“Assembly Square, the Back Story” was a series of columns by William Shelton that appeared in the Somerville News between April 13, 2005 and August 15, 2006. 

Part 1:  Proud History
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Over the last seven years, no other issue in our city has been as enduring and acrimonious as that of Assembly Square redevelopment policy.  One reason is that the stakes are so high.

Developed to its full potential, Assembly Square could double Somerville’s tax base, more than double its jobs base, and provide us with thirty acres of waterfront parkland.  Developed foolishly, Assembly Square could gridlock Route 28, worsen Somerville’s highest-in-the-Commonwealth rate of excess heart-attack and lung-cancer deaths, and be a permanent drain on city finances.

A recent Massachusetts Land Court decision creates another opportunity for the city to choose which course to pursue.  Choices made at similar crossroads in the past were informed more by rhetoric, personal relationships, and calculations of political advantage than by solid evidence and careful analysis.

George Santayana, who once lived not far from here, famously said that those who do not learn from history are doomed to repeat it.  There is much about the history of the Assembly Square conflict that I don’t know or understand.  But much that I do know has never been made public.

What I will share with you in this series is only information that comes from documentary evidence, or the testimony of those willing to be quoted for attribution, or from at least two independent sources who are unwilling to be quoted.

City residents under the age of forty mostly know Assembly Square as a vast tract of underused land.  But it has a long history as a vibrant economic center.

When Governor Winthrop built a home nearby, what is now Assembly Square was a salt marsh.  He launched the first sea-going vessel built in Massachusetts in 1631.  Nine other shipyards would eventually locate nearby.

In 1803, the Middlesex Canal connected Lowell with Charlestown, spurring development of a textile industry along the Merrimack River. The Assembly Square area’s proximity to, first the canal terminus, and after 1842, the Boston and Maine Railroad, made it a center for industry and commerce.   Tidelands were filled and factories, built.

Over the next century and a half, the site would host thriving businesses, manufacturing machine tools, confections, clothing, ceramics, and appliances, and distributing petroleum, dry goods, groceries, structural steel and other products.  In 1926, Ford built an assembly plant, from which the square took its name.  The next year, First National Stores built a warehouse complex running from what is now Circuit City to Lowes Theater.

The Olmstead firm, designers of Boston’s Emerald Necklace, planned a beautiful tree-lined boulevard connecting Broadway (now Foss) Park to the Mystic River.  When built in 1897, this “Fellsway” became the Northwest border of Assembly Square.  A beautiful rail station built at the Southwest tip of the site in 1901 served streetcars and an elevated line.  Streets lined with homes and businesses integrated Assembly Square with East Somerville.

Effective public transit made Assembly Square’s thousands of jobs easily accessible.  Residents picnicked along the Mystic River.  Naughty children would encourage their peers to pronounce “Somerville Beach” while holding the tips of their tongues.  The city’s 170 manufacturing concerns generated ample property tax revenue.

Then, two events forever changed Assembly Square and Somerville. First, deindustrialization hit Somerville early.  Ford closed its plant in 1958 and First National closed in 1976, each laying off more than a thousand workers.  Between those two dates, most of Somerville’s factories closed.

Developers, who often had personal relationships with city officials, converted many of the city’s abandoned factories to residential uses, which produce only 60% of the tax revenues, but twice the costs of commercial uses.  The city came to rely increasingly on state aid to meet its budget, and residential taxes crept up.

Then, the Commonwealth drew up plans for I-93 that would rip out the heart of East Somerville and isolate Assembly Square.  State officials sat on evidence developed by Cambridge-based consultants Bolt, Beranek and Newman showing that the expressway would flood the neighborhood with pollution up to ten times federally allowable limits.

Neighbors formed Somerville Citizens for Adequate Transportation (SCAT) to oppose these plans. The city administration opposed and sought to undermine SCAT’s efforts.

SCAT often met at the home of Joe and Delores LaPiana, a block from the proposed interstate.  When the heavy equipment arrived in 1969, Joe got out in front.  A bulldozer charged until its blade was under his feet.   He wouldn’t move, so the front loader had to.

Ultimately, the Commonwealth and its city-hall allies prevailed, but Joe, Delores and other SCAT members continued to participate in civic life over the next three decades.  Last year, Joe died from heart disease and lung cancer.

 

Part 2:  False Hope and True Corruption
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By 1976, Assembly Square was becoming a ghost town.  First National Stores (FINAST), the B & M Railroad, and Ford Motor Company, who had each paid the city over $1 million in annual taxes, were gone.  Two machine tool companies and a trucking concern were the only large employers remaining.

In 1978, city officials began preparing an Assembly Square redevelopment plan that, in many ways, resembles the exercise that they recently went through.  Then, as now, city officials declined to develop a master plan, but embraced a developer’s initiative and presented it as the city’s redevelopment plan.

Then, as now, the developer had site control of the old Ford plant.  Then, as now, the plan called for the city to take properties from existing owners and give them to the developer.  Then, as now, Somervillians were told that turning the old auto plant into a retail center would subsequently bring high-value development across Assembly Square.

East Bay Development Corporation promised to not only turn the Ford plant into a mall, but to revitalize the office building that had been FINAST’s headquarters, build a 200-400 room hotel, develop ten additional acres of commercial and office property, and all together, create 1,450 permanent jobs. The city approved the plan and got a $3.3 million grant from HUD to build the road improvements that the developer wanted.

East Bay had built the Woburn mall and several others.  In the process, FBI special agents caught them in a securities-fraud and tax-evasion scheme.  East Bay’s principal, Ray Coots, told then U.S. Attorney Bill Weld that, in return for reducing or dropping charges, he could deliver corrupt Somerville politicians.

Conducting the sting required an operative who would not be recognized in Somerville.  Special Agent John Connolly, now serving time for colluding with Whitey Bulger, recommended Special Agent Jack Callahan, his former Boston College classmate.

They introduced Jack Callahan to Somerville as Jackie Collins, East Bay’s public- and government-relations officer.  Their intention was to catch a low-level politico, offer leniency in return for cooperation, and work their way up the food chain.

The fictional hotel’s restaurant needed a liquor license, but Somerville had recently frozen the number of on-site licenses at 52. A new license would require legislation by the Board of Aldermen and a home-rule petition passed by the Legislature.

Callahan wined and dined Ward 1 Alderman Tim Creedon, who said that he could get the legislation passed, but it would cost East Bay.  Callahan gave Creedon $13,500.  Creedon gave $500 each to five other aldermen.  The only one who he later named was Ward 3 Alderman Michael McKenna, who had complained that he should get at least $1,000.

Vinny Piro was then riding high as Somerville and Medford’s powerful State Representative.  Callahan asked Piro to shepherd the home rule petition through the statehouse.  Piro said that it would cost $25,000, and as proof of his good intentions, told Callahan that he had taken two bribes for successfully rendering favors in the past.  In March, 1983, the FBI recorded Piro telling Callahan that he “needed a little walking-around money” to “grease a few guys.”  They gave him $5,000 in marked bills.

At that time, city tax assessors were elected.  Assessor Robert Campo knew a good thing when he saw it.  He went to Callahan and told him that he “needed some help,” because his campaign costs had been high.  In return for $5,000, he reduced the mall’s tax assessment.  Over the next two years, he solicited two more bribes, and the FBI recorded 47 conversations with him, including three involving his son-in-law, Ward 3 Alderman McKenna. He later testified that he had shared the bribes with other assessors.

Campo ended up pleading guilty and received a three-year sentence.  Creedon got a one-year sentence in Danbury for cooperating, and was paroled six months later.  Suffering from cancer, McKenna was given house arrest.

Piro’s attorney argued that his client had been entrapped, and pointed out that he had returned the $5,000 three weeks after taking it.  Prosecutor John Pappalardo said that Piro had been tipped off, and that the currency he returned was different from what he had been given.

Piro’s first trial ended in a mistrial, and his second, in an acquittal.  Somerville voters, however, convicted him at the polls.  He had won the Democratic primary election for the State Senate and faced no Republican opponent.  In the general election, outraged voters elected Alderman Sal Albano in an unprecedented write-in campaign.   Shortly thereafter, the Board of Alderman abolished the election of assessors.

The mall did not stimulate a wave of new development.  During the period of its greatest popularity, it had the highest incidence of car theft of any location in the Commonwealth.  A decade after it opened, it began a decline that would end with its closing.

 

Part 3:  Wheeling and Dealing
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From the mid-1980s to the mid-1990s, a few speculators became interested in the 50 acres of Assembly Square land that would later become the focus of city redevelopment efforts.  By far, the most clever of these developers was Steve Samuels.  The Samuels family had been principal shareholders of First National Stores, which, in the mid-Twentieth Century, was Assembly Square’s largest property owner.  Following First National’s closure, the Samuels went into real estate development there and elsewhere.

Two machine tool manufacturers owned the property adjacent to the Assembly Square Mall, which is now targeted for an IKEA store. In the years after the Mall’s opening, both plants closed, eliminating 400 jobs.  Cooper Industries bought HK Porter, and Cambridge Machined Products went into bankruptcy.

