Assembling the Pieces

 

On April 30, with media abound and the site abuzz, officials from the state, the MBTA and Assembly Row developers Federal Realty Investment Trust (FRIT) joined City officials for a groundbreaking ceremony at Assembly Row. Construction was already underway at the time, but the formal ceremony provided an opportunity to celebrate that the project, perhaps the most important of Mayor Joseph Curtatone’s five-term administration, is moving forward with full momentum after 15 years in developmental purgatory.

“We have been working for this moment for nearly two decades,” Curtatone said, “and I can’t tell you how proud I am of this city and its people for never losing faith and never giving up on its hopes and dreams.”

Plans for the 60-acre location include high-end outlet shops, residential properties, an MBTA Orange Line stop, an AMC movie theater, restaurants, a hotel, office space and waterfront parkland. Two residential buildings, the T stop and the theater complex are already under construction and Assembly Row is being marketed as the “next great Boston neighborhood of the 21st century.”

The ceremony may have been all the more celebratory given that much of what transpired in the decade before the shovels came out was fraught with discord. And even as work begins, many of the most basic concepts behind the original vision of the project remain in flux.

“What has been ironically consistent [throughout the process] is the community’s vision,” Curtatone told Scout. The process by which that vision would be chased is what Curtatone called “a wild ride to say the least.”

Getting to Know the Row

The history of Assembly Row, the riverside subset folded into Assembly Square, has been documented as far back as the 1600s as swampland, or the middle of last century when it served as the home of the Ford assembly plant that would become its namesake. For the purposes of its forthcoming incarnation, its relevant history begins in the late 1990s as a sputtering, mostly empty post-industrial eyesore.

The first ever SomerVision event occurred in April of 1998, marking early discussions of the economic potential the Assembly Square area may yet see unlocked. After all, it was massive, located minutes from downtown Boston and situated on major highway routes.

Also around this time, alderman Bill White had started discussing the possible advantages of getting an Orange Line station at Assembly Square as a means to economic revitalization, and Somerville residents formed the Mystic View Task Force (MVTF), a community group set on seeing Assembly developed as a job generating giant, with office and research space, high-end retail and restaurants, and plenty of parkland along the waterfront. At the time, the area was characterized by the dwindling pull of the Assembly Square Mall (now the Assembly Square Marketplace), the highest grossing Home Depot in the country, and the beloved gaming spot Good Times Emporium, which would close with the recession.

“We saw three different futures,” said MVTF founding member Wig Zamore. The options, he said, were housing, which only generates half the property tax of commercial development; big box retail, which requires lots of space, does not create many jobs, means massive parking lots, and pales in tax generation compared to office or lab space; and dense, mixed-use development built along public transportation and, by Zamore’s calculations, could fund a third of the city’s annual expenses in property taxes, meaning residents would see their own taxes drop.

“We wanted to look ahead at the next economic wave rather than look back,” Zamore said. “The Assembly Square Mall was built backward. It was developed at the tail end of mall building.”

The Mystic view quickly became the sexy view amongst the community and officials. Whether the site’s developers embraced that view is less clear. Around the turn of the millennium, National Development – primary owners of the mall property – left Assembly Square Limited Partners (ASLP), leaving partner organization Taurus New England in search of new partnership. IKEA, the Swedish furniture mega-retailer, owned 16.7 acres in Assembly as the other major property owner in Assembly Square.

Somerville News columnist Bill Shelton, who has written extensively about Assembly Square’s history and is considering writing a book about the process, said Taurus’s goal was to obtain the necessary permits to allow for the development of a big-box strip mall and quickly sell the property. Taurus would take on politically adept development agency Gravestar as its partner to try and secure those permits.

Curtatone Rising

By 2003, Mayor Dorothy Kelly Gay had sufficiently alienated enough parties to attract two major challengers for her position. Kelly Gay had turned off Mystic View with what the task force considered a bogus City-commissioned report saying the best bet for Assembly would be to develop big box superstores and let market forces somehow see those same stores close in place of office and research space inside a generation. ASLP and IKEA were frustrated, as they’d been unable to get any of their plans off the ground largely due to the protests against big box development from MVTF. And Kelly Gay still had to answer to irritated landowners as property taxes rose.

Curtatone launched his second campaign for mayor and became Gay’s second challenger in the 2003 race that summer, joining current alderman Tony Lafuente in vying for the seat. In a primary election, Kelly Gay would be dispatched. In the run-off, Curtatone defeated Lafuente to win his first of five terms so far.

Two elements of Curtatone’s campaign may indicate that the developers at ASLP stood to benefit most from his election.

First, a Gravestar employee named Natasha Perez was the public face of ASLP from 2001 until it sold the property to FRIT. Perez had previously worked on Curtatone’s first campaign for mayor in 1999.

Second, Curtatone received four campaign donations from the law firm Palmer and Dodge, whom the City would reportedly pay at least $400,000 to draft new zoning for the mall site. That new zoning would later result in massive profits for ASLP upon selling to FRIT.

During the campaign, Curtatone said at a debate that it would be “over [his] dead body” that a strip mall would be developed at Assembly Square.

