So the Mayor is worried about the Greenway. He’s also worried about Filene’s. He should be. Let’s start with the Greenway and the real world.
If anything is to be built along the Greenway, there must be a compromise between aesthetics and economics. Unless the public sector is going to construct buildings along the Greenway, which it is not, then only the private sector will do so. And the private sector will only do so if they can make a profit. Simple as that. There are 2 components to the cost of construction--the price of the land and the cost of construction. The land along the Greenway is among the most expensive land in the Northeast. Why--because it is on the Greenway and on the waterfront.
The price of land is usually measured in terms of the price per square foot of land per square foot of the development on the land. Right now, on a per square foot basis, land along the Greenway would easily carry a price of $150 per square foot of development. The construction cost for a Class A property, both hard and soft, is roughly $400.00 per square foot. The combined market “price” of land and building is therefore $550.00. But we need to account for profit. To achieve a 20% annual return on the land and building costs, a developer would need to carry a hypothetical purchase price, as opposed to market price, of $440.00. At 20%, this would enable the developer to receive a return at the $550 market price.
Let’s consider a real proposal. Don Chiofaro purchased the Aquarium Garage for $150 Million. This is a land purchase--not a garage purchase, unless the City feels Don can rent parking spaces for about $2,000 per day per space. The land measures 57,346 square feet, so Don paid $2,615 per square foot of land. Now he has to knock down the garage and construct income producing property large enough to generate revenue to justify the $2,615 purchase price per square foot of land. He also has to construct a building large enough to justify a $550.00 development cost. And he needs to profit. I have stated this at 20% per year.
So how much building does Don need? If Don built a property using every inch of the land area, the property would have to be at least 17 stories tall to justify the land cost ($2,615 / $150 market price).
Today's market net income per square foot of office space is $35.00. To get a 20% return, Don needs to carry a “purchase price” of building square footage of $28.00. At 20%, this “price” meets the market rent of $35.00. To justify the cost of construction alone, a hypothetical property would need an additonal equivalent of $35.00 in net income per built square foot. If Don utilized every inch of the site, he would need additional property height of a minimum of 14 stories of space ($400 of construction cost / $28.00 per square foot of net income.
So, at a minimum, Don requires a 31-story building which covers every inch of the site. The building would have 57,000 square foot floorplates. Nobody builds 57,000 square foot floor plates because they are not acceptable to the Boston tenant market. The City would never allow anyone to build to the entire perimeter of the site because it would leave a) no open space at ground level, and b) no open vertical space for views and light.
The building plate acceptable to the market is 35,000 square foot at the most. This would leave over 20,000 square feet at ground level as open space along the Greenway. The much more slender building would also allow better views of the water than the existing garage.
At 30,000 square feet, the tower would need to be at least 50 stories tall.
Now Kairos Shen can imagine all he wants about low rise buildings linking the Financial District to the sea. And because of a person like him and the Mayor and everybody else that is afraid of heights in the City, nothing will happen. The Greenway will remain as exactly what the Mayor fears it to be: "cold and boring." Maybe he’ll threaten eminent domain again. We’re a big city. It takes big buildings to justify big prices or else we end up with Big Nothing.
Speaking of eminent domain, let’s talk about the Mayor’s favorite project in the City—the Filene’s redevelopment. Remember the Mayor’s idea to move City Hall to a fish pier at the end of South Boston? That was right about the time he thought he could, by dictum, create a 110-story building on the sliver of land at 133 Federal Street. Well, space is available long-term now at the existing 133 Federal Street and nobody talks about South Boston City Hall.
So how’s this: a swap. Let John Hynes and his development team at Filene’s create a New City Hall right in the heart of the City. And, in exchange, extend a 99-year lease to Mr. Hynes and his team on the land under and surrounding City Hall. The former would certainly revitalize Downtown Crossing. And the latter would certainly bring long overdue life back to the brick desert. And there would be no need to tear down the existing City Hall. Just a thought.