Winchester-based Jupiter Properties bought the Cambridge Machined Products property in 1985, and the Mystic Builders Supply building.  Aside from leasing the latter to Good Time Billiards, not much happened at these sites for the next ten years.

In 1988, Shearson Shopco, a joint venture with Shearson Lehman, bought the Assembly Square Mall for a head-turning $42.3 million.  The next year, Boston’s overheated commercial real estate market tanked.  The turn of the decade brought virtually no new construction across the region.

Former Mayor Michael Capuano cites this as the only reason that he was willing to consider big box development.  Home Depot wanted to put a store on Middlesex-Avenue. Stephen Bobrow, president of the New-York based company that owned the property, assured the mayor that he would not sell it to Home Depot.  Instead, in April, 2001, he executed a 40-year land lease.  In the mid-1990s, the store had the highest per-square-foot sales of any Home Depot in the U.S.

Steve Samuels and Costco Wholesale Corporation were paying attention.  In 1993, they obtained options to buy the old machine tool company sites so that Samuels could develop a Costco there, along with a Stop and Shop.  Since the property sat on filled tidelands, they needed a state license.  The project languished because Shearson Shopco was unwilling to grant Costco/Samuels an easement across the mall property, and the Capuano administration declined to take it by eminent domain.  Costco eventually located across the river in Everett’s Gateway Center.  Stop & Shop bought the old Somerville Lumber site.

Meanwhile, Cambridgeside Galleria and Medford’s Meadow Glen were eating the Assembly Square Mall’s lunch. National stores left Assembly Square, and Jordan Marsh’s closure eliminated its last “destination tenant.”  Mall management began offering short-term leases to little-known retailers.

Like a city government that tries to compensate for the absence of promised commercial tax increases by boosting parking fines, Shopco tried to compensate for declining rent revenues by increasing existing tenants’ common-area charges.  The increases were so oppressive that short-term tenants began leaving, while others threatened litigation.  Before the conflict was resolved, Shopco defaulted on its mortgage.  Its lender, Aetna Insurance, foreclosed in 1996, bought back the deed for $15 million, and began seeking a buyer.

Steve Samuels saw a strategic opportunity.  He bought the former machine-tool properties in 1997 for $10.5 million.  Rather than buying the mall, he bought the K-Mart lease, knowing that this would give him leverage with new mall owners.

Peter Merrigan was a smart and ambitious graduate of the MIT real estate program who had been negotiating to buy the mall, with an eye toward creating a big-box strip mall.  Taurus New England was a highly successful firm that acquired failed real estate projects, repackaged them, and made enormous profits.  Merrigan joined Taurus and persuaded his new colleagues to buy the mall.  In October, 1988, they did so for $18.8 million, financed with an $18.5 million one-year note.

Taurus very much needed the K-Mart lease.  It had a clause obligating the mall’s owners to lease to retail tenants.  Taurus needed to persuade gullible city officials that this clause prevented Taurus from using the mall site for higher-value development.

Steve Samuels agreed to sell Taurus the lease, but only if they would give Samuels an easement.  They did, and Samuels sold his properties to IKEA in 1999 for $19.5 million, having held them for less than two years.  He made $9 million in profit.

Samuels would go on to develop the kind of high-density project advocated by the Mystic View Task Force, in the Fenway, where similar activists in that neighborhood supported him. Taurus’s development partner, National Development, would bail out of the mall project and build a high-value development across the river in Medford.

Although future events would demonstrate that the K-Mart lease posed no real obstacle to high-value development, city officials would never challenge this fiction.  Because of these officials’ commitment to illegally entitle Taurus to build low-value big boxes, Assembly Square would remain undeveloped for seven more years.

 

Part 4:  A New Vision
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A new way to think about developing Assembly Square emerged in the late 1990s.  It did not come from those who were usually charged with thinking about such things.

Unrelated to Assembly Square, grant writers who worked for the city and for its nonprofit organizations began to meet regularly.  Their work had acquainted them with several realities.

First, Somerville then received a share of charitable grants that was disproportionately small in comparison to what its neighbors received.  Second, in virtually every area of education, social services, health, recreation, and open space, Somerville’s needs were disproportionately large.  Third, Somerville had extraordinary potential as a community, home, and workplace.

In April, 1998, they invited residents to discuss that potential at “SomerVision,” a citywide event.  With attendees from economic development, real estate, business management, and environmental backgrounds, they considered three more realities.

First, the best way to meet many of Somerville’s needs was full employment.  But while Boston and Cambridge had two jobs for every resident, Somerville had two residents for every job.

Second, regional grant makers’ generosity could only meet a fraction of the city’s needs.  The economic causes for Somerville’s lack of jobs also denied it a strong tax base and put the tax burden disproportionately on homeowners.  Third, the only land left that could accommodate development adequate to produce needed jobs and tax revenues was Assembly Square and the Inner Belt.

One attendee, Pat Jehlen, had heard a talk on “smart growth” and the “new urbanism” given at the State House by Somerville resident and national expert Anne Tate.  Representative Jehlen’s staff organized a public meeting at the City Club in late spring.  Eight months pregnant, Professor Tate gave a compelling slide presentation on how the built environment encourages or discourages economic vitality, a sense of community, crime, and environmental health.

Those attending were inspired by the solutions that wise development offered for Somerville’s challenges.  Over the next year, they met with public officials, business people, community groups, clergy, and neighborhood associations, asking what the goals for new development should be.  They consistently heard that development should increase tax revenue, jobs, and usable open space.

At the same time, they investigated the benefits and burdens associated with different development patterns and analyzed those patterns’ economic requirements, market potential, and environmental impacts.  They discovered some things that surprised them.

• Assembly Square is the best development site left in Greater Boston for high-density development.  Its $6 billion in infrastructure investment, second only to Boston’s financial district, includes the Orange Line, three commuter rails, Routes 28 and 38, the Mystic River, and I-93.  It’s less than 15 minutes from downtown, the airport, financial centers, and the economic engines of Harvard and MIT.

• Developed only as parkland, Assembly Square would be a permanent fiscal burden.  Housing development would create a greater burden, as new city costs would be more than new tax revenues.  Large retail stores would create the greatest burden.

• Office development can create about four times the amount of jobs and taxes per thousand square feet of building as retail can, and ten-to-twenty times the amount of jobs and taxes per acre of land.  Yet offices create only about one-tenth the traffic.

• Developed as an office-based urban district with supporting housing, retail, a hotel, and cultural facilities, Assembly Square could produce $30 million in net taxes and 30,000 new jobs.  Because office buildings can afford more public amenities, it could also produce 30 acres of new open space.

• Developers who can do land transformations can’t take on projects of much more than 25 acres.  But they won’t undertake these projects unless they have assurance that surrounding properties will be well designed, have sufficient transportation infrastructure, and not include uses that would undermine their investment.  They require a master plan, and only a city can create one.

Somewhere along the line, the citizen activists chose for themselves the awkward name “Mystic View Task Force.”  No one remembers who came up with it.  Or perhaps, no one is willing to admit it.

As they developed their analysis and began to formulate a vision, they shared it with elected officials.  During the special election to replace Mayor Capuano, candidates Dorothy Kelly Gay and Joe Curtatone both endorsed the vision.

In May of 1999, Mystic View invited Somerville residents to a half-day public event at Good Time Billiards, where they presented what they had learned.  Hundreds of attendees broke up into groups, where they proposed ideas on how to turn this information into a physical design for the site.

Dorothy Kelly Gay had been elected Mayor four days earlier.  She attended and endorsed the Mystic View vision.  Things were looking up.

 

Part 5:  The First Big-Box Proposal
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Lorenz and Günther Reibling founded a real estate investment company in Munich in 1976, Taurus Investment Holdings began working in Florida in 1979 and now also has operations in Atlanta, Buenos Aires, Chicago, Dallas, Denver, New England, Shanghai, and Toronto.

In the late 1980s, Lorenz, managed Taurus New England.  He had developed a strategy of acquiring assets from failed developments at a fraction of their cost, adding value, repackaging them, and making a substantial profit.  The strategy worked brilliantly, both financially and by putting distressed properties into more productive use.

About the time that Mystic View’s predecessors first discussed Assembly Square’s potential, a smart and ambitious MIT real estate program graduate was joining Taurus.  Working out of his kitchen, Peter Merrigan had identified Assembly Square as an opportunity.  Taurus officers had doubts about whether it could successfully fit with their strategy, but they did not doubt Mr. Merrigan’s competence and commitment.

Taurus bought the former Sears warehouse, where Good Times Billiards operates, in December 1997, bought the mall in October 1998, and asked the city for a development moratorium.  Primarily dealmakers, Taurus needed a development partner.  They chose National Development of New England. National had been active for 15 years, with successful residential, industrial, retail, and office projects.

The following April, Mike Foley resigned as Somerville’s Inspectional Services Division (ISD) Superintendent. On April 9, 1999, his last day, he left seven permit applications for mall-site big-box stores in the mail bin of his successor Pat Scrima and told Scrima that National Development would be coming in to pick up the permits.

The next week, Mr Scrima examined the applications and the Zoning Code.  He asked his colleague, Paul Noni, to do the same.  They both concluded that zoning for the main mall building limited retail uses to less than 10,000 square feet.

