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Might want to get that visit to Anthony's Pier 4 in relatively soon
By adamg on Thu, 08/11/2011 - 10:14am
The Globe reports construction's set to begin next spring on a 21-story residential and retail building on Pier 4. The restaurant named for the pier and founder Anthony Athanas is slated to eventually be torn down, its land turned into a waterfront part; developers say the restaurant may be moved into another building slated for a later part of the pier project.
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Comments
Pier 4 not closed??
Well, that answers that question. I thought it had closed years ago when they first released plans for the property. Every time I walk by there, there are valets but I couldn't figure out if anyone was actually inside.
It's great that we're seeing development, although I'm still very skeptical about the whole "innovation district" branding, especially since the borders of it seem to be ever increasing and ill-defined.
Another Question
John
What do you feel is the annual demand for luxury condos in Boston. Based on prior exchanges re. census numbers it looks like total new housing demand in Boston averages around 1200 units per year (which jives with about 0.5% per year population growth on a base of 260,000 housing units).
This is a total estimate, but I'm guessing about 20% of this might be luxury downtown units (the Clarendon, Province Place and W seem to be selling about 30 per year based on the notes on your real estate blog). That means each of these big projects would take 4-12 years to sell out - even in better times - is that typical for a developer - or do they normally plan to sell these in shorter time frames?
Do you have any better estimates for demand on these places, whether current or even in better times.
With about a dozen luxury condo/rental projects of 200-500 units getting ready to break ground again, will we be able to sell them without glutting the market?
As the national economy goes down the toilet
and unemployment increases, and social programs that already house and feed large numbers of poor people in urban areas are strained or fail, will Boston take the initiative to secure "safe" areas of the city for people who still have jobs in downtown, and will this draw more employers and skilled employable people to the area, and if so, how will this affect the demand for luxury condos and other residential property in the safe zones?
Adjust that foil, pal
The "special rays" are seeping through,
Buddy
Look at how we can't make all of Dorchester safe even during economic boom times. Then look at the economy. Then look at how crime increases with poverty. And that hellholes like Detroit can and do happen. Then imagine there there still being some jobs in the future, and Boston trying to keep them here. Why would we not make a special effort to keep the golden goose area of the city safe enough that people are willing to go there? And if we do a good job of it, while most of the rest of the country does much worse than we do, why wouldn't companies and the employable move here for the island of economic health and safety? And so, how will that affect housing prices?
How do I get in on this?
I want to be one of the people with jobs and in a safe enclave, when there's 30% unemployment, the food lines can't keep up, and rioters and looters become a familiar sight.
Luxury condos absorption
Hi.
I don't have answers to your questions.
A developer would probably say it wants to sell out within three years of a project's opening. Pre-sales would begin six-to-eighteen months prior to completion, but in this day and age, you don't get pre-sales; buyers want to be able to see the property from inside and out in order to make sure their money isn't at risk.
In regular times, I think a developer of a 100-unit building would hope for 3 closings per month and of a 130-unit building, four per month. That (not coincidentally) comes to about three years.
I think a higher percentage of luxury buildings are "downtown" than you estimate; I think almost all of them are in the Back Bay / South End / Beacon Hill / Waterfront neighborhoods.
There is definitely a switch from condo projects to apartment projects. I don't think you'd see any new condo projects proposed in the city.
The apartment complexes all advertise themselves as "luxury" for marketing purposes, while the media calls them that as short-hand. They are "luxury" in the sense they are full-service buildings with security/concierges, pools, media rooms, central a/c, etc. and because they charge high-end prices ($2,500 for a studio, for example).
Is there demand for all these new apartment complexes? I don't know. If you add them all up (which I think you have), it might seem like a high number, or it might seem like a drop in the bucket. What's the total? Something like 3,000 units, I think. This is spread out between several neighborhoods and the completion dates are two to three years out. So, the economy will have improved by then. And, new immigrants (meaning, college graduates and job relocators from other cities) will continue to come into the city.
If the net result of all this is that the increased supply lowers the prices in the "luxury" buildings, is that such a bad thing? Isn't that something we all want to happen?
Best case scenario, the "glut" of new housing creates a competition in which developers have to lower prices.
Worst case scenario, the developers complete their buildings and they lose funding, meaning empty lots. (Worse, they start but don't finish, but I don't think we'd see that.) Banks foreclose, property languishes but is then bought for pennies on the dollar and new developers build.