Showing posts with label boston zoning. Show all posts
Showing posts with label boston zoning. Show all posts
Thursday, March 25, 2010
Saturday, March 20, 2010
Fear of New York, fear of heights, and Boston's Greenway--a fool's paradise of Menino's own making
"Mayor Thomas M. Menino said the height restrictions on these particular properties are intended to prevent shadows and strong winds thrown off by tall buildings from making the Greenway a cold, uncomfortable place."
I think the Mayor means well. But, Mr. Mayor, in all due respects, have you been on the Greenway lately? It already is a cold, uncomfortable place. In fact, it's also boring and utterly unused. Every proposed non-profit project has collapsed. I for one don't look over my shoulder at New York all day (“I don’t want to Manhattanize the Greenway,’’ the mayor said.) Why not? Manhattan is exciting. Or try the waterfront of Sydney, or Hong Kong, or any major, thriving city in the world that is not afraid of itself.
Now let's get to the economics. Columbus Center let out its final death knell on Monday. The project was not feasible from its inception due to height restrictions on air rights requiring decking. The pictures were pretty, but nobody ever believed in the project. And we gave money to the "developer" every time he whined.
On the south side of the Harbor, nothing is really happening in the private sector. One new office building in 10 years. We are a market of 72 million square feet. The total amount of space under construction and not already leased is 230,000 square feet in exactly 2 buildings--One Marina Park Drive and Russia Wharf. From the start of construction, it takes 3 years to construct a building for occupancy. The City is not prepared for the future demands of the modern tenant, because we are not allowing the construction of tall, modern, green, highly technical buildings which our companies will demand.
To connect the city to the sea, as the Mayor desires, we must provide a reason for people to approach the connection itself. Nobody uses the Greenway today because it is perceived as a curving linear path between South Station and North Station. It is shorter and far more interesting to walk up the streets of the Financial District, stopping at the Langham or Faneuil Hall for a beverage or lingering on the grass at Post Office Square, than it is to walk a barren stretch of disconnected parcels of grass.
If we want a thriving Greenway, we need to get over our fear of heights and our fear of the private sector. Otherwise, we will end up with the country's most expensive dog-walking parks.
I think the Mayor means well. But, Mr. Mayor, in all due respects, have you been on the Greenway lately? It already is a cold, uncomfortable place. In fact, it's also boring and utterly unused. Every proposed non-profit project has collapsed. I for one don't look over my shoulder at New York all day (“I don’t want to Manhattanize the Greenway,’’ the mayor said.) Why not? Manhattan is exciting. Or try the waterfront of Sydney, or Hong Kong, or any major, thriving city in the world that is not afraid of itself.
Now let's get to the economics. Columbus Center let out its final death knell on Monday. The project was not feasible from its inception due to height restrictions on air rights requiring decking. The pictures were pretty, but nobody ever believed in the project. And we gave money to the "developer" every time he whined.
On the south side of the Harbor, nothing is really happening in the private sector. One new office building in 10 years. We are a market of 72 million square feet. The total amount of space under construction and not already leased is 230,000 square feet in exactly 2 buildings--One Marina Park Drive and Russia Wharf. From the start of construction, it takes 3 years to construct a building for occupancy. The City is not prepared for the future demands of the modern tenant, because we are not allowing the construction of tall, modern, green, highly technical buildings which our companies will demand.
To connect the city to the sea, as the Mayor desires, we must provide a reason for people to approach the connection itself. Nobody uses the Greenway today because it is perceived as a curving linear path between South Station and North Station. It is shorter and far more interesting to walk up the streets of the Financial District, stopping at the Langham or Faneuil Hall for a beverage or lingering on the grass at Post Office Square, than it is to walk a barren stretch of disconnected parcels of grass.
If we want a thriving Greenway, we need to get over our fear of heights and our fear of the private sector. Otherwise, we will end up with the country's most expensive dog-walking parks.
Friday, January 15, 2010
Veritas: Harvard, Allston, and the Future
I know the issue of Harvard and Allston creates, well, a bit of discussion. In one of my recent posts, “The Influence of Higher Education on Boston Real Estate”, dated December 17, 2009, I stated what I felt were the positive impacts of our local universities and colleges not only on the real estate market in Boston but also on the general economy and job market. The impetus for my post was the recent purchase of the former Bayside Convention Center by UMASS but also included thoughts on the growth of Harvard in Allston.