Mr. Scrima sent a letter to National Development explaining that all of the big boxes would require a special permit with site plan review.  This obligated the developers to present an analysis of the projects’ impacts in 21 areas, such as air pollution, traffic, and so on.  Four years later, Massachusetts Superior Court would reach the same conclusion.

The developers did not want to do this. National development officer Sherry Clancy met with Pat Scrima and Paul Noni on May 6.  She said that she had taken care of Mike Foley’s charities, and that she expected the permits.  Then, she burst into tears.  A bemused Pat Scrima explained that he was obligated to enforce the law as written.

Michael Capuano had been elected to Congress the previous November, and Alderman Bill Roche was serving as acting mayor.  Mike Foley tried to persuade Mayor Roche to direct Scrima to issue the permits.  Mayor Roche declined, pointing out that the Zoning Code made Mr. Scrima the sole authority, as Enforcement Officer, to interpret the Code, unless his interpretation was appealed.  Appealing to the Zoning Board would force National to go public with its plans.

Mike Foley asked then City Solicitor Joan Langsham to issue an opinion on the matter.  She drafted a memo that Pat Scrima described as “all spin,” but she could not overrule him.  Her memo went into the property’s ISD file, along with Scrima’s denial, letter and a memo-to-file that he had written describing these events.

Two years later, mall abutter Lanny Evarts’ would appeal the Planning Board’s issuance of a permit to turn the mall into a giant Home Depot.  In the discovery process, her attorneys requested the mall’s ISD file. When the file emerged from the city’s law office, Scrima’s denial letter and memo were gone.  Whoever had removed them had overlooked Joan Langsham’s memo referencing the missing denial letter, and did not know that retired civil engineer Lawrence Paolella had already copied the file, including the offending documents.

National Development, resigned to the fact that they would have to prevail politically to obtain permits, held a public meeting in the mall building on August 25, 1999.  Three hundred Somervillians attended their presentation of “Riverside Plaza,” a plan that looked very much like the big-box strip that was completed last year.

Every single resident who spoke rejected the plan.  One of them was Alderman Joe Curtatone who said, “Raising a sign, adding some more trees, and paving a parking lot is not the highest and best use.”

National Development soon left the partnership.  I don’t know whether they read the handwriting on the wall and jumped, or whether they were pushed.  What I know from Taurus’s principals is that selecting a new partner who could deliver the permits became far more important to them than a potential partner’s development capacity.

Playing to the crowd that August night, Joe Curtatone said, “Mayor’s come and go, but these people will always be here.”  That prophecy would come back to haunt him.

 

Part 6:  Two New Players
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In the fall of 1999, Assembly Square Limited Partners (ASLP) faced two serious problems.  They had bought the mall property with $300,000 in cash and a one-year, $18.5 million loan that was due in October.  But they could not legally obtain as-of-right permits to build big box stores.

Newly-elected, Mayor Gay had told the Globe, “We can’t allow National Development  to come in here and tell us what we’ll have at Assembly Square.”  National was the ASLP partner managing the permit process.  Mayor Gay’s development director, Steve Post, said, “It’s clear that big box retail stores on the scale of potential development ranks near the bottom because it creates few jobs and doesn’t bring much tax revenue.  Large retail stores will have a negative impact in East Somerville by generating lots of traffic and pollution.”

Mayor Gay called for an August 25 public meeting, at which ASLP presented a plan that closely resembled the big box strip mall ultimately built last year. Those attending the presentation, including Alderman Joe Curtatone, unanimously rejected the plan.

The next week, furniture giant IKEA announced that it had bought the 16.6 acres next to the mall site. Mayor Gay immediately met with both developers and persuaded them to accept a yearlong development moratorium while the city prepared a master plan.

A master plan is essential to an effective land transformation and would have avoided much of the subsequent acrimony.  Sadly, it never happened.

Meanwhile, ASLP solved its debt problem.  Without telling the city, ASLP essentially sold the majority of the mall site property to Home Depot.  To give Home Depot tax advantages, ASLP signed a 99-year ground lease with a $1 purchase option at its conclusion.  Home Depot bought the $18.5 million note and executed a mortgage with ASLP.

These contracts contained some unusual provisions. Home Depot committed to pay half the property’s carrying costs and any litigation costs. ASLP’s partners had to obtain permission from Home Depot before purchasing property anywhere in the world.  And Home Depot was the actual developer, while ASLP was the public face.

Taurus New England, ASLP’s majority partner, never seriously considered building anything other than a big-box-dominated project.  This was not just because of Home Depot’s contractual constraints.  Taurus had enjoyed great success by buying failed projects, repackaging them, and selling them for a quick and substantial profit.  The last thing they wanted was to execute an office-based master plan.  Also, principal Lorenz Reibling was and remains deeply pessimistic about the Boston-area economy’s future demand for office space.

So Taurus faced the challenge of obtaining permits to build a project to which most Somervillians then objected.  They determined to meet that challenge by replacing erstwhile partner National Development with a politically connected developer.

Environmental activist and unsuccessful congressional candidate John O’Connor was married to Carolyn Mugar, who with her brother David, was heir to many Star Market properties.  The Mugars were major contributors to the Massachusetts Democratic Party, and Carolyn sat on the Conservation Law Foundation Board of Directors.

Mr. O’Connor had persuaded his wife to create a development company that, starting with the supermarket properties, would showcase “green” development.  They called it “Gravestar.”  One of its first projects was the Porter Square strip mall, which drew mixed reviews from neighbors.

O’Connor had become close with a political operative named Natasha Perez, whom he installed in a cottage on his and Ms. Mugar’s residential property.  During the Spring, 1999 special election to replace Mayor Capuano, Ms. Perez had also become quite close with candidate Joe Curtatone, when she served as his campaign’s field officer.  She subsequently went to work for Gravestar, and at the same time, as Deputy Executive Director of the Massachusetts Democratic Party.

Taurus calculated that Gravestar had the political juice that they needed. They brought Gravestar into ASLP, gave them a small equity position, and charged them with managing public relations and delivering the permits.  Gravestar, in turn, charged Natasha Perez with leading this effort.

This was the biggest opportunity that Gravestar had thus far encountered.  Unfortunately, John O’Connor, beloved in the environmental community, had the bad judgment to die at the age of 44, before he could fully appreciate the environmental disaster that ASLP’s plans would create.

Joe Curtatone was deeply impressed with Lorenz Reibling when Natasha Perez introduced them.  This is understandable; Mr. Reibling is brilliant, charming, highly successful, and has an avuncular manner.  Curtatone sought a personal relationship, taking Reibling’s family to see the tall ships when he was out of the country, and attempting to persuade Reibling to purchase the Prospect Hill house across the street from Joe’s sister’s home.  They dined together regularly at Henrietta’s Kitchen in Harvard Square, discussing a variety of topics, including Joe’s political ambitions.

 

Part 7:  Voodoo Redevelopment
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In early September 1999, Mayor Gay sat down with Assembly Square’s 15 landowners and persuaded them to delay development activity for at least six months to give the city time to create a “comprehensive development plan.”  All agreed.

The first week in December, the Cecil Group, urban planners whom the city had retained to lead the planning effort, held the first of six public meetings.  Their purpose was to integrate public participation into the planning.

Mayor Gay also appointed an advisory committee of Somerville residents, business representatives, and city officials that met nine times over the next year.  The advisory committee gave no advice, having no means of critically analyzing, agreeing on, or offering recommendations.

The second week in December, Assembly Square Limited Partners (ASLP) announced plans to replace the mall with a 135,000 square-foot Home Depot.  The existing Home Depot would become a Home Expo. ASLP had faced universal hostility to a similar plan at a public meeting in August.  An angry Mayor Gay said, “These developers agreed to a six-month planning process.  I don’t want a concrete jungle with a collection of big-box stores and parking lots down there.”

ASLP denied that they had made such a promise.  Instead, they offered the first of three myths that continue to undermine wise redevelopment:  the K-Mart lease obligated ASLP to only build retail uses on the mall site.  ASLP declined to show the lease to city officials.

In fact, the proposed Home Depot was, itself, a lease violation that K-Mart, desperate for any development, quickly agreed to, as they have since agreed to any development proposal that was presented to them, including the current strip mall.

Perhaps sensing this, Housing and Community Development Director Steve Post asked a Globe reporter, “Wouldn’t K-Mart want to be a part of a premiere mixed-used development with retail, office, and an entertainment center for the region?”  Unfortunately, he did not ask K-Mart.

Planning continued.  At each of the public meetings, participants overwhelming opposed big-box stores.  They advocated a fully integrated plan, dominated by offices and served by the site’s Orange and commuter lines, that would generate high tax revenues, low traffic, many jobs, usable open space, and ground-floor retail.  They urged the city to approve no projects that would take decades-long detours away from this vision. Meanwhile, the developers and their allies were putting enormous pressure on the Cecil Group and city officials to include big boxes in the plan.

On April 11, 2000, Mayor Gay met for the only time with the advisory committee that she had appointed.  Chamber of Commerce representatives on the committee complained that Cecil appeared to be moving toward the vision advocated in public testimony, which, they said, excluded the tax revenue that big boxes could quickly generate, and unrealistically relied on a nonexistent office market.  These were the other two myths.

They did not know that Cecil was caving under pressure.  Steve Cecil had told Mystic View leaders the previous evening that he would be recommending a phased development.  The scheme proposed beginning redevelopment with the new Home Depot and Ikea.  In eight years, real estate market forces would begin to fill in the giant parking lots with the office buildings that both advocates and city officials wanted.  In 20 years, market forces would replace the big boxes with more office-based development.

Community advocates were at loggerheads with ASLP and IKEA.  City officials and Cecil fervently wanted to find a workable compromise.  However, Cecil based his solution on an unworkable economic fantasy. Operating their core businesses in strategically located stores with cheap parking is vastly more profitable to IKEA and Home Depot than would be any future gain the sale of their property that the Cecil plan envisioned.  Moreover, the increased property value resulting from building big boxes would create a high economic hurdle for any potential developer who considered replacing them with high-tax-and-job-generating projects.

Cecil said that Emeryville, California provided an example where Home Depot, Ikea, and other big boxes formed an “urban village” with apartments and offices.  He showed pictures of stores with iron sculptures in front of them.

Mystic Viewers went to Emeryville.  Looking in the opposite direction from the scenes captured in the photographs, they found a vast sea of asphalt.  The apartment complex, wedged between the asphalt and Emeryville’s busiest street, was surrounded by a high iron fence. Ikea’s traffic deluge had forced the state to build an $80 million dollar new lane on I-880.

Emeryville’s largest employer, Sybase, had left town.  A spokesperson cited IKEA’s traffic as the tipping factor in the decision.  But weekend traffic was worse, requiring a dozen police officers to manage the big-box gridlock. And although Emeryville, unlike Somerville, received sales tax on every big-box sales dollar, its retail economy produced public safety costs greater than its property and sales tax revenues combined.

 

Part 8: Loss of Trust
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It’s hard to know whether Dorothy Kelly Gay’s administration and Mystic View could have found a compromise on Assembly Square Redevelopment.  It would have required sufficient mutual trust for all parties to take two risks:  exploring innovative but unfamiliar solutions, and estranging some portion of their constituencies.  Today, both parties say that they took both risks.  But before they did so to the extent needed to craft a real solution, mutual missteps and a lack of communication undermined the trust necessary to support further risk taking.

Dorothy Kelly Gay had come into office just before property tax assessments caught up with huge increases in Somerville’s housing prices.  When homeowners received $200-300 hikes in their tax bills, many blamed the new administration.  The mayor and her staff felt an urgency to expand the commercial tax base, providing some measure of homeowner tax relief.

Developers loudly protested that delays in their plans were imposing carrying cost burdens.  The mayor determined to move as quickly as possible to implement whatever recommendations planner Steve Cecil produced.

City staff had never before been involved with a land transformation.  This is a city-led process that imposes a single, unified development plan on 50 acres or more, to fundamentally transform the property and how the market perceives it, and often, create market demand that has not yet existed.  Landowners are constrained, through zoning, to build only what the plan specifies, but the plan greatly increases their property value.  The process is fundamentally different from trying to negotiate the best deal for the city, in the current real estate market, on a series of individual projects.

By contrast, Mystic View members had played a variety of roles in land transformations, including urban planner, developer’s consultant, architect, and financial analyst.  They felt supported in their view when, in every planning meeting, public participants overwhelmingly opposed big boxes.

Cecil was under enormous pressure from developers to bless big boxes.  He attempted to produce a compromise plan that depended on market forces replacing big boxes and vast parking lots with offices in twenty years.  It was an economic impossibility. Mystic Viewers felt betrayed, and they imagined that the city had pushed Cecil in this direction.  City officials had not, but they quickly embraced Cecil’s plan as a solution to their political challenges.

Mystic View continued working with the city in good faith.  In one effort, they met with individual aldermen, pointing out that the city spends $100,000 each year per taxable acre.  Land transformations like Kendall Square generate $1 million per acre in taxes, while big boxes seldom break $50,000.  Neighboring cities have spent billions to support land transformations.  Somerville would need to spend a much smaller amount to make Assembly Square the best of its class.

On June 22, 2000, the Board of Aldermen unanimously voted the following:  “RESOLVED: That this Board of Aldermen supports the vision for the redevelopment of Assembly Square articulated by the Mystic View Task Force, and will support the Administration in imposing conditions and design standards on developers which will transform that vision into reality.”

Throughout that summer, City planners and Mystic View conducted a series of confidential meetings to draft new zoning for Assembly Square. They were working against a submission deadline of the August 24^th Board of Aldermen meeting.  Developer ASLP intended to apply for permits to turn the mall into a giant Home Depot, and the city and Mystic View wanted the project to be covered by the new zoning.

In the view of city officials, many conflicts remained in the draft zoning.  It is, in fact, unclear whether the parties would ever have resolved them.  Late on August 22^nd, city staff called Mystic View leaders and informed them that they would not be submitting zoning on the 24^th.

Mystic Viewers were unaware that the city’s lawyers had informed city staff that the August 24 deadline was not binding.  They scrambled to complete a zoning proposal and find an alderman who would submit it on the 24^th.  Denise Provost agreed to do so.

When Mystic View leaders informed their city counterparts that they would be submitting zoning, the city’s planners were disappointed, but said they understood Mystic View’s intentions.

However, for reasons that may have been as simple as miscommunication, the mayor’s spokesman told the press that Mystic View’s submission had come as a surprise.  The organization’s leaders concluded that they had been set up, and they revealed that they had been working with the city.

This breech of confidentiality, together with Mystic View’s unilateral submission of zoning, was a breaking point for the administration.  They would never again communicate with Mystic View except through public channels.

Mystic View did not know this at the time.  Their breaking point would come three months later.

 

Part 9:  Missed Opportunities
*

Only a small fraction of developers has the capacity to execute a land transformation, and mall owners Assembly Square Limited Partners were not among them.  City officials accepted ASLP’s explanation that there was no regional demand for office space, and that no developers were interested in building offices at Assembly Square.

Community activists knew that land transformations require such long development horizons that they anticipate future economic cycles’ demand.  Indeed, had the city committed to a master plan for Assembly Square in 2000, we would be positioned to catch the next wave of office space demand.  That wave is currently rising, while demand for the residential development that ASLP’s successor advocates is going into a trough.

But in the Fall of 2000, the city administration embraced the idea that big-box development would generate net new tax revenue and that market forces would replace big boxes with offices in twenty years.  So activists began making presentations to developers with land transformation experience to solicit their interest in Assembly Square.  The activists encountered the perception of many developers that city favoritism toward ASLP created a barrier to anyone else.  Still, some were interested.

One such developer went on the public record.  Forest City has completed major developments in 25 states.  It is conducting the largest land transformation in U.S. history on Denver’s old airport site.  Its University Park development, a land area slightly smaller than the mall property, brings Cambridge  $20 million in annual taxes, and its seven office projects in Greater Boston also produce healthy tax revenues.

Forest City Boston’s officers immediately grasped Assembly Square’s potential.  President Gayle Farris asked for and got a meeting with Mayor Gay.  She presented Forest City’s credentials and expressed strong interest in Assembly Square.

Mayor Gay expressed pride that world-class companies like IKEA and Home Depot were interested in Somerville.  Ms. Farris diplomatically suggested that big-box development might not be in the city’s best interest.  Although the meeting seemed pleasant, Forest City was not invited back.  Forest City officials perceived that they had been given a brush off.  A senior administration official who was in the meeting later told me that Mayor Gay “would have loved to work with an accomplished developer, but Forest City did not aggressively pursue development at Assembly Square.”

Developers who can conduct land transformations require capital.  Mystic View activists gave their presentation to an institutional investor who had the capacity to buy all of Assembly Square and finance a long-term master plan.  He expressed strong interest.

Mystic Viewers arranged a meeting for him with the mayor. At the investor’s request Mystic View had declined to name the investor until the meeting took place.  The morning of the meeting, the city’s Housing and Community Development Director called.  As graciously as possible, he communicated that the mayor had cancelled the meeting.  This was two months after activists and city officials had publicly quarreled over their failed collaboration to draft zoning.

Five days later, Mayor Gay signed a Memorandum of Agreement (MOA) with Assembly Square Limited Partners at a press conference.  She posted police officers to keep activists out.  A dozen Mystic Viewer’s who were available on short notice showed up outside with signs reading things like “Public Process or Private Deals?”  Neither action improved mutual relations.

City Solicitor Susan Callahan said that the MOA was a binding contract between the mayor and ASLP, but that it did not restrict other branches of city government.  No one seemed able to explain how that was possible.

The MOA committed the Mayor to support a plan for ASLP to build a Home Depot on the mall site, develop a small office building and hotel at some unspecified future point, and give the city $350,000 for waterfront improvements and $75,000 for public art.  After intense negotiations, administration officials felt that they had fought for and won the best deal that they could get.  Activists felt that the MOA was the equivalent of Esau selling his birthright for a pot of stew.

The Aldermen felt “frozen out of the negotiations.”  Five months earlier, they had passed a unanimous resolution asking that “the administration not sign any memorandum of understanding with any developers without first holding a public meeting, with reasonable notice, and inviting questions and comments from this board and the public….”  They passed a new resolution, asking the mayor to appear before them and explain herself.

Alderman Bill White said, “It isn’t just that the aldermen should have a say, but the public.  We are the public’s representatives.”  Alderman Bill Roche said, “I did expect [the mayor] to keep the members of this board informed, and I am a little disappointed it didn’t happen.”  But Alderman Curtatone said, “”Right now, what has resulted is we have a great deal….  We have maximized our vision for that particular parcel.”

 

Part 10:  Dirty Tricks
*

In 2000, Assembly Square Limited Partners (ASLP) submitted an application to build a giant Home Depot on the mall site.  The project was not allowed under Somerville’s Zoning Ordinance.  As sole authority to interpret that law, Inspectional Services Division chief Pat Scrima drafted a letter stating this.

However, City Solicitor Susan Callahan prepared a letter that merely required a special permit for the project.  She made clear to Scrima that he was expected to sign it.  He did so, but this and other abuses of authority continued to rankle him.

Although the Planning Board received extensive testimony on the project’s illegality, they approved it that December.  My personal favorite of the five separate violations was the requirement that Home Depot just occupy the existing building.  Drawings submitted to ISD called for demolishing the mall and driving 1,500 piles through its foundation.

In January 2001, mall abutter and Mystic Viewer Lanny Evarts appealed this decision in Superior Court. In response, ASLP partner Gravestar conducted a campaign to discredit and intimidate her and her supporters.

With the cooperation of the city administration, they launched a PR campaign, portraying Mystic View as a tiny group of elitists who wanted nothing built.  In fact Mystic View is composed of Somervillians who work for a living and are the only community group that I know of advocating for greater development density.  The developers were millionaires who lived elsewhere.

The Conservation Law Foundation and the design firm Goody Clancy had been advising Mystic View.  ASLP retained both organizations, creating a conflict of interest and ending their assistance.

Gravestar placed a series of full-page ads in the Somerville Journal fraudulently promising inflated job creation and tax revenues, implying that CLF and Goody Clancy were partners, and stating that Mystic View member Wig Zamore opposed their project because his own plan would garner him $30 million.  None of this was true.

Gravestar persuaded allies to call the Attorney General and charge that Mystic View was a bogus nonprofit, set up to enrich Lanny Evarts.  Public Charities Division staff attorney Johanna Soris reviewed the evidence and found it baseless.  When more influential people called, Public Charities Division head Jamie Katz stepped in and found no wrongdoing.  In response to still higher-level pressure, Deputy Attorney General Dean Richland went through the same exercise, with the same result.

Each time, Mystic View was obligated to produce every legal, financial, and membership record that it possessed. Although the AG’s office found no basis for the charges, influential ASLP allies called Boston-area foundations that might support Mystic View and told them that the organization was under investigation by the Attorney General.

The Barr Foundation already supported Mystic View.  ASLP retained former Suffolk D.A. Ralph Martin, who tried, unsuccessfully, to persuade Barr to cut off Mystic View.

Front-line reporters for the regional press knew the facts about Assembly Square.  So Gravestar fed selective information to less knowledgeable Globe opinion writers with whom they were well connected.

Barr Foundation’s benefactor, Amos Hostetter, is adamant about anonymity.  Barr requires that grantees not reveal the source of their funds, on pain of losing them.  Gravestar’s private investigator couldn’t dig up much dirt on Mystic View leaders, but discovered Barr Foundation’s support.  Gravestar gave a thick file to Globe columnist Steve Bailey, who had attacked Hostetter in the past on other matters.  Bailey tried to persuade Hostetter to give him information about Mystic View.  Hosstetter declined, and Bailey wrote a column outing Barr.

When Lanny Evarts, a widow and a senior citizen, began receiving bizarre emails, she called AOL and learned that someone had sent out 3,000 pornographic solicitations under he name.  She received a call from her phone-service provider Verizon, saying that someone claiming to be a representative of a charity had attempted to obtain her phone records.

In December, 2001, ASLP finally agreed to mediate, on the condition of confidentiality.  When the parties met, ASLP’s attorney said that his clients were unwilling to negotiate anything on the mall site.  Since the lawsuit only opposed the Home Depot project, Mystic View representatives were bewildered.  ASLP explained that they were willing to discuss what they would build on their Sturtevant Street property.  When Mystic View declined, ASLP issued a press release stating that Mystic View had refused to mediate.

Finally, ASLP tried to buy off Lanny Evarts, culminating in an offer of $2 million.  Lanny, a devout Christian, prayed about what she should do.  She later said that she could find a lot of scriptural reasons to reject the offer, but none to accept it.

Ultimately Mystic View’s resolve only hardened.  In a narrow sense, however, the harassment campaign became self-fulfilling.  Mystic View had been very outgoing, conducting over a hundred meetings in neighbors’ homes.  ASLP’s attacks diverted Mystic View’s leaders.  They consumed hundreds of hours, for example, responding to the Attorney General’s information requests.  Over time, they came to rely increasingly on legal tactics rather than political persuasion.  Although a couple hundred members attended Mystic View’s annual meeting that year, outreach efforts declined.

In turn, the developers’ allies in city government illegitimately manipulated the law, culminating in tomorrow night’s public hearing at City Hall.

 

Part 11:  Yard 21
*

The narrow piece of land along the Southwest side of Assembly Square’s railroad tracks was once a switching yard.  After a nine-month negotiation, the city bought the 9.2 acres from the MBTA in September 2000 for $3.1 million.  Another nine months passed before the city issued an RFP, that is, a Request For Proposals from developers to buy and redevelop the property.

In a December 20, 2000, meeting with redevelopment activists, Board of Aldermen President Kevin Tarpley said that the city was delaying the RFP, in order to give Assembly Square Limited Partners (ASLP) time to gain site control of properties surrounding Yard 21.  Senior officials of the Gay administration deny this and attribute the delay to the slow pace at which bureaucracy functions. Before the RFP was released, the Somerville Journal reported that, Taurus “had been ‘chatting with the city’ about the RFP, and had prepared a team of specialists.”

In August, 2001, city redevelopment staff conducted site tours for twelve-to-fourteen interested developers.  Mystic View encouraged responses to the RFP from developers who had demonstrated the capacity to carry out an office-based, transit-related land transformation.  Some took the tour.  Whether their perceptions were accurate or not, developers that Mystic View tried to recruit said that they would not spend the money to develop a proposal because the selection was a “done deal.”  Forest City spokesman J Keily told the Boston Globe that the company had been very interested, but could not tie up any of the surrounding properties.

No one expected a competing bid, but “Mystic Port,” a joint venture between Habitat for Learning and Cathartes Investments submitted a proposal. The proposal’s vision was to relieve pressure on local housing markets by creating a self contained community for 1,500 graduate students.  They also committed to build over a million square feet of office space and 70,000 square feet of neighborhood retail; give the city a free performing arts center; and guarantee an Orange Line Stop.

Their proposal would have generated twice the annual tax revenues at Yard 21 as ASLP’s proposal and 1,400 more permanent jobs (4,200 vs. 2,800).  They offered to pay $8 million, twice as much as ASLP, and they committed to begin development immediately and continue until the project was done.

Developer selection rested with the Somerville Redevelopment Authority (SRA), whose members are appointed by the mayor.  Gay administration officials say that they made no attempt to affect the SRA’s decision.  They do acknowledge that they favored the ASLP proposal.

The SRA did not take up the matter until October 25, 2001.  They immediately went into closed executive session, and did so again on October 30 and November 5. They emerged on November 7 to announce that they had selected ASLP.  One SRA member said that he thought ASLP’s proposal was “more buildable.”  Several members referred to ASLP’s “financial guarantees.”  If that meant guarantees to the city, they do not exist in ASLP’s proposal or in the subsequent Land Disposition Agreement (LDA).

The city and ASLP did not execute that LDA for another seven months.  Although city officials had said that redevelopment was too urgent to prepare a master plan, the LDA gave ASLP until 2009 to even purchase the land.

It did require ASLP to make a $410,000 “down payment,” and declining progress payments each following year, starting with $75,000 in 2004.  The purchase price that ASLP would eventually pay was reduced by each payment.

Massachusetts law requires that buyers and sellers of real property from or to a city file a statement disclosing who will ultimately profit. Mystic Port submitted this “Beneficial Ownership” statement with its proposal.  ASLP did not submit its disclosure until after the LDA was already executed.  It listed only Taurus and Gravestar officers, rather than the wealthy German investors who were the ultimate beneficial owners.

One month before she was defeated in the 2003 preliminary election, Mayor Gay told me that ASLP was “holding Yard 21 hostage to get what they want on the mall site.”  Today, Yard 21 remains barren.  Although it is assessed at $8 million, the city collects no taxes because it retains ownership.  When FRIT eventually buys it, they will pay $4.1 million.  Habitat for Learning is moving ahead in Malden.

 

Part 12:  IKEA vs. City Government
*

While the former owners of the mall deceived and manipulated to avoid regulatory requirements, IKEA undertook every regulatory process required of them.  Yet, they initially encountered more resistance from city government than did the mall developers.