Professionals seem unwilling to ever move outside the downtown Boston neighborhoods. You can blame public transportation, you can blame crime, you can blame blight, but it's just the way it is - in every city, young people want to live in the "center" of things. How many people when they move to NYC have to live in Manhattan?
Why do you fear a glut?
Affordable housing in luxury apartment building
Oh, this doesn't necessarily relate, but worthy of a topic on its own.
Each new apartment complex is required to set aside "affordable" units for lucky tenants (I call them "lottery winners"). The rents are much less than the market would demand. Many times, the units are the same quality as the "regular" units.
The new "luxury" Lofts at Atlantic Wharf (average apartment price: $4,900) has several units available.
Apartments
Size / monthly rent / median income
2 Bedroom @ $1,528 80%
1 Bedroom Loft @ $1,155 80%
2 at 1 Bedroom @$1,690 100%
1 bedroom Loft $1,454 100%
Incomes
HH size / 80% median / 100% median
1 $ 54,050 $ 67,550
2 $ 61,750 $ 77,200
3 $ 69,500 $ 86,850
So, yeah, you can get an "affordable" unit that costs $1,155 per month if you make $54,050.
Ca-ching!
Go to 290 Congress Street, Maloney Properties, for more information and an application.
could be an unmitigated disastah!
Best case scenario, the "glut" of new housing creates a competition in which developers have to lower prices.
No that would be worst case. Several problems.
As these come on and "glut" the market it depreciates the value of these and every other luxury property in the city-probably condos too. First step is that some of the taxes they were paying get pushed onto all of the other residents - tens if not hundreds of millions of dollars. Other apartments then rent for less and depress rents at the same time as taxes are going up - not a very good scenario for landlords who find it unprofitable to own these properties.
Then you have people who are struggling to pay their mortgage - if the taxes on the expensive apartments go down and they get pushed onto lower value homes - then they have to pay higher taxes - and possibly over the edge.
This also pushes down the average value of all homes - which is generally correlated to the residential exemption - so you end up, especially on very low value homes, with higher taxes, a lower exemption and shrinking value - anybody on the margin goes into foreclosure.
This could end up in a never ending cycle - values go down, taxes go up, which pushes down the value of properties more so again taxes go up, values go down etc. - especially if people start folding their tent due to higher taxes.
Think this is just an ivory tower theory? Over the past 4 years the total tax take in the city has gone up by 20%, about 10% of that is automatic inflation increases under prop 2.5. The other 10% is "new development". Only one problem, despite 10% "new development", assessed values are down about 5%. That means property values are already down roughly 15% from their peak. And those are values based as of Jan 1, 2010. Just a guess but over the next two tax years I'd guess we'll see at least another 5% "new development" (2.5% is pretty consistent - even in the recent "lean years"). However, values will probably fall 5% as the Jan 1, 2011 values for FY 2012 and Jan 1, 2012 values for FY 2013 kick in which means the rest of us are likely going to somehow have to eat a portion of all those new taxes - at some point people start to break.
If you have a system where the tax take is relative to property values - you don't have this problem (but the city can have unpredictable revenue flow). Under our system where the tax take is fixed and taxes are proportional to the total and never decrease, the city gets steady cash flow - but the burden can start to build and eventually crush the residents. As I've posted before - over the past 10 years residential taxes have doubled. Most of that has fallen on the downtown residents who fortunately can afford it for now. However, if they double again you'll see downtown condos become unaffordable even for the "rich" - they'll sell out. Even most "rich people" have a hard time justifying $20,000 and up property taxes. If that happens watch out below - all those taxes shift to places like JP, Rozzie, HP and West Rox where there isn't as much discretionary income.
And the final wild card - this all assumes commercial taxes remain fairly consisten and more taxes don't shift over from the commercial side. However, if office rents fall or interest rates rise even a couple of percent the problem is accelerated considerably.
That's why i fear a glut of any single type of real estate, especially ones like offices or luxury condos that pay the lion's share of taxes. If you offload their taxes onto the outer neighborhoods it could be an unmitigated disastah!
Don't get me wrong - I'm all for development - but not a glut of luxury units. Build steadily from the middle with a little at the top and bottom so you can sustain and grow values. But if you create a top heavy system, the whole thing will crush everyone below.
I've decided you're pretty much against everything,
but your nonsense about more housing increasing rates on existing units is quite nonsensical.