I was pleased to see that a number of people brought a number of opinions to the fore, particularly regarding the Allston, or more specifically, North Allston development plans. From those who did not agree with me that Harvard’s expansion into North Allston was an eminently ideal development, I learned a great deal about what the points of confusion and anger are. From those who did support my view, I learned further about how others saw additional benefits to Harvard’s presence.
In fairness to those in opposition, particularly a number of people who are part of the Allston Brighton Community Blog, I took some time to do some first hand research. The primary complaint of the opposition was timing. Many felt that Harvard was unnecessarily 1) sitting on land, 2) not living up to a commitment to build and to provide new jobs, and 3) had forced out a number of important businesses.
I reviewed all of the public information prepared by the Boston Redevelopment Authority, Harvard, and the very active Allston Community Planning Group. I can say that there has been no shortage of effort and creativity in the joint planning for North Allston. But I can also say that I do not accept the claims of the opposition.
1. Is Harvard “sitting on land?”
The answer is yes. Harvard has been sitting on land in North Allston since the turn of the century. Harvard Stadium opened in 1903; the Business School in 1924. Of the 200 acres of land Harvard owns in North Allston, 100 acres have been owned by decades.
The recently acquired 100 acres represent a coherent and concentrated assembly of land along Western Avenue, North Harvard Street, Soldiers Field Road, and adjacent streets. Any entity, in planning to construct a major facility, be it scientific labs or a sneaker factory, must assure that it purchases sufficient land to enable the scope of development necessary to accommodate its plans.
Harvard’s purchase of land actually led to a master plan for over 760 acres of land in North Allston. From a planning standpoint alone, Harvard’s purchase triggered intense public scrutiny of what the community wanted not only Harvard but anyone to do or not do in North Allston.
Sitting on land is a bit of a vague term, but I think I understand the complaints of those who feel that Harvard may just be buying up buildings and land with no purpose in mind. There has been very little construction other than the completion of the foundation of the new Science Center and Harvard’s work in assisting in the development of the new Charlesview Apartments, approved today by the City.
But, in looking through every document issued by the city, by Harvard, and by the community, nowhere will one find a time-specific commitment made by Harvard or by the Community to build or occupy space at any time. In fact, I will quote from the report “Strategic Framework for Planning, Thomas M. Menino, Mayor of Boston; Mark Maloney, Director, Boston Redevelopment Authority, May, 2005” (see References).
This report was prepared by the BRA, the Mayor’s Office of Neighborhood Services, and the North Allston Community Planning Group, consisting of forty representatives of residents, businesses, institutions, and non-profits with interests in the area. I know that term “community group” is often overused and rather amorphous. I included a list of all of the members at the end of this post. This group was later expanded in 2009 to include 30 additional local entities.
In this report, which is one of many reports of which reference is made at the end of this post, the following statement is made quite prominent:
“It was understood that the planning framework’s timeframe would
cover the next 20 years of a development strategy that would occupy
Harvard over the next 50 years.”
Yes, Harvard is sitting on land. But they are doing so in accordance with a plan that the community approved. While I can understand that this may upset some members of the community, I think it is fair to say that any member of the community has had ample opportunity to air his or her thoughts.
2. Has Harvard reneged on its promise of new development and new jobs?
The answer is no. In some ways, this is another way of phrasing the issue of sitting on land. Harvard made no commitment to immediately begin construction on any property or any commitment on dates when specific jobs may be available. However, Harvard has already set up a separate office for all inquiries regarding future job opportunities at the Science Center and in North Allston in general. But the key issue is simple: Harvard in the most prestigious univerisity in the world, whether you like it or not. And I’m a Dartmouth guy having to write this! Its endowment, at over $27 Billion is nearly twice the size of Yale’s, which holds the second largest endowment. For local reference, BU, who has battled the community many times, has an endowment as well. Harvard’s endowment is 33 times the size of BU’s. Harvard receives more government research money than any other university. Its student body is over 18,000 and Harvard is the 3rd largest employer in the entire state.
