Assembly Square, the Back Story
Part 17:  ASLP (and the City) Sell Out

A Commentary by William C. Shelton

(The views and opinions expressed in the commentaries of the Somerville News belong solely to the commentators themselves and do not neccessarily reflect the views and opinions of the Somerville News, its publishers or its staff.)

In April 2004 the Board of Aldermen approved new zoning for Assembly Square.  It stripped environmental and public health protections, reduced the city‚Äôs ability to control development, and violated Massachusetts law.  But it enabled Assembly Square Limited Partners (ASLP) to develop a strip mall.  Lanny Evarts, the mall abutter who had earlier turned down a $2 million settlement offer from ASLP, appealed the new zoning‚Äôs validity in Land Court that July.

ASLP withdrew from sales negotiations with Forest City, one of the nation‚Äôs leading land-transformation developers.  ASLP began plans for the strip mall, and recruited big-box tenants. 

In December, it filed for an as-of-right building permit.  Despite the weakened zoning, the project still violated Code.  In a February, 2005 hearing in which Palmer and Dodge‚Äôs Jim Shea took the place of the City Solicitor, the Zoning Board of Appeals dismissed citizens‚Äô evidence of these violations.

From the moment that Taurus‚Äôs officers had bought the mall site in 1998, their intention had been to get out as profitably, but as soon, as possible.  Community resistance blocked their plans, and they brought Gravestar in as a limited partner, offering a small piece of equity if Gravestar could mobilize its political connections to deliver the required permits.

With new zoning, building permits, and big box tenants lined up, Taurus found a buyer.  But Gravestar found a different buyer, one that would keep Gravestar in the deal with a somewhat larger piece of equity.

The decision on whom to sell to was that of Taurus‚Äôs German investors.  Gravestar‚Äôs president, Deborah Ciolfi, arrived in Germany several days before the investors‚Äô meeting.  She visited each investor, attacked Taurus‚Äôs competence, and lobbied for a sale to Gravestar‚Äôs favored buyer.

Investors and officers held a customary dinner the evening before the investors‚Äô meeting.  At its conclusion, Taurus President Peter Merrigan had to intervene when an angry investor believed that Ms. Ciolfi was reneging on promised sexual favors.  The next day, investors voted to sell to Taurus‚Äôs candidate, Federal Realty Investment Trust, for $64 million.  The approximately $30 million in resulting profit had been created by the city of Somerville‚Äôs re-zoning and its granting of Yard 21 development rights to ASLP.

Gravestar‚Äôs Natasha Perez, who was simultaneously Assistant Executive Director of the Massachusetts Democratic Party, had managed ASLP‚Äôs political relations in pursuit of project approvals.  Mayor Curtatone made a personal appeal to FRIT to retain Ms. Perez in a similar position.  FRIT declined.

Despite the fact that the zoning, and therefore the building permits, was under appeal, FRIT began construction of the strip mall at risk. FRIT calculated that even if it lost the appeal, no judge would have the moral courage to order the project demolished, or its certificates of occupancy, revoked.

FRIT was able to quickly recover the money that it had invested in the sale.  With big-box leases in hand, it was able to replace its investment with debt that would be serviced by revenue from those leases.

Whether based on property value, net tax revenues, public health and infrastructure impacts, or any measure other than immediacy of developer profits, the strip mall is the lowest and worst use of all those proposed for Assembly Square.  It also constrains good development elsewhere in the Square.  By gutting Assembly Square‚Äôs zoning, and approving the mall, city officials locked in this use for the thirty or more years specified in the leases.

On March 7 of this year, Massachusetts Land Court ruled that the re-zoning was illegal, and the subdivision of the mall site and the permits for the strip mall were invalid.  The city asked the judge to amend his ruling.  On July 13, he issued a final ruling, stating that the subdivision would be allowed because it was not based on the re-zoning, but both the new zoning and the strip mall‚Äôs permits were invalid.

The city issued a bizarre press release, hailing the decision as ‚Äúa ‚Äòmajor victory‚Äô for the city in its effort to promote a Smart Growth development.‚Äù  Few who received the release took it seriously. 

I would guess that among those who did are a few aldermen.  The Board is now considering proposed amendments to the Zoning Code that would further weaken Assembly Square‚Äôs zoning in order to accommodate the strip mall.