Shortly after winning the seat, the new zoning drafted by Palmer and Dodge was passed by the Board of Aldermen, allowing for the mall site to be developed as big box retail. In 2005, ASLP sold their holdings to FRIT – a Maryland-based developer worth billions, with experience nationwide in developing for retail – at a profit of around $30 million without having built anything. By 2006, Staples, Christmas Tree Shop and others had joined KMart at the site, giving it a look very similar to a strip mall.

Alderman Bill White spoke out most strongly about the new zoning at the time and would be one of three to vote against it. “We had tremendous leverage at the time,” he said, knowing that Taurus would have been far more easily able to sell zoning that allowed for big boxes to the next developer. “I would have liked to have heard more plans.”

Asked by Scout almost a decade later how his “dead body” comments jived with that eventual opening, Curtatone said he was speaking to the idea that Assembly’s development may be limited to only a mall. The mall, he said, provides an economic base for the rest of Assembly to build itself around.

“The argument against what I was advocating against there was that we would be left with nothing but a strip mall,” he said. “What I advocated for was that if we moved to do the things to re-tenant the mall and catalyze the economic activity in the district we could move forward and we’d see the greater development that is happening today.

“And I’ll say my position proved to be right,” he added.

Whose View?

A look at Curtatone’s campaign literature from the 2003 election shows how central Assembly has been to his administration. “If I’m elected mayor, Assembly Square will emerge as a place where a diverse mix of people live, work, shop, enjoy the river, learn, and seek entertainment,” read one pamphlet.

That channels the vision originally put forth by MVTF. But by the 2003 election the organization, which had stood in the way of big box developments like a second Home Depot in Assembly, had become a political liability. Curtatone even leveraged this in his campaign, suggesting that MVTF’s support for Lafuente as reason enough to not vote for his opponent.

When FRIT bought the mall space in 2005, it quickly got to work on re-developing the mall. MVTF, meanwhile, went to court over the zoning. The courts sided with MVTF, saying the City had not held ASLP to the same standard as other developers in drafting the zoning. The zoning was ruled illegal after the mall had already been redeveloped and had begun filling its spaces.

This ruling set the stage for a six-month negotiating period that would see MVTF get many of its wishes met. Out of the organization’s settlement with FRIT and IKEA, the developers agreed to put $15 million into securing the Orange Line; fund a bike path and parkland; work to limit car traffic in and out of Assembly; and develop that at least 5 million square feet long-term for office and research use.

Suddenly, MVTF’s fears of a vast big box wasteland were put to rest. And their hopes for that transit-oriented, mixed-use urban village looked very alive. For so long the countering voice to developers’ plans, MVTF was suddenly onboard with the project.

“It’s not 100 percent correlation [to our original ideas], but it’s close,” Zamore said. “As long as we end up working with the City and developers to draw R&D and offices to get the mix of uses that were in the settlement, we’re all good.”

The love goes both ways.

“I learned a lot from them and we owe at debt of gratitude to them,” Curtatone said of MVTF. “They did so much to set our sites high and raise the bar. They continue to be an important partner in this and I’m very thankful to them.”

What’s the DIF?

With hopes high following the settlement, the global recession made sure to keep them in check. As Good Times closed its doors, the Assembly Row area saw little movement.

All along, the Orange Line had been seen as the key to unlocking the district’s potential. In the spring of 2011, it became do-or-die time to bring the T to Assembly.

The state sat on $19 million in funding for the station that it would release only once the rest of Assembly’s infrastructure was paid for.

Though previous agreements had said the developers would be responsible for paying for the infrastructure, FRIT and IKEA refused to do so. An option to secure infrastructure financing that would put the city at minimal risk was thwarted by the lack of development at IKEA, by that spring looking increasingly unlikely to open in Somerville.

The City, instead, turned to District Improvement Financing (DIF) bonds from the state. The deal would look something like this: the state gives the City $25.75 million, the City gives that money to FRIT to fund the infrastructure, the state and FRIT would provide the money required to build the Orange Line, and the City would need to pay back that $25.75 million by 2043. Essentially, the city would be betting that the money it generates in property taxes from Assembly Row would be enough to both pay back the DIF and still provide the revenue that made developing Assembly worthwhile in the first place.

FRIT made it clear that this was the only way it would move forward with development. In early meetings about the DIF, White said FRIT was “holding a gun” to Somerville’s head. The developer’s Boston head Don Briggs disagreed and said the City needed to work in partnership with the developer. “For every one dollar the public invested, we’ll have invested 13,” Briggs said at the time.

Ward 6 Alderman Rebekah Gewirtz didn’t like it. FRIT, she argued, should pay for the infrastructure improvements as a company worth around $4 billion, not the cash-strapped city. Further, Gerwitz reminded her fellow aldermen, developers had signed a covenant saying they would do just that.

By the time it came to a vote her colleagues disagreed, saying whatever it took to get the shovel in the grounds, the City needed to jump on it. The board approved the DIF 9-1, meaning two things: the City had a big mortgage to pay back, and construction was close.

“The hope is that by ensuring the construction of the T stop, we’ve taken the most important step we could take,” White told Scout.

Today, Gewirtz says she is happy to see the project move forward, but still regrets that the city’s taxpayers are at risk for it. Even if the City can afford to pay back the DIF, she said, that’s money that could go into the schools or city services. “I’m hoping there will be a surplus [in tax revenue generated],” she said. “But I would have liked the City to see all the revenue.”

Asked whether the developer would have left the project had the City not secured the DIF, Briggs (a regular Curtatone campaign contributor, who gave $500 last year) was loathe to answer.

“I can’t answer that question because they did approve it. This was a public-private partnership from the beginning,” he said before abruptly ending the interview.

Curtatone was more candid. “No, this would not have happened without the DIF,” he said. Asked why FRIT would not pay for the infrastructure, City spokesman Tom Champion said it was a matter of business. “They had a certain target based on their investment model,” he said. “They made it clear they could not invest more.”

Documents obtained by Scout show that City Hall projects to see nearly $35 million in surplus tax revenue by the time the DIF has been paid off in 2043, based only on the projected tax revenue generated by the first three major developments at Assembly Row.

A New Neighborhood or a Somerville Neighborhood?

Last November, The Boston Globe reported high-end outlet shops would comprise the retail element of Assembly Row. While 81 percent of those polled on Somerville Patch at the time said they were excited to see major brands at a markdown, it’s unclear whether the strategy will help Assembly to develop its own neighborhood feel.

One local business owner who asked not to be identified by name said he had been in talks with FRIT for five years about eventually leasing out space. Shortly after the outlet shop announcement, he said, he was told he would either need to rent a bigger space than had been discussed or FRIT would seek a tenant willing to do so. Whether Assembly will have room for small businesses is unclear.

According to a plan acquired by Scout, FRIT was targeting businesses like Soma, Guess and Brooks Brothers to operate outlet stores in the location. Curtatone said FRIT will announce a sizable roster of tenants this summer.

Curtatone said he hopes local businesses would be able to operate out of Assembly, particularly restaurants looking to expand. “We expect this neighborhood to be a modern neighborhood, but that will still be so Somerville,” he said.

AssemblyRow.com does not use the word Somerville. Instead it refers to the project as “Boston’s new BFF.”

White said it may have made sense to create a provision during the DIF discussions to ensure local businesses are able to occupy space. Though FRIT has agreed to give the mayor the opportunity to speak to all tenants about hiring local workers as part of the DIF discussions, White said, “Nobody mentioned saving some space for local businesses.”

Brandy Brooks, a community designer who sat on a Somerville steering committee for Assembly, said she worries that Assembly’s modern feel will not match Somerville. “Somerville’s got a grittiness,” she said. “It’s not trying to be so polished.”

Brooks added that she is concerned Assembly not only won’t represent Somerville from a business-based perspective, but also may come out looking a little too white. “We haven’t seen a large-scale development that brings in the kind of diversity that makes Somerville,” she said. “It’s not a fundamental motivation of a developer.”

If in its new shine Assembly fails to develop its own culture immediately, a nearby neighborhood sees an opportunity to provide a taste of culture. “The new residents will want to have access to the authentic community feel that East Somerville and East Broadway provide,” said East Somerville Main Streets Director Carrie Dancy.

How Bright are the Horizons?

On the day of the groundbreaking, Curtatone had reason for optimism, even pride. Assembly Row is underway, and it figures to generate significant tax revenue. It will feature housing, an entertainment center, high-end retail, an Orange Line stop, a waterfront park, and FRIT is legally obligated to create high-end office space. Excepting the Marketplace, the shape Assembly is taking is not very out of line with the early views that excited people citywide 15 years ago after all the twists and turns.

But as Assembly’s future becomes clearer, so too do the challenges that await it next.

What about IKEA?

In late July, IKEA ended speculation about whether it would build in Assembly and informed City Hall that it would not open a Somerville site.

IKEA’s letter to Curtatone informing him of the decision said the company will work to find a buyer of the property that fits the city’s vision for Assembly Square. Curtatone had previously said that if IKEA doesn’t plant itself in Somerville, any new development would be nowhere near the scale of IKEA. Briggs told Scout in May that FRIT had not held any internal discussions about purchasing the land. He said at the time that he fully expected IKEA to build.

Now that it’s known that it won’t, coming up with a new plan marks a significant challenge with significant stakes as Assembly continues to grow.

Office Space

By way of the 2006 settlement with MVTF, FRIT is required to develop millions of square footage in office and research space in Assembly Row. The developer has little history of doing so, however; most of their previous developments nationwide are marked by a heavy retail presence.

FRIT will need to find the right partners to develop these high-value properties. And if FRIT can’t follow through on the agreement, a betrayed MVTF would figure to make life difficult for the developer.

Show Me the Money

Look back to 1998. Assembly wasn’t developed just for the sake of creating a new neighborhood. Until the new neighborhood is generating enough tax revenue to not only pay off the DIF but to provide more city services and drive property taxes down, nobody – not FRIT, not City Hall, not MVTF, not Somerville – can say mission accomplished.

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