Not really
Henry - there is indeed probably demand for about one 300 unit (luxury condo or luxury apartment) project per year - that's fine on a long term average - however, we probably read about one project every two weeks. And while some may not get built, apparently there are several ready to break ground quite soon and we will probably see a dozen come on line within 2-4 years.
Nonsensical until you realize that it has already happened twice in the past 12 years:
first we massively overbuilt office space during the late 90's. We have never quite absorbed all of that space. Huge vacancies in the early 2000's and just as we were starting to see full occupancy, the '08 recession hit and vacancy rates fell back to double digits. The result - about $150 million shift in property taxes from the businesses to the residents of Boston.
Then during the real estate boom we built several thousand luxury units of housing, many of whose values have stagnated or fallen (a couple of properties have at least remained steady). The initial taxes that these created at the peak of the market are no longer being charged in full to these units as they have been reassessed at a lower rate. Those taxes didn't go away - they are now being spread to other homeowners - along with the annual 2.5% increase on the original higher value. This effect is though much smaller than the one above and note that it can happen in reverse - we may see much higher taxes downtown in the next two years because values in the neighborhoods have taken a much bigger hit on values - meaning downtown will have to pick up the slack.
for now the high end of the market - top 10-20% has absorbed most of the $275 million in extra residential taxes that have been heaped upon us in the past 10 years. But even for the rich that burden starts to get too big. If it does and you see a downturn in the values of downtown condos - that can really hurt the rest of the city. Couple that with even a small rise in interest rates which can have a huge impact on the way commercial values are determined (negatively) and this will shift even more taxes onto the residents and you have a full blown crisis on your hands (just like what happened around 2004 when they had to take drastic measures to forestall a 40% across the board increase in residential taxes- most residents had no idea what was about to hit them - the city didn't prevent it - they just spread it over several years).
This is not a healthy development strategy under our tax regime. The thing that concerns me most is that our officials are in denial - even though it's happened twice - including one time that required crisis management - they are just as bad as our friends in Washington and continue to kick the can down the road.
How do you build "non-luxury"
How do you build "non-luxury" apartments in downtown Boston? What does that mean? First, it is impractical, since buying the land and building the tower requires a certain amount of money that would require charging higher rates. Are you recommending subsidies? Do you think the housing should be built outside city-center? Who would want to live there?
I have never heard the argument that increasing supply of housing is "bad". I honestly can't comprehend that. It seems like something a rich person would say who is against development because it will ruin his/her views or has a sense of "I've got mine, screw you."
There has been absolutely no negative effect from having high-end condo building during the past ten years; it was simply supply responding to demand. Your math may show that overall tax revenue was reduced even though the new housing added to the property tax base, but first, I don't know if those numbers work, plus, without new housing, the city is Detroit.
I admire the amount of effort you've put into this but I can't support your conclusions. The city is far short of the amount of new housing it needs (as my earlier analyses have proven) based on the number of new arrivals during the past decade and the small amount of additional housing units added between 2000-2010. It didn't even keep pace with the population increase.
The plans for the Seaport District don't even include enough housing to satiate demand, although I don't have the data in hand.
Downtown residential real estate is what pays for the rest of the city to run. Without "luxury" housing downtown, other neighborhoods would be lost and we couldn't pay for schools or police. High-end housing in Boston Proper is perfect because the owners put little pressure on the cost of city services - none of those people are putting their kids into the public schools, and they hall have garages so they aren't putting their cars on the streets.
The absolute worst thing to happen to our city is to lose its upper-middle class base.
How you build "non luxury" in 3 simple steps
Cut out the "concierge", gym, pool, and all the other crap that justifies an exorbitant "monthly condo fee" or doubling the rent.
Don't automatically build in marble countertops, or hand-carved cabinetry, or whatever that runs the per unit costs up. Also, no need to hire the most famous architect in town to make the exterior look like a Jedi Temple either.
Finally, feel free to use the first floor or two to house commercial space that will keep the rent/mortgage down for the residents.
You can't imagine how someone could build a condo building, say in Kendall Square, where units wouldn't cost more than $300-350K (ok, you can charge more for the penthouse) or rent for a 2-BR would be about $2000/mo? All this over-designed (in every sense of the word) stuff is nice for those who can afford it (all one a month)...but the rest of us carry on renting our older but decent apartment or moving out of town.
Wishes were kisses
I can't afford a Mercedes but Daimler-Benz keeps making them ...
You must have missed where I said...
Someone's there to buy them. Great. There's way more who would buy something else. Where are the Honda Civics and Ford Focuses?