The land that Harvard purchased in North Allston was primarily abandoned industrial space, weeded asphalt lots, truck depots, rail yards, and an assortment of low-end retail. Other than the soon to be redeveloped Charlesview, there were and are no residents. Yes, I recognize that people miss Charlesbank Cleaners, the VW dealer, and Kmart. But if anybody thinks that those uses are what is best for North Allston in the long run, as opposed to simply the possibility that Harvard will build, then I will say that is not only shortsighted but preposterous. There’s a reason North Allston has been economically dead for decades. Nobody has had any interest in building anything there. Harvard is the Golden Goose. Is it good for Harvard? You bet. In fact, it’s perfect. Is it good for the community? Consider the alternatives. There are none.
3. Has Harvard forced out a number of businesses?
The answer is yes, and this was addressed above. The real questions are; 1) what is the impact on the community of the departure of these businesses in the long run? 2) what will Harvard do with the vacant properties it now owns and 3) what is the long term value to North Allston and to the City in Harvard’s purchases?
1) The departure of the local businesses, while perhaps temporarily inconvenient, has no impact on North Allston in the long run. The businesses were primarily small retail establishments providing few jobs and few tax dollars to the City.
2) Harvard has begun a very public leasing program for all of its vacant properties. On January 10, 2010, President Drew Faust specifically addressed the leasing program in her Letter to the Community of January 10, 2010. The link follows this post. (Harvard has made over 100,000 square feet available after renovating existing properties it purchased. In the past 10 months, Harvard has signed leases with six new companies, primarily research and technology tenants, and has signed a new lease with Mahoney’s Garden Center on Western Avenue that will significantly expand its outdoor market area in 2010. On the public side, this week Harvard opened a free skating rink on Western Avenue.
3) Long Term Value
When I speak of the “value” that Harvard brings with its purchases, I speak of what is known in the real estate industry as the “highest and best use” theory of land ownership. Simply put, every piece of land has a theoretical “best use”, defined in the private sector as that use which will return the greatest profit to the owner of the land over a given period of time. For example, the highest and best use for a parcel of land on State Street in Boston is not a gas station. But for a parcel on any within ½ mile of any exit of route 93, a gas station is ideal.
Measuring a return in terms of profit for Harvard is difficult since it is a non-profit and, by law, any surplus Harvard sees at the end of any measured period of time must be retained by the University, most typically through its endowment. But what of the community? What of its highest and best use? The community does not own the land, but it is the nature of our government that land planning is not only acceptable but is the norm throughout the country. Harvard cannot do whatever it wants to do nor has Harvard at any time not acknowledged this fact.
Earlier I said that Harvard and the community have both agreed that Harvard’s development plans are long-term. So how do we determine whether Harvard’s purchase of the land will result in the highest and best use not only for Harvard but for the community in the long term?
I reviewd 41 separated land purchases Harvard has made over the past 8 years. Harvard does not occupy any of these properties, which are all assessed by the City as “Commercial Land” or “Commercial.” In other words, Harvard pays real estate taxes on all of the 41 parcels.
The 41 parcels represent 38 acres of land or roughly 40% of the total land purchases made by Harvard. Property values for any purpose, including for tax assessment, use one or a combination of any of the following three methods: 1) by the use of comparative sales information; 2) by the use of replacement cost; or 3) by the income approach. Overwhelmingly, number 3, the income approach, is the method used by the City to determine assesed value of commercial properties. This is particularly the case in North Allston where there have been few comparable sales and where valuing a property based on the cost to build an outdated industrial building simply makes no sense. Land and property value is all about the potential income of the improvements made to the land, where improvements mean whatever is built on the land.
Public assessed values do not necessarily reflect what a given parcel of land or building will sell for in an open market sale. However, I used these values to determine the “potential” of Harvard’s land by analyzing comparing the assessed value of the 41 Harvard parcels with a sample of 23 developed properties in North Allston and Cambridge. Each of these parcels was “improved” by a midrise office or research and development building, the type of buildings Harvard is contemplating for North Allston.
To determine Harvard’s land “potential”, I looked at the ratio of assessed building value to assessed land value. I used this as a proxy for highest and best use, where the higher ratio is considered a higher and better use.