The world’s largest furniture retailer bought 17 acres of waterfront property in 1999 for $19.5 million.  The company submitted plans for their typical sprawling, windowless, blue box, but the mayor and her staff rejected them.

IKEA offered new plans in June 2000 that called for a larger store, but reduced its footprint from 200,000 to 160,000 square feet.  The blue box would become cream-colored brick, and IKEA would build a little league field next to the store.

Publicly, the mayor’s spokesman said she was “pleased with IKEA’s revisions, but she would like to see more.”  Privately, administration officials were amazed that IKEA imagined it could balance its enormous community impacts with a baseball diamond.

Six months later, IKEA submitted its “final proposal.” Mayor Gay rejected the plan because, “it did not include sufficient mixed use on their vital waterfront acreage.”

At the same time the Board of Aldermen was considering three “Interim Planning District (IPD)” proposals to make Assembly Square’s zoning more conducive to high-value development.  IKEA publicly threatened to sue the city if the legislation blocked its plans.

Alderman White responded that if IKEA pursued litigation, he would participate in a campaign, “inviting the world-wide press to see what IKEA is doing.”  Alderman Curtatone was equally steadfast.  He said, “As a landowner and a new purchaser of land, there is an inherent risk that zoning may change when you purchase the land.”  Unfortunately, he would later work successfully to weaken zoning when the landowner threatened by zoning enforcement was mall owner ASLP.

The following week, IKEA filed a legal challenge, requiring that passage of any new IPD require eight, rather than six, votes from the eleven aldermen.  The Board subsequently passed the IPD drafted by the mayor’s staff.  It did not block IKEA.

The company submitted new plans in June, 2001.  They called for a 250,000 square-foot store, 203,000 square feet of office space, and 22,000 square feet of retail and restaurant space.  Mayor Gay was pleased, but said that IKEA still had a “a little ways further to go….They have a yellow light, not a green light.”

Over the following four months, IKEA worked on its plans, culminating in two days of intense discussions with city staff.  The parties emerged the last week in October and jointly announced that IKEA would build a 250,000 square-foot store.  The agreement required IKEA to promise that it would build an additional 225,000 square feet of office, retail, and restaurant space, although it did not require IKEA to actually build it.

The city’s orientation had been to essentially accept the use that IKEA proposed, but to (1) mitigate its harmful impacts as much as was possible, and (2) obtain substantial compensatory benefits.  As Mayor Gay said, “I aim to get the very best deal for the city, and as you saw, I have sent them back to the drawing board many times.”

Indeed, her staff fought long and hard, getting more concessions from IKEA than most other host cities had achieved.  Considering the enormous pressure that she was under to immediately produce new tax revenue, she took and held a courageous position.

Her critics reasonably asked whether it was a well-informed position.  It is natural to imagine that IKEA’s impacts are those of any other big box—like a bigger Home Depot or Walmart.  In fact, IKEAs’ traffic congestion is unique.  From Emeryville to Stoughton, cities that accept an IKEA don’t realize what they are in for until it is too late.

In the U.S., city after city that does realize this has blocked IKEA developments.  In the U.K., Deputy Prime Minister Prescott banned new IKEA developments, including three that were already in progress.  IKEA challenged him in court and lost.

The orientation of activists like the Mystic View Task Force was that an IKEA store’s traffic impacts were fundamentally incompatible with Somerville’s best interests.  Therefore, IKEA should not receive a permit unless it was willing to develop a new model for doing business in an urban setting, as IKEA is now doing in England.

Mayor Gay had explicitly told IKEA officials to have no contact with Mystic View.  But after their agreement with the city, IKEA’s development officers solicited the activists’ views.  The parties met three times, and IKEA staff and their architects acknowledged that a number of Mystic View’s suggestions would improve the project’s design.  In the end, IKEA concluded that it was too late in the process to make changes.

 

Part 13:  Ikea vs. the Activists vs. the State
*

Before Ikea’s arrival, Stoughton officials hailed it as a great new source of tax revenue.  Jordan’s Furniture and other merchants in next-door Avon anticipated that they would see sharp sales increases from people visiting Ikea.

This Spring, irate representatives from Home Depot, Costco, Christmas Tree Shop, and forty smaller stores stormed the Planning Board.  They complained of plummeting sales caused by their customers’ inability to penetrate Ikea’s traffic.  Barry Tatelman, of Jordan’s famed Barry and Elliot duo, said, “This is [Ikea’s] problem; they caused it, and they need to fix it.”  National Tire and Battery’s manager said that his customers waited 20-to-30 minutes to get out of his parking lot, and then another 45 minutes to get through Ikea’s traffic.

Ikea offered no solutions.  However, its traffic engineer Ken Caputo told angry neighbors that opening a Somerville store might draw some customers away from Avon/Stoughton.

City officials in communities hosting Ikeas seldom appreciate the stores’ impacts until it is too late.  Infrastructure costs that jurisdictions pay to relieve Ikea gridlock have run from $50 million in Emeryville, California to $200 million in Elizabeth, New Jersey.

One reason why cities make these miscalculations is because Ikea grossly underestimates the vehicle trips it will generate.  Somerville’s permit approval was a textbook case.

Ikea acknowledges that its traffic generation is far beyond that of other big-boxes.  So it projected its Somerville traffic by averaging trips from questionable traffic counts at four other Ikeas. It counted its Elizabeth, New Jersey store, for example, during the low point of its annual sales cycle, on a freezing day, with winds gusting to 35 mph.  It did not factor in trip reductions resulting from its shuttle buses that bring customers from Manhattan.

Ikea said its store would increase weekday trips on I-93 by 5,000, but it did not include these trips in its projections of increased pollution.  It assumed that the 45% of customer cars and trucks traveling on I-93 during the eight weekday peak hours average 45 miles per hour. But Central Transportation Planning Staff report that average peak hour speed is 11 miles per hour, producing four times as much pollution.

When analysts who administer the Massachusetts Environmental Protection Act (MEPA) challenged the traffic projections in Ikea’s Draft Environmental Impact Report (DEIR), the company increased weekday trip projections by 61%.  But it made no corresponding changes to its pollution projections.  Based on these and other manipulations, Ikea understated its pollution projections by more than 100%.

Its carbon monoxide projections, for example, came in at 7.9 parts per million.  The federally allowable standard is 8.0.  And we now know that fine particles are far more lethal and local in their impact than the highly regulated pollutants.

The city administration’s approach was to demand that Ikea provide compensatory benefits.  Community activists said that no compensation would prevent gridlock on Route 28, a net loss in tax revenue, harm to public health, and preclusion of high job-and-tax-generating development nearby.  They said Ikea should change its operating model in urban areas.

Initially, MEPA officials agreed with the activists.  In response to Ikea’s Draft Environmental Impact Report, MEPA asked the company to reduce its parking spaces by 75%, charge for parking, operate shuttle bus service from Sullivan Square, and provide free or low-cost home delivery to encourage public transit use.

Activists also wanted assurance of Ikea’s promise to eventually fill in its vast surface parking lot with office buildings.  They asked for more compact store design and to put the Ikea entrance at the same grade level as the surrounding “urban village.”

Ultimately, Ikea refused to make the substantive traffic changes. MEPA rolled over and abandoned its earlier requirements.

Local activist Wig Zamore sent MEPA an analysis of Ikea’s fraudulent projections well before MEPA issued its decision.  Outgoing MEPA head, Jay Wickersham, intercepted the analysis.  He wrote a note across it, directing staff to ignore the information because it was “submitted too late.”  In fact, the law requires MEPA to consider any material evidence until the final decision is made.

A group of Somerville citizens filed appeals of Ikea’s zoning, MEPA certificate, and Chapter 91 license.  They subsequently dropped the zoning appeal.

Chapter 91 requires that the first floor of buildings set on Commonwealth tidelands be accessible to the public.  Ikea plans to build a private garage on its first floor and surround it with slanting earth berms.  The garage would project above the berms, 4 feet on one side and 10 on the other.  A summary judgment motion argues that Ikea’s “underground” parking lot is either a built structure or the first floor.  If the Judge agrees, the plaintiffs will win.  If she doesn’t, the case will proceed.

The MEPA case, initially scheduled for this summer, will probably be postponed.  Ikea has not responded to discovery requests.

Mystic View Task Force leaders have continually asked Ikea to mediate their differences.  On August 1, 2003, Mystic View was joined in this request by Mayor Gay and Commonwealth Development Chief Doug Foy.   Ikea continues to refuse.

 

Part 14:  ASLP’s New Strategy
*

Rumors in Somerville swarm thicker than flies on road kill.  And as James Norton recently observed, they usually come in multiple versions and with large doses of paranoia.

A recurring rumor concerns mayoral corruption.  In the summer of 2001, for example, Joe Curtatone was at pains to deny that he had met with Lorenz Reibling in Italy, and that money had changed hands.   Reibling was then chief of Taurus New England, lead partner in Assembly Square Limited Partners (ASLP).

In fact,  Mr. Reibling is a devout Christian who takes seriously the biblical injunction to render unto Caesar only that which is Caesar’s.  He has never in his life made a political contribution.

The problem with conspiracy theories is that they ask us to believe complex explanations for events whose simpler truths are accessible  to anyone willing to pay attention.  The simple truth is that ASLP’s operatives elected their candidate for mayor in the 2003 election.

If that sounds too bold, then try this:  Mr. Curtatone could not have eked out the 50.8% of votes that gave him the margin of victory without the overwhelming superiority in campaign contributions organized by the Assembly Square Mall owners.

By 2003, ASLP was unhappy with Mayor Dorothy Kelly Gay.  She had negotiated what she believed to be a tough memorandum of agreement with them, and then worked hard to entitle ASLP to build a larger Home Depot on the mall site.  The project had stalled in court, and ASLP was frustrated.

Voters wanted to see development at Assembly Square.  When Gay pressed ASLP to begin the high-density Yard 21 development that they had promised her, they were unresponsive.  Their site control over Yard 21 greatly increased the value of their Assembly Square assets, but they never really intended to build it out.

Mayor Gay could not then align with redevelopment activists to pressure ASLP.  Her staff had dismissed claims that the Planning Board’s issuance of permits for the Home Depot violated the city’s zoning code.  When activists filed a legal appeal, she and ASLP had worked hard on a bitter public relations campaign demonizing the Mystic View Task Force for delays in Assembly Square development and resulting losses of potential city revenue.

In fact, the Home Depot would have created more city costs than new revenues, like the strip mall now does, but the campaign’s timing gave it potency.  The Commonwealth had made savage cuts to Somerville’s local aid allocation, resulting in hundreds of city layoffs.

In January 2003, Superior Court Justice Stephen Neel ruled that the Planning Board had violated the law in order to accommodate ASLP.  The PR campaign came back to bite the Gay administration. It wasn’t that people who had been influenced by it reconsidered Mystic View’s credibility.  Rather, they increasingly perceived the Gay administration as ineffectual.  This perception resonated with other voter dissatisfactions.

That winter, Stuart O’Brien, a Somerville city planner working on Assembly Square, took a class from MIT’s Lawrence Susskind.  Many consider Susskind to be the best land-use-conflict mediator in the U.S.  O’Brien and the city’s development director, Steve Post, proposed to the mayor that they seek a mediated solution.  The Mystic View Task Force quickly agreed.  The developers said they would consider it, and that Spring, the parties retained Susskind’s firm to prepare a conflict assessment.

Meanwhile, local businessman Tony LaFuente launched a mayoral campaign, charging the Gay administration with a variety of failures, including failed redevelopment.  Political insiders were surprised by the strong response he got from discontented voters.

Month after month went by, and ASLP offered no new proposal, even though they had complained bitterly of large carrying costs on their property.  Outside observers were puzzled.

In fact, the developers had determined that they could make greater profits by building a big-box strip mall rather than a Home Depot.  To do this, they would need a city government willing to both radically change Assembly Square zoning and to intervene to persuade Home Depot to forgive ASLP’s contractual obligations.

In June, Alderman Joe Curtatone flatly told the Somerville Journal, “I am not running for mayor,” As Chairman of the Legislative Matters Committee, he began a series of meetings on proposals to change the zoning that had thwarted ASLP’s plans.  Then on July 11, the last possible day, he took out papers to run for mayor.

On August 1, Mayor Gay, Chief of Commonwealth Development Doug Foy, Ikea, ASLP, and Mystic View met in an all-day session to discuss mediation, hosted by Tufts University President Larry Bacow.  The city the state, and Mystic View all wanted to mediate.  ASLP and Ikea refused.

ASLP’s new strategy was becoming apparent to those paying attention.  A month later, Mayor Gay was defeated in the preliminary election.

 

Part 15:  The 2003 Election
*

The Massachusetts Election Commission’s 2003 municipal campaign finance reports tell a remarkable story.  Somerville’s Joseph Curtatone raised more money than any other candidate in Massachusetts’ 38 mayoral elections.  With additional borrowed funds, he outspent his general election opponent by 390%.  Yet his campaign committee began that year $140,000 in debt, and, until four months before the general election, he had declared that he would not run. Political junkies wondered why scores of donors who seemingly knew nothing of Mr. Curtatone gave the maximum allowable contribution.

Two years earlier, Taurus New England had selected Gravestar to replace National Development in Assembly Square Limited Partners. ASLP faced strong community opposition to a big-box strip mall.  Gravestar had scant development experience, but extensive political connections.  If it could deliver the required building permits, Taurus would give it a small piece of equity.

Taurus’ calculation seemed to pay off.  The Planning Board approved ASLP’s new Home Depot for the mall site.  In January 2003, however, the court ruled that these approvals were illegal.  Observers were puzzled when, after six months, ASLP offered no new proposals.

During that time, Alderman Curtatone conducted a series of meetings as chair of the Legislative Matters Committee, on weakening Assembly Square’s Zoning Code.  Meanwhile, mayoral challenger Tony Lafuente’s candidacy demonstrated the incumbent mayor’s political weakness.  Gravestar determined to elect its own candidate.

Lorenz Reibling, then Taurus’s chief, is deeply skeptical of politics as a virtuous endeavor.  He had not encouraged Joe Curtatone’s mayoral ambitions.  But once Gravestar undertook its election strategy, other Taurus executives, along with Gravestar execs, began soliciting contributions from their extensive contacts with professionals who make their living from real estate development.

Often, they would agree to make large donations to the campaign of a contact’s candidate in return for the same to the Curtatone campaign.  Developers, real estate attorneys and accountants, mortgage brokers, realtors, contractors, and property managers gave at least $35,000.

The actual amount may be substantially more.  Those donating $200 or more are required to state their occupation and employer, but 44 such contributors, giving an average of $390, did not do so.  And 12 maximum contributions of $500 came from donors in distant suburbs who identified themselves as “housewife” or “home maker.”  Four Palmer and Dodge attorneys gave large contributions.

Gravestar’s Natasha Perez had managed the politics of obtaining the permits.  She was simultaneously Assistant Director of the Massachusetts Democratic Party, enabling her to solicit funds from a variety of distant contributors.  $88,000 in contributions came from outside Somerville.  Lafuente’s total campaign expenses were only $68,000.

With vastly superior financial resources, Curtatone’s election committee conducted an argumentum ad nauseum campaign.  The technique repeatedly saturates the electorate with misleading statements and untruths until they are accepted as fact.

Voters received over 10 direct-mail pieces from Curtatone’s campaign.  They accused Lafuente of having once registered as a Republican, when Curtatone had done the same.  They said that Lafuente, who had moved from Cambridge 10 years earlier, was a “carpet bagger,” when Curtatone’s legal residence was Wakefield at the time that he first filed to run for Alderman.

The most potent attack was that Lafuente’s support for the Mystic View Task Force had cost the city $5 million in taxes, which would fully fund the city’s deficit.  Lafuente had, indeed, questioned the wisdom of squandering $6 billion in Assembly Square’s public infrastructure on big box stores.  His “support” for Mystic View consisted of donating a banner made by his company.

The real whopper was the $5 million in taxes.  It assumed that, (1) Ikea and ASLP would have promptly built 2.3 million square feet of offices, 816,000 sq. ft. of retail, 1,400 residences, and 6,800 structured parking spaces, but for Mystic View; (2) these projects would produce only taxes and no city costs; and (3) the city’s deficit was only $5 million, when that year it was $11.2 million.  In fact, Mystic View had only opposed the big-box developments, which would have created more new city costs than revenues.

Gravestar also gave an envelope of cash to at least one bewildered alderman, who said, “What’s this for?”  When told, “We just want to help with your election,” he passed it back like a hot coal.

Mr. Curtatone promised voters that, if elected, he would “get Assembly Square moving” within 90 days.  During an October 20 debate, he said, “Over my dead body, if I’m mayor, will there be a strip mall at Assembly Square.”

On Election Day, Mr. Curtatone captured 50.8% of the votes.  His campaign committee spent $34.48 per vote.

Once mayor, he immediately retained Palmer and Dodge to draft legislation designed to permit ASLP to build a strip mall.  The Aldermen passed it 98 days later.  Massachusetts Land Court invalidated it this month, along with the mall’s permits.  The mayor remains among the living.

 

Part 16:  Rezoning
*

Seven years ago Home Depot wanted to replace Assembly Square Mall with a large new store.  When Assembly Square Limited Partner’s (ASLP’s) balloon payment on the property’s one-year mortgage came due, Home Depot bought the loan.  ASLP happily agreed to the tough new mortgage and lease that Home Depot imposed.

During the time that the project was later stalled in court, ASLP realized that developing a big-box strip mall would generate far greater profit than a Home Depot.  But the reasons why the court eventually judged the Home Depot to be illegal also applied to a strip mall.  And ASLP was bound by its Home Depot contracts.

Once elected mayor, ASLP’s candidate, Joe Curtatone, immediately retained Palmer and Dodge to write zoning that would lend ASLP’s plans an appearance of legality.   He simultaneously initiated a campaign to persuade Aldermen to approve it.  Somerville’s Charter forbids mayors from submitting zoning, but they can always find a compliant alderman.

Some aldermen insisted on a process for public input.  The administration conducted a series of public meetings, but participants’ “input” never influenced the rezoning draft.

To give the charade more credibility, the administration retained fiscal analyst Richard Bonz to forecast the city taxes and costs that ASLP’s and Ikea’s projects would produce.  In March, 1994, he reported to the Legislative Matters Committee that the strip mall would generate no net tax revenue, and all the other projects together would produce only $890,000 more in taxes than in costs. Committeemen were stunned; two years of state aid cuts had totaled $15 million.  The Mayor hustled Mr. Bonz out of the committee room.

A week later, Mr. Bonz issued a revised report.  It projected net revenues for all projects at $4 million.  A peer review by Tischler and Associates knocked a million off this projection for things like assuming that each of ASLP’s apartments would only house two one-hundredths’ of a public school student.

Tischler had been given a narrow contract scope, and no raw data to review.  So Tischler’s analysts said they couldn’t estimate the costs resulting from Bonz’s other errors, like including no capital costs whatsoever.

Had they received the raw data, their estimates would have been a net loss for the strip mall, and little more for all the rest.  Nonresidential developments’ largest municipal expenses are public works and public safety costs.  Road-related costs are driven by the number of vehicle trips; and public safety costs, by what kinds of uses are on site and how many people they bring.  Retail space, for example, produces about 14 times the number of police calls that the same amount of office space produces.

Bonz’s analysis divided the city’s annual road costs by its total road miles, and applied this cost-per-mile to Assembly Square’s road miles.  This is equivalent to saying that maintaining an isolated residential block costs the city as much as a Union Square block.  City roads serving the ASLP/Ikea developments would be the most traveled in Somerville.  And instead of using the police call figures from Assembly Square, city staff gave Bonz figures for the sleepier Somerville Avenue Target store.

However, Assembly Square’s high rate of police calls was useful in persuading Home Depot to relinquish its contractual rights with ASLP.  Palmer and Dodge crafted zoning that allowed the strip mall but excluded Home Depot by limiting big boxes to the 50,000 sq. ft. that would be the size fo the strip mall’s largest tenant.  Contract law required ASLP to defend Home Depot’s interests, but ASLP’s attorneys actually collaborated with Palmer and Dodge on the rezoning.  ASLP still needed Home Depot to let them off the contractual hook.  So the Mayor closed down Home Depot for a day, publicly citing crime in its parking lot.  Home Depot got the message.

Writing the zoning that ASLP required wasn’t easy.  It was an affront to the Somerville Zoning Code’s stated purpose.  And allowing one landowner to do things forbidden to others violated Massachusetts law.

The 54-page rezoning’s legalese was difficult to penetrate.  Most aldermen didn’t try.  Nor did they read the analyses submitted by citizens that explained why it was illegal and how it would harm public health and city finances.  Alderman O’Donovan stated that he didn’t understand the rezoning but was going to vote for it anyway.  He was simply more candid than his colleagues.

On April 23, 2004, Aldermen voted eight-to-three to approve the rezoning.  During the next 16 months, 15 Palmer and Dodge attorneys gave an average of $600 each to help retire the mayor’s campaign debt.

Today, with only half of Palmer and Dodge’s invoices publicly released by the city, we know that the firm was paid at least $600,000.  The meter is still running.

 

Part 17:  ASLP (and the City) Sell Out
*

In April 2004, the Board of Aldermen approved new zoning for Assembly Square.  It stripped environmental and public health protections, reduced the city’s 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’s validity in Land Court that July.

ASLP withdrew from sales negotiations with Forest City, one of the nation’s 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’s Jim Shea took the place of the City Solicitor, the Zoning Board of Appeals dismissed citizens’ evidence of these violations.

From the moment that Taurus’s 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 and deliver the required permits.

With new zoning, building permits, and big box tenants lined up, Taurus found a buyer.  But Garvestar 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’s German investors.  Gravestar’s president Deborah Ciolfi arrived in Germany several days before the investors’ meeting.  She visited each investor, attacked Taurus’s competence, and lobbied for a sale to Gravestar’s favored buyer.

Investors and officers held a customary dinner the evening before the investors’ 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’s candidate, Federal Realty Investment Trust, for $64 million.  The approximately $30 million in resulting profit had been created by the city of Somerville’s re-zoning and its granting of Yard 21 development rights to ASLP.

Gravestar’s Natasha Perez, who was simultaneously Assistant Executive Director of the Massachusetts Democratic Party, had managed ASLP’s 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’s zoning, and approving the mall, city officials locked in this use for the fifty years specified in the leases.

On March 7 of this year, Massachusetts Land Court ruled that the re-zoning and the strip mall’s building permits were illegal.  The city issued a bizarre press release, hailing the decision as “a ‘major victory’ for the city in its effort to promote a Smart Growth development.”  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’s zoning, in order to accommodate the strip mall.

 

Conclusion:  Simple Lies and Complex Truths
*

Somerville’s city government is skating on the edge of a fiscal chasm.  Repair and extension of the city’s sewer system has been overdue for thirty years.  It would cost $200 million.  The public safety building is making its inhabitants sick, but there are no funds to replace it.  Bringing our library into the information age would cost millions.

A wave of boomer-aged teacher retirements across the state will soon force our schools to compete for replacements by offering higher salaries and better resources, or lose the competition.  Levels of city services have not recovered from the layoffs of over 200 workers caused by $15 million in state aid cuts three years ago. Of Somerville’s 15,000 taxable properties, not a single one larger than an acre produces more tax dollars than it consumes in city services. Homeowners’ taxes increase each year, while city government eats its own arm—selling off irreplaceable assets to pay annual operating costs.

Wisely planned and developed, Assembly Square could double the city’s tax base.  No other similar opportunity exists to cure the city’s fiscal ills.  Yet two administrations have bungled redevelopment there.

In fairness, a land transformation is a complex and challenging undertaking for any city, and Somerville has never done one.  But the required expertise exists among Somerville citizens who would enthusiastically share it with policy makers.  Instead, two administrations have rebuffed and ridiculed these citizens while making a legal and fiscal mess of their own redevelopment efforts.  The city is now considering new zoning to lock in a redevelopment plan that would bring unprecedented levels of congestion and health impacts, while producing a net fiscal loss for at least two decades.

City leaders have relied for redevelopment expertise on self-interested developers with limited experience.  They have embraced and spread simple propositions that seem easy to believe: There is no market for office development. K’Mart’s lease prevents high-value development nearby. Huge regional stores and thousands of apartments will produce high taxes, low costs to city government, and leave sufficient transportation capacity to support offices later.

None of these simple propositions is accurate.  The truth is complex.  It takes some effort to sort out, but unequivocal evidence exists.  Rather than relying on committed citizens who possess this evidence, or on truly independent experts with full access to data, city officials have retained consultants to bless the myths.

City leaders’ stupid decisions do not constitute conclusive evidence that they are stupid people.  On the contrary, they have made smart decisions in the context of maximizing political advantage in a political culture, and with a city charter, that have outlived their usefulness to Somerville’s broader population.

Our antiquated city charter authorizes the mayor to appoint two Fence Viewers, a Wood and Bark Measurer, a Grain Weigher, and a Public Welfare Board.  It also invests in the mayor overwhelming authority to govern.

In practice, an alderman is little more than an ombudsman.  Ward aldermen, in particular, are judged on how well they deliver services, which a mayor can withhold from any ward whose alderman is uncooperative.  It is rare that a mayor cannot put together an aldermanic majority on any issue.  If Aldermen were doubtful about redevelopment myths and wanted to retain independent experts, they would have to beg for funds…from the mayor.

Planning Board member Linda Bohan asked thoughtful questions that went to the heart of the current zoning proposal’s failings.  She got glib responses from the mayor’s director of Strategic Planning and Community Development, Jim Kostaras, and Palmer and Dodge attorney, Jim Shea.  The only staff to whom she might turn for critical analysis are those that report to…Jim Kostaras.

The current mayor did not write the charter.  Understandably, he, and all mayors, seek maximum political advantage within the constraints of the law.

Fifty years ago this was an efficient system.  But with the increasingly complex challenges to municipal government, it is no longer effective.

Nor is the political culture that comes with it.  Loyalty is more important than accountability.  Reasoned dissent equates to disloyalty.  Patronage dominates problem solving.  One has to go along with simple lies, to get along.

Paradoxically, those who most defend the status quo are, as a class, most hurt by it.  Somerville’s political culture can provide individual loyalists with increasingly insecure public sector jobs.  It cannot guide the economic development that would provide all of them and their children with good jobs.  Or deliver the educational resources needed to qualify for those jobs.  Or ensure that housing is sufficiently affordable for them to remain in the community.  These all require a clear understanding of, and a well thought-out response to, complex truths.

Somerville’s new arrivals bring expectations of a political culture that gathers all available evidence, analyzes it, and formulates the most effective policies.  For the time being, many of these newcomers’ attention is absorbed by the careers that enable them to pay inflated housing costs.  They won’t be focusing much on city government until they put down roots, or until city government’s fiscal-management-by-denial catastrophically catches up with it.

Before then, city leaders will make decisions about Assembly Square that will affect Somerville for generations.  We probably won’t see grass growing in the streets.  Just a lot more Volvos and BMWs.