Locale of apt complexes less than prime
Of note is that these "luxury" high-rise apartment complexes are in locations that are seen as far from prime. The Archstone Boston Common is on a still-dicey block overlooking two strip joints and a porn store (and a huge empty lot). The other one is at North Station. The third overlooks a massive train yard in East Cambridge. The Park Lane Seaport apartments are far from public transportation and without neighborhood amenities.
Only One Back Bay is in a "prime" location.
All those neighborhoods are undergoing change. Imagine how much the rents will be when they're fully developed.
Isn't Park Lane Seaport on the Silver Line?
Sure, it's a bus, but it's in an underground station and it runs more frequently than any individual branch of the Green Line.
Pass the popcorn
There's nothing like an argument between a fellow who makes a living selling new luxury condos and a fellow who lives in a luxury condo and doesn't want his home value eroded by a market glut.
All about the second clause
In this case, it's the fellow who doesn't want his own property devalued who raises my suspicions. He speaks of taxes, yet the argument is illogical to say the least. More housing = more assessments = more taxes. He can talk all he wants about how new luxury will drive down the assessments levied against older luxury, but the assessment pie expands nonetheless.
Ha, ha, true
Good point. For clarification, however, I haven't "sold a new luxury condo" for over two years. I'm certainly not "making a living".
Don't choke on that popcorn
For my record our plan was to hopefully stay in our condo until they take us out in a flower vase, the only people who would benefit would be our siblings or their kids. Unfortunately at some point it becomes ridiculous to keep eating the tax increases which are probably the only thing that would eventually force me and many of my neighbors to sell, the value is irrelevant if you plan to stay forever.
So S-P - As more taxes come over to the residents and you get downtown flight - yes the prices will come down. As will the taxes. But somebody has to pay those taxes - if it's not commercial and it's not all the luxury owners it's you. Hope you don't need that extra $2-3k for your kids' college or your retirement. Enjoy the popcorn.
And henry says
More housing = more assessments = more taxes. He can talk all he wants about how new luxury will drive down the assessments levied against older luxury, but the assessment pie expands nonetheless.
That's the problem - the taxes necessarily expand - the assessments don't and as the assessments contract on one person, the taxes go up on the rest of us. The total assessed value capped out at $90 billion a few years ago and is now about 5% less. Add that to the 10% "new growth" that has never materialized and there's about a 15% increase for all the rest of us who are now paying for the last 6 years of "new growth" that has gotten written down.
And all of this pales in comparison to what happens if interest rates, which are at historic lows, start to go up even just a point or two. That would be as bad or worse than the 2003 property tax crisis - anybody ready for their taxes to double AGAIN in the next 10 years?
You should do standup
Stevil, you should do standup with your math. Seriously. It's that funny.
When Henry says more housing = more assessments = more taxes, and you twist that up into a paranoid teabagger fantasy about everybody else's taxes going up as a consequence of more building, it's better than Tina Fey doing Palin.
I know you went to skool, so you understand perfectly well that more property in the same area means a larger tax base for that area. But keep the yuks coming. You bring a smile to everybody's face. You're like the flying karamazov brothers of stupid accounting tricks.
You seriously don't know this?
You do realize that this is how the system works don't you?
It's an independent closed system. The only way this doesn't hit you is if your property also goes down by the same percentage or more as the glutted sector of the market. So congrats - you might not get the $2-3k annual increase in taxes. Instead you get a property that loses say another 10% in value. And depending on how the complex interaction of citywide assessments works out, you could get the grand combo prize of a lower value on your home AND higher taxes if say downtown condos go down by 20% and you are lucky enough to see only a 10% decrease in the value of your property.
Ignorance is bliss. Until you get that tax bill with a 40% increase and choke on your popcorn.
Not a closed system
That's the flaw in your thinking. It is an expanding pie, regardless of the impact on individual slices. New buildings pick up the slack.
Yes the pie expands
but the slices mostly don't. In 2007 the value of all the land in Boston was $86 billion. Now four years later, despite about 10% "new development" totaling $150 MILLION even though we've only added about 3500 households to our population and very little new commercial development. Today the assessed value of all the taxable land in boston is - drumroll please - $86 billion. So we've added some $150 million in ad valorem taxes and zero added valorem (this is in addition to $150 million in cost of living increases - so almost $100k in property taxes per new household). Instead of all those taxes falling on the "new development" they are now shared by every taxpayer in Boston. Thanks to historically low interest rates, commercial properties are currently eating about 60% of that incremental - low interest rates prop up commercial values due to the assessing formulas. Hold onto your hats though because without going through all the math, every 1% increase in interest rates drives down commercial values by about 15-20% which translates to about a 20-30% increase in residential taxes. If interest rates tick up say just 2-3% as many expect them to, we are massively screwed. It will devastate commercial values and shift hundreds of millions of dollars in taxes onto the residents. Every time we develop a new property that adds taxes, but zero value it magnifies the risk of catastrophic failure.
There is no guarantee this will happen if we remain in a blissful state of low interest rates - but that's never happened before in history and I wouldn't bet on it now. I wish it weren't so and I wish City Hall had a contingency plan. But it is and they don't.
Pre and post crash comparison, really?
I'm amazed that we've already achieved parity. Its a good thing we had all those projects in the pipeline and more on the way. Let's just be sure when we talk pies that both are apple. Don't bring out that orange creme pie from 2007, it will just end up on your face.
We're not done yet
those values are only as of Jan 1, 2010. We have all the depreciation of 2010 and 2011 to go yet. So what we'll probably see eventually is a drop to about $80 billion assuming another 2-3% drop per year. That means plus 15% in new development (somehow we still had almost 2.5% growth both years) and minus 10% in value - or a 25% ad valorem tax on nothing over 6 years. Again, pray that interest rates stay low or it's 2003/2004 all over again and the business community might not be as accommodating in agreeing to spread the pain - they already absorbed a lot and they may really be hurting themselves if they have to pay higher interest rates.
I know you can't help yourself
but really, reduced revenue due to a burst housing bubble has nothing to do with the revenue impact of new construction.
huh?
Exactly what reduced revenue r u referring to?
Was your premise, not mine
that rates went up to achieve a billion less in total revenue. In absolute terms, that is a reduction of revenue. Further, your argument was that the city had to raise taxes to hit that number. In other words, there was a revenue gap by your own reckoning. One way to deal with this is higher taxes. Another way is a larger tax base. Question: does more housing increase the tax base? Or does the presence of more units in the city somehow still require higher taxes on existing units to achieve flat revenue?
You've argued that it is the latter, but the only way for this to happen would involve some sort of negative tax on new property. Even Liberty Mutual didn't get that kind of a deal!
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tom!
Post hoc ergo propter hoc?
This is the best line in your standup routine: that the new building caused the value reduction. It's a screamer. Closed system? Really? Do you know what those words mean? And can you do a George Bush impression for parties? Because if flogging annuities to widows doesn't pan out, you could have a second career.
Luxo buildings got built, adding to the property tax base (see, that's the open part). Then the
local lux condo marketwhole friggin' economy tanked, lead by popping the real estate bubble. And now the total value of Boston residential real estate, in comparison to pre-crash, is no larger.Well, why should it be? Crash, remember?
The idea you suggest with "closed system," that new building can never add to total value, as "proven" by your pre-post crash comparison, is unworthy of being called sophomoric.
Here's a suggestion that will no doubt fail to penetrate your haze of numerical ineptness: if not for the new building in Boston increasing the total square footage and value of taxable real estate, the total current valuation of Boston real estate would have decreased over your comparison pre-crash period.
Increase in residential density in Boston reduces our taxes, whether you like it or not.
Build. Build more. And throw a shadow over Stevil's garden condo, because the lead in those tomatoes is killing him.
You are truly clueless
The sure sign someone has lost an argument - bring on the ad hominem attacks - in Latin - cool.
Clueless about what I do for a living and clueless about the property tax system.
Hey - we're all relatively ok for now - our December bills are based on Jan 1, 2011 and next year's on Jan 1, 2012 - barring a seismic shift in interest rates in the next 4 months we won't have to worry much until December 2013 - after that it's like living in San Fran - it's not a matter of if the big one hits it's when (I started telling people in 2001 the property tax system would implode and it happened in 2003/2004 then in 2006/2007 I told people the city budget would implode and it happened in 2009/2010 - the what is easy the when's a lot harder). We are due for one more property tax implosion and we are one recession away from a massive budget crisis that will make this look like a walk in the park if we don't mend our spendthrift ways).
There's plenty of time to adjust and prepare - unfortunately, like you, our elected officials have their heads in the sand and the 2012 budget and all this overdevelopment of more luxury housing is already evidence they haven't learned the lessons of the past decade.
Ditto Kaz (OMG is hell freezing over?)
Lots of places to build middle class housing - my favorites would be right above all the one story shops you see along the green line, Rozzie Square, JP and West Rox - in additional to Kendall and others. Who would live there - everyone who would rather pay $1500 in rent for something other than a basement studio overlooking a rat infested alley while living literally a 12 minute train ride from Back Bay Station - that's probably a big number.
To your points john -
I have never heard the argument that increasing supply of housing is "bad".
I never said building was bad - Building isn't bad - overbuilding too much of the same thing is bad. We've paid the price twice and we are gunning for a third.
There has been absolutely no negative effect from having high-end condo building during the past ten years; it was simply supply responding to demand.
If true the Clarendon, Province Place and the W wouldn't be half empty or worse - we overbuilt and prices are lucky if steady and probably coming down in some buildings. Their initial assessments need to be reduced and that means the rest of us have to pick up the slack for those taxes plus the 2.5% annual increase. We're 2 for 2 on this so far and it looks like we will make it 3 for 3 subbing lux apartments for condos and office space.
The city is far short of the amount of new housing it needs (as my earlier analyses have proven) based on the number of new arrivals during the past decade and the small amount of additional housing units added between 2000-2010. It didn't even keep pace with the population increase.
We've built about 12,000 units of housing over the past 10 years while population from one census to the next went up by about 60,000 people. However, if you look at the interim press releases about half of that is people who were already living here, but not counted and the census bureau working with the city "found" them. We've only added about 30,000 truly incremental residents or 30,000/12,000 - 2.5 residents per unit - almost exactly the same as the prior 600k/253k - or 2.4 residents per unit. The only kind of housing that still seems to be in overly plentiful supply are in luxury downtown towers and now we want to add to that glut calling them "apartments" instead of condos.
High-end housing in Boston Proper is perfect because the owners put little pressure on the cost of city services - none of those people are putting their kids into the public schools, and they hall have garages so they aren't putting their cars on the streets.
Exactly city hall's talking points - and fine if you can sell or rent these units. Only one problem - even if a generous 20% of the city's new residents can afford these places and we are creating 1200 households a year on average - That means we need about 250 of these a year - a single project - not one a month or more.
The absolute worst thing to happen to our city is to lose its upper-middle class base.
And that would be most of the people who currently live downtown and are willing to pay $10-$15k in taxes - but when those taxes jump to $15-20k - we vote with our feet - and if people say - great then I'll move downtown when the prices come down - that's awesome - as long as you are willing and able to donate $20k just in taxes to the city's coffers. You can't keep increasing the tax base by 5% when the economy is growing at 2-3% - mathematically impossible. It eventually crashes under its own weight. It's not if, it's when.
Wow, your math is bad
Wow, your math is bad Stevil.
I only have time to glance at your screeds but you can't even get commuting times right.
You're not going anywhere on the green line in 12 minutes and you're certainly not getting from West Roxbury or Rossie to Back Bay in that time.
Rossie to Back Bay in 12 on Purple
That's the actual ride length on the commuter rail, station to station. Westie takes 3 to 7 minutes longer, depending on where you board. So he's right about that, but I do agree that his math is otherwise flawed.
It was open last week
My cousin visited on a whirlwind business trip, and a cheese-making equipment vendor took her there.
About time
Anthony's was run like they were still living in the 60's.
I got my last visit . . .
. . . in to Anthony's about 20 years ago and have no hankering to go there again.
I'm with you
And thank God I was on the company dime - wouldn't want to waste my own money in there. Nice views though.
worked there in the '80s
and since I was an urban planning student (waitering for tuition), Anthony used to show me all of his grand plans (that was before he got greedy and tried to get more $ out of the Pritzkers after their deal was already struck).
His plan included making essentially an island out of the Fan part of Fan Pier by building a new canal from the FP Channel/N.Ave bridge along N. Ave down to the "inlet" that divides Pier 4 from the ICA.
Glad to see that 30 years later things are starting to cook.
Hasn't been the same since S.S. Peter Stuyvesant sank
Hasn't been the same since S.S. Peter Stuyvesant sank in the Blizzard of '78, or since the old man died, for that matter. Where will all of the Dem pols have their "times" when Anthony's Pier 4 is closed?
http://www.boston.com/bostonglobe/magazine/galleri...
Great boat!
A cousin of mine whose mother was a first cousin of Anthony (Albanian side of my family) had her wedding reception on the Peter Stuyvesant. I have a vivid memory of watching the Baked Alaska burst in flames and eating said Baked Alaska.
I was especially saddened by the news of the boat's demise, even though Anthony had spent an ungodly sum building a special mooring for it.
Anthony's Pier 4
No thank you. I had the worst food poisoning there years ago. Never went back. It hit me 20 minutes after leaving the restaurant and lasted 3 days. I couldnt even stand up again until the third day! Scary stuff. I warn everybody not to eat there.
I Have Fond Memories of Pier 4
I enjoyed going there as a kid when I used to visit my grandmother. The view was great and there was lots of nautical junk on the wall to entertain a little kid.
Interesting, I didn't know there was a boat moored there as well. I assume it was scapped after the blizzard?
I hope the cool like locomotive next to the restaurant is saved when they demolish the restaurant (http://www.waymarking.com/waymarks/WM68H3_BAP_Co_T...)
I just finished a book about the disruption of Scollay Square
I am starting to wonder if, no make that when, South Boston is going to be "West Ended" I have a feeling those of us lucky enough to be born here will be quickly be pointed to the toll booths with little more than a reminder to have exact change. I stopped going to Anthony's Pier 4 when they stopped thinking like a restaurant and started acting like a tourist trap.
Nothing like Scollay Square
I understand the anxiety, but I think it's misplaced. Large scale development in Southie isn't happening in the predominately residential section, but in a land of parking lots and decrepit warehouses. Wouldn't worry.
Dated in the 80's
The last time I was in Pier 4 was during the early 80's and I thought it was already dated then. From what I hear it hasn't changed much.
Way to kill the view from the
Way to kill the view from the ICA.
If the ICA was about viewing the harbor it would be called
the aquarium.
My premise?
Not sure I follow - but I doubt that was my premise
the city collects about 1.6 billion in property tax - that number never goes down so you can't have reduced property tax revenue. In fact it goes up by about 5% every year. The only significant revenue cut the city saw during the downturn was state aid - but property tax increases (which are decided by a formula strictly controlled by statute) more than made up for it - contrary to what you might read in the papers Boston's total revenues NEVER decreased year over year even in the depth of the recession - they just didn't go up fast enough to cover all the increases in wages, bennies and pensions we promised to city workers, but there never was and never will be a reduction in property taxes.
Here's the point I don't think you are following - simple example
If a new million dollar tower apartment is built - assuming a tax rate of $10 per thousand and ignoring residential exemption - the first year that unit is on the market it generates $10,000 in property taxes and that $10k becomes incremental revenue for the city. But let's say you totally overbuild that segment of the market and you have a huge surplus of luxury tower units - the rest of the city isn't going to see much impact as those are generally unique markets - such as brownstones in Back Bay/Beacon Hill or single family in West Rox or townhomes in Roxbury - the glut will affect mainly tower condo values which attracts a certain kind of customer. So let's say the rest of the submarkets hold steady but tower condo units like that now are worth $750,000 - that person will pay about 25% less taxes or about $7500 (there's your negative tax). But those taxes don't go away - by law they have to get made up for by all the other residents. So the brownstones, the townhomes, the single families etc. whose houses are worth the same will see their tax rate and taxes go up to make up the difference.
This is significantly simplified to make the point - but the problem is that if you build too much of the same thing and damage that submarket - doesn't matter if it's office buildings, retail space, townhomes in Roxbury or luxury condos downtown, their values will likely either go down or at least not rise as fast as other segments of the market and you will need to raise the rates on everybody else to make up the difference. We've seen this cycle at least 3 times in the past going back to the 1980s and now we are entering a fourth. It's a double edged sword - sure you get incremental revenue if you develop new real estate - but if you overbuild and the prices of that type of real estate are impacted disproportionately, citywide you can push tens of millions of dollars in taxes onto other existing taxpayers who have to make up the difference. If it's commercial property we are talking about it can run into the hundreds of millions of dollars because the commercial sector is so much larger than the residential due to classification and is also volatile due to the way they calculate their values which is different from residential.
But 200 units can't have such
But 200 units can't have such an impact on a city this size. Your example is specious.
It's not 200 units
that's a single property - there are dozens of projects and thousands of units in the pipeline, plus if you glut the market these will of course have a negative impact on valuations of thousands of other comparable existing luxury units - rentals and condos so others will have to absorb their taxes as well. It's impossible to ferret out the impact with all the variables, but you are probably looking at a tax shift over time of tens of millions of dollars and that compounds at 2.5% forever.