In the aggregate, the 41 parcels purchased by Harvard have a total assessed value, as of 2008, of $92 million, of which $60 million is assessed building value and $32 million is assessed land value. The ratio of assesed building to land values is 1.9. Of all of the 41 parcels, only 10 have a higher building value than land value.
In the 23 parcel survey of developed land in North Allston and Cambridge, the average ratio of assessed building value to assessed land value is 4.1. North Allston is woefully underdeveloped and this is reflected in the relative lack of value realization of the land in North Allston. And the only way that will change is when Harvard changes it. Will this also be better for the community? If we determine community benefit based on new development intended to house new employees, how can it not be?
In closing, let’s go back to the importance of Harvard to North Allston. Last week, Harvard went to the markets with a $460 million bond offer for capital projects. The bonds were rated AAA by both Moody’s and Standard & Poors’s, the highest rating possible. Only one company in the United States has an AAA rating—General Electric. And that rating is only from Moody’s. Standard & Poors lowered GE’s rating last March.
Thank you to all of my followers who keep me honest.
References and Information Sources:
From Boston Redevelopment Authority
1. Allston Strategic Planning Framework 2004 http://www.bostonredevelopmentauthority.org/Planning/PlanningInitsIndividual.asp?action=ViewInit&InitID=134
2. Harvard Allston Campus Planning and Institutional Master Plan 3/2006
http://www.bostonredevelopmentauthority.org/Planning/PlanningInitsIndividual.asp?action=ViewInit&InitID=115.
3. Allston-Brighton Neighborhood Planning Initiative 2007.
4. http://www.bostonredevelopmentauthority.org/Planning/PlanningInitsIndividual.asp?action=ViewInit&InitID=123
5. North Allston-Brighton Community-Wide Plan (CWP) 2008.
http://www.bostonredevelopmentauthority.org/Planning/PlanningInitsIndividual.asp?action=ViewInit&InitID=34.
.
From Harvard University
1. 2007 Harvard University Allston Campus Institutional Master Plan Notification Form
http://www.allston.harvard.edu/imp/imp.htm
2. Letter to the Community, January 10, 2010
http://www.president.harvard.edu/speeches/faust/091210_allston.php.)
Members of the North Allston Neighborhood Strategic Planning Group
*Paul Berkeley, Co-Chair
*Ray Mellone, Co-Chair
*Robert Alexander, resident
Teddy Arvanites, Cambridgeport Bank
Harris Band, Harvard University
State Senator Jarrett T. Barrios
Adam Berger, Cabot, Cabot & Forbes
*John Bruno, Brookline Bag & Paper
Jeffrey Bryan, resident
Jim Creamer, McNamara House
*Paul Creighton, resident
*Michael Curran, resident
*Rita DiGesse, resident
Josephine Fiorentino, Charlesview Apartments
*Ellin Flood-Murphy, resident and Gardner School
*Brian Gibbons, resident
State Representative Brian Golden
*Michael Hanlon, resident
Pastor Gary Andrew Heart, Hill Memorial Baptist Church
Father Daniel Hegarty, St. Anthony's Parish
State Representative Kevin Honan
*Proctor W. Houghton, Houghton Chemical
Paige Kane, CSX
Shirin Karanfiloglu, City of Boston
Shaun Keefe, Romar
Kevin McClusky, Harvard University
Councilor Jerry McDermott
Kathleen P. Phenix, Joe Smith Community Health Center
Juan M. Prieto, Cabot, Cabot & Forbes
Beth Shepard-Rabadam, Harvard University
State Senator Steve Tolman
Bob Van Meter, Allston-Brighton CDC
I was pleased to see that a number of people brought a number of opinions to the fore, particularly regarding the Allston, or more specifically, North Allston development plans. From those who did not agree with me that Harvard’s expansion into North Allston was an eminently ideal development, I learned a great deal about what the points of confusion and anger are. From those who did support my view, I learned further about how others saw additional benefits to Harvard’s presence.
In fairness to those in opposition, particularly a number of people who are part of the Allston Brighton Community Blog, I took some time to do some first hand research. The primary complaint of the opposition was timing. Many felt that Harvard was unnecