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BPDA reminds New Yorkers running Faneuil Hall Marketplace who owns the buildings, demands they do better by tenants
By adamg on Wed, 06/24/2020 - 5:35pm
The BPDA is warning the New York real-estate firm that currently has the lease on the city-owned Faneuil Hall Marketplace - for which it apparently pays the city just $10 a year - that it's going to want the buildings back if the firm doesn't start doing more to help retail tenants hamstrung in recent months by the Covid-19 forced shutdown.
In a letter to Ashkenazy Acquisition Corp. today, BPDA Director Brian Golden acknowledges the company deferred rents for April and May - even if only because of public outcry and a call from Mayor Walsh, but says he's hearing discomfiting news that the company is now demanding that tenants repay those rents by December and that it is refusing to meet with the tenants to figure out how to safely re-open marketplace buildings that at peak times are jammed by tourists jostling shoulder to shoulder in search of some authentic-ish local food and stuff.
Golden's letter, addressed just to the company, not to any executive in particular, says Ashkenazy needs to give the mall's tenants more of a breather to begin making up rents, to give more than lip service, like, actual rent relief to "long-term family-owned small businesses that have long been the lifeblood of FHM" and to fill any vacancies "in a way that advances equity, inclusion, and the prioritization of locally owned minority and women owned businesses that reflect the diversity of Boston." Oh, and meet with tenants on developing a plan that does not turn the marketplace into a Covid-19 superspreader.
Golden continues:
If ACC is unwilling or unable to make these commitments, we request that ACC meet with the BPDA to discuss returning the property to public ownership or facilitate a transfer of the property to a private owner capable of making the investments necessary at the property.
He adds:
The 99-year lease was signed by the Rouse Company, the original redeveloper of the FHM, and the former Boston Redevelopment Agency in 1975 and set forth a meager rental payment of ten dollars a year to transform the old marketplace into one of the first festival marketplaces in the country. The BPDA believes that ACC and previous leaseholders have benefited greatly from this lease arrangement, and we call on ACC to come to the table with reasonable and acceptable terms for the merchants at Faneuil Hall and for the long-term management of the property.
It is our hope that after this pandemic is over, FHM can return as a cultural and civic destination for both the residents and visitors of Boston.
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 Golden's letter | 288.92 KB |
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Comments
Woah
I'd never thought I'd say "Go BPDA" but I am.
Good for them to use their clout to help the tenants.
I wish
I wish I could say that's the least they could do but, well, we've seen that.
Good on them for going past the minimum required 15 pieces of flair.
Change the name
From Faneuil Hall to Hamilton Hall so taxpayers can be reminded how they got ripped off in this 99 year political sweetheart deal.
Ask for them back?
Wait, if the city can ask or take it the plaza back, why are they sending polite letters? Take the buildings back now. When tenants decide to leave, make a policy of only renting to businesses owned and run by Boston based, non-franchise operators.
no shit
I mean that not as in "that's obvious" but "holy #$&+), if they can take them back why the ffffuuu would they not?"
BPDA, so close to showing awareness and a willingness to use its powers for good, for once. Not quite there yet, this is only a letter.
But I appreciate them making Boston aware that we can in fact demand more of them.
Facts not in evidence
The City does not have the authority to break the lease. Your conclusion is way past the point. The letter is basically threatening that the city will become a real pain in the ass for the developer, possibly by engaging in costly legal action of a dubious merit. Mind you, that will be really expensive for the developer to defend even if they have the law on their side. The city is staking out a ground to say that it is in their better interest to offer better terms to the tenants for a short period of time than to fight the city who has limitless resources to and the ability to bring dubious actions to court or otherwise be a royal pain.
If contracts could be broken simply because one side is getting the better deal then there is no enforceable contract. Just another crumbling brick in the wall of our society that is collapsing before our eyes.
BPDA probably does have the authority to break the lease
Like any landlord, the BPDA (which, by the way, is a separate corporation and body politic from the City of Boston) may well-and probably does-include clauses in its lease to any operator of FHM that requires the lessee to adhere to certain metrics and performance standards, etc. that allows the lessor to revoke and invalidate the lease if any of the clauses are violated. For example, if there's a clause in BPDA's lease to the Ashkenazy that requires 70% of the commercial space to be leased to locally owned small businesses, and they fail to meet that threshold, or if the lease requires Ashkenazy to adhere to certain standards of maintenance, cleanliness, and hygiene, and then they stop picking up trash, stop repairing broken lights and floor tiles, and stop regularly cleaning the bathrooms, the BPDA could revoke its lease to Ashkenazy for violating its terms. It's a pretty standard practice in both commercial and residential leases.
Speculation
The City did not negotiate a lease with these operators. The lease in question dates back to the redevelopment in the 1970's. What you suggest are things the City would use in lawsuits to torment the landlord in court, but there is one obvious reason why the City cannot just break the lease as you suggest. The City would break it in a nanosecond if they could. $10 a year???
The re-developer in the 1970's put a large investment into a distressed property the city was offering in order to try and bring development to a decaying area getting worse by the year. They offered these generous terms and the contract was agreed. The City can't just break their end of the bargain because it worked out well in the end. This is not the standard commercial lease you are describing.
Those certainly are words
But what exactly are you trying to say? You are correct, the City of Boston did not negotiate a lease with these operators, but that's because the City of Boston does not own the property. The BPDA (fka the BRA) does and that's who negotiated the original lease (and again, the BPDA is a separate corporation from the City of Boston). The current operators assumed the lease, if it is indeed the same unamended lease from the 1970s, and like any other subsequent lessee, it assumes all existing encumbrances that were on the property at the time of transfer, like the lease in this case. My statement above is just that there are very likely clauses in the lease, just as there in pretty much every lease I have ever seen, commercial or residential (and I could probably do an online search at the Registry to see if I can find it, but I have better things to do at the moment, plus most pre mid-1970s documents at the Registry are unindexed and are a PITA to look up online), that allow the BPDA the option to revoke the lease from any lessee that's a bad actor. This letter from Golden might be the shot across Ashkenazy's bow that begins that process (similar to a [MGL Chapter] 93A letter in a small claims case).
Another case of intimidation by Walsh's people?
Mayor Walsh has his coatholder from the troubled BPDA send a threatening letter to a tenant. Really? Hasn't Walsh's City Hall gotten into enough trouble with intimidation tactics (and bribery) during their relatively brief tenure? Ashkenazy Acquisition Corp. is simply a Massachusetts tenant in this case. The city is landlord. It appears the tenant has a valid lease, signed by both sides and non-payment isn't an issue. Harassment of a tenant in good standing in the Commonwealth has long been frowned upon by prosecutors and the courts. Mayor Walsh himself has been a strong advocate for tenants, including those with sweetheart government leases like the Swan Boats and Sullivan's at Castle Island. As a lawmaker, he did nothing to stop such deals but now cries foul? Please.
This matter also raises the question, what is Mayor Walsh's official policy on which department heads can write/speak to who? An African-American BPD Commissioner is publicly humiliated and muzzled by Walsh, merely for meeting with the US Attorney General while his (white) BPDA buffoon is applauded for sending a threatening lettter to a private firm, ordering them to do better with Blacks? The damage done to Boston by this crew will take decades to repair.
No.
.
Ah the smell of fish
Fishy - clearly you have no interest in the health of the city since you choose to defend a vampire corporation that pays effectively about $25 A YEAR (adjustged for inflation) for an extremely valuable portion of Boston property and history.
Funny - not really - how you blended in William's stupidity in being played by Barr as somehow noble.
Wherever you live (apparently not a citizen of Boston) stick to adding toxic pablum to your own locality. You are obviously a part of the Trump philosophy of destroying anything good. At least keep your destructive impulses close to you own home.
While some were stateside guarding mall Santa from
violent Christmas photo paparazzi, Golden was serving his country in Iraq. Granted he's no General Flynn.
The rent paid to the city is effectively $2.10 per month
Maybe it is time for the city figure out how to make rent realistic. If it was $10 per month in 1975 then the current value of rent to the city is $2.10 according to one of the inflation calculators.
How many millions have the various owners of the markets made over the years? While the argument would always be that the employment and tax revenues justify the city effectively giving away the property.