Again - look at what has happened to residential taxes over the past decade - they have more than doubled from $275 million to a bit over $600 million - and we've only added 12,000 units of housing. If we repeat the last decade you will add about another 12,000 units of housing and residential property taxes would total $1.3 billion. How will anyone afford to live here if property taxes doubled again? If you say "That can't happen" - what have we changed to make those increases stop? If I told you in 2001 this would have happened you'd have the same incredulous reaction - and look what happened. This is a very dangerous game.
We are ignoring history that has already repeated itself several times. We are also waking up every single day and doing the exact same thing and expecting a different result. You know what they say about those kinds of people?
Individual fluctuation does not mean agregate
Again, your argument is specious. The total value of taxable real estate goes up, even if your particular condo is worth less. If this were not so, there would be no incentive to build. Basic economics here.
If $15-20 billion is specious, then you're right
In 2007 all the taxable property in Boston was assessed at $90 billion. We have added about 10% in "new value" to the tax rolls over the past 4 years - which means we should have about $100 billion in assessed value - the actual number is $86 billion. Looks like there's another 2.5% built in for next year and I'm estimiating a little less than that the year after. Given that we have at least 2 more years of further depreciation due to the real estate bubble popping and the recession - (the next two fiscal years represent values in 2010 and 2011) - we'll probably be lucky if we stay at $86 billion total value and could fall to as low as $80 billion. So over 6 years you have incremental taxes that have been generated on almost $15 billion worth of new property and at least another $5 billion in net depreciation on existing property. Effectively that's about $300 million of taxes on vapor. Under your theory, the city could basically print money by building to the sky with no harm done (effectively this is what they try to do - and one of the reasons taxes are going up so rapidly).
The total value of real estate doesn't just go up - ask Detroit. Boston's not Detroit, but we're not exempt from the laws of physics either.
Misplaced cause and effect
Nobody is arguing that housing values didn't decline from 2007 to 2010. But that was part of a bursting bubble, and definitely not caused by a construction glut in Boston. There are examples of the sort of thing you describe, but in places like Las Vegas, not here.
Dont be silly, Stevil. To ignore the large, impactful event in favor of the micro is a significant mistake.
Have you read a single thing I've written
You seem to have ignored almost everything I've said and made up an argument that I never made.
Of course values are down because of the bubble -but that's why you have to be so careful with new development under our tax system. When the bad times inevitably come, if you've focused on developments that maximize new taxes and overdevelop that segment of the market, when the inevitable downturn comes you push a lot of those new taxes onto existing taxpayers. You can measure this almost exactly. Under prop 2.5 if you had a "perfect" development policy, everyone's taxes would go up by 2.5% every year without fail. This has to be true by formula. However, residential taxes have gone up by 7% on average for at least the past 10 years. This is a direct result of bad development policy. That's not an opinion - it is a mathematical fact of tax law.
I've been reading it, but your conclusion is simply wrong
Start with a valuation of 100. New development adds to that value by one, but macro market conditions subtract 20 from overall value. That nets to 81. You've been saying that because we no longer have 100, new construction was detrimental to market value. The point you are missing is that it was +1. Thanks to new units (and a commensurate population growth), the macro impact of a market crash was slightly mitigated. Look at the whole picture. And while we're at it, where do you get the idea that luxury is the only new construction? The entirety of what you have said in this thread is based on an inaccurate description of the local market and a complete refusal to consider the macro trend. You don't know what you are talking about or you are purposefully making mis-leading statements.
Is it ignorance, or propaganda? I wont wait for the self-serving answer.
Of course my conclusion is wrong
It's bound to be if you apply your premise to my conclusion.
I'm talking property taxes and you are talking market value. More importantly you are referring to absolute market value and the important thing in tax policy is relative market value. I repeat - if you have "perfect" tax policy - taxes on existing properties can't go up more than 2.5%. Obviously perfection is not possible and that 2.5% has to be positively skewed, but even allowing a generous 40% margin for economic cycles, a "good" policy would keep average increases to about 3.5% or less. In Boston we have "no" policy - unless you consider how big would you like to build it and can you build it bigger so we can get more taxes a policy. That's effectively why residential taxes go up 7% a year. It has nothing to do with why property values go up - it has to do with a sensible development policy that complements our tax policy.
Question - 7% average annual increases means taxes double every 10 years. If this continues, how long do you think it will be before everyone moves out of Boston? My guess is 10 years or less.