certain threshold for a project ($100,000) must utilize our Purchasing department to solicit bids to ensure that our HOME funds are spent efficiently.    And who knows amybe even a Worcester based contractor will be able to win a bid. 

City of Worcester Housing Policy

This issue is going to be discussed alot in the next couple of months and I want to take a minute to set the record straight on a couple things:

1. There has been and there is alot of good work done by the CDC's
2. I am not against affordable housing

There are however some things I would like to see change:

1. more emphasis on owner-occupancy to stabilize our neighborhoods. 
2. any rental projects should limit the low-mod income ratio to no more then 15% of the total units.  Current projects (City Builders, May Street, Hadley and Piedmont Street) are near or at 100%
3. utilize the procurement capabilities of our the City of Worcester Purchasing department to drive down the costs
4. encourage private developers to get involved.   Why do the CDC's have to be the "preferred" developers?

I keep going back to the RKG summary and they could not have been any more right, click here.   if you have not read these two pages, take a minute and please do. 

Thanks,

Bill

Players Championship

Great live coverage on
http://www.pgatour.com/

JetBlue

Interview with CEO Barger of JetBlue.

Downtown Restaurants

Random thoughts:

• Off the top of my head 86 Winter and Castelano's are for sale
• 55 Pearl Street is most definately closed as well as the Jewel Box
• there is no construction going on next to the Hanover.
• El Forno has closed
• Crown Plaza has closed

Now the City of Worcester has decided to go into the restaurant business and float a couple hundred thousand to install the infrastructure for a restaurant in the parking garage on MLK.   As much as we should not be in the airline business, not sure we should be in the restaurant business either.

JetBlue Starting Summer Expansion

JetBlue said Tuesday it is starting a rapid summer expansion of flights from Boston's Logan Airport, part of its plan to bump up its departures there by 30 percent.

Link here

Used Office Furnture

Anyone have any good places for used office furniture? 

Jewel Box

Rumor is this is closing and to be rented out as sports bar, heard that from a fellow blogger.


Stand corrected, it has already been closed for a couple months.  How long ws it open then as the Jewel Box?

Niche Hospitality wins bid

click here