Even if one of the goals of the markets included providing space for generic, anodyne, boring and find in any city stores (with a few exceptions) that is still way below what the city (you and I) deserve as rent for a business based in New York acting like a vampire and sucking away all it can, leaving a desiccated retail corpse.
Under market rents? Absentee landlord?
Sounds like a blighted property to me. Time to get west end on their ass.
Raising the city's rent wouldn't help
If the city, or BPDA, simply raises the rent, then the developer will simply pass that increase on to the tenants, which is exactly what the city doesn't want them to do.
It's time for the city/BPDA to get creative and to specify in more detail how they want the developer to behave. It seems like this letter is a first effort. But the problem has been festering for decades now, and this is the first time the city/BPDA seems to have shown any interest.
I say this as someone who's been working in tourism -- and visiting Quincy Market regularly -- for 41 years now. (Well, 40 years, since I haven't been to QM yet this year.)
If the city, or BPDA, simply
My guess is the developer charges market rate rent, as opposed to rent based on cost. They charge the highest rent the market will pay. In that case, an increase won't get passed through.
Let’s go back to 1975
It’s worth keeping in mind that what the city leased to the developers in 1975 was effectively a blighted property with a deeply uncertain future.
Sure, in hindsight we can see it was the forerunner of a better and more successful kind of urban renewal, but there’s good reason why the city gave the land away at the time. While the developer may have succeeded beyond their wildest dreams, the city has also benefited by the decades of renewed vigor in the downtown market. FHM is far from the only reason downtown came back from the dead, but it’s also more than a small part of the story.
1975 Present Value
What most of the socialists wringing their hands here fail to understand, is that the site in 1975 had close to zero value to the City. Portions were being considered for demolition. Rouse took the risk and made the investment. That entire corner of the City began an incredible revival, which has created billions in wealth. In the current fiscal year the City will collect $4.3 Million in real estate taxes, from the site. Consider the revenue from everything within the sphere of influence of that project. Ashkenazy bought out the leasehold, and they and the City are bound by the original lease terms. The BPDA will be making a big mistake if they try to push around a private property owner to promote the current political agenda. Definitely bring in some more interesting tenants, and provide incentives to assist local/minority/disadvantaged small businsess, but remember that the $4.3 Million ultimately comes from cash flow in the form of rent.
4.3 million in rent a year
4.3 million in rent a year isn’t much. Each of those little carts was paying $4000 a month at one time. As a local guide who’s known cart and food vendors there for decades, many have been on the verge of or have been edged out. There have been many vacancies, with boarded food stalls and empty side buildings since Ashkenazy took over, and the place is suffering from Mallitis. We guides are also in regular conversations with the customers as well as the vendors. There have been no raves about the place for a few years, and no, locals do NOT hang out there anymore, like they did for decades. Time to revitalize AGAIN! And get a landlord invested in the city.
How does that work? Normally
How does that work? Normally the landlord pays the real estate taxes. In this case the landlord is the city.
So if the tenant is paying the property taxes, isn't it effectively $4.3 million in annual rent rather than $120?
Redevelopment
Boston has always sucked at contracts. Signing a 99 year lease for $0 was just as foolish in 1975 as it would be today. The right move is to give them a tax credit worth double or triple whatever they actually invest.
This happens over and over and over again. The most recent example with was Yawkee Way a few years ago where the city pretty much gave the extremely valuable street to the Red Sox for a song. In no way was that in the interests of the residents of Boston.
I assume Rouse spent the
I assume Rouse spent the money to renovate the buildings. Ashkenazy presumably paid Rouse a lot to take over the lease, to represent the value from the future rent and the investment in the earlier renovations.
I hope the city can get what it wants out of them. But if they wanted control over aspects of the management, they should have put it in the original lease.
Without picking sides here,
Without picking sides here, just noting that the $10 lease was in the context of an extensive renovation of the buildings by Rouse. It’s not as if the favorable rate was given for no reason.
BPDA to Ashkenazy: "Because
BPDA to Ashkenazy: "Because you won't let your tenants violate their lease terms, we're going to violate the lease terms with you."
Regardless of the community/social/emotional impact of all this, that's basically what's going on here. Ashkenazy tries to enforce their leases on tenants, and gets threatened to have their own lease on the property reneged upon by doing so.
But who cares about actually honoring agreements when the mob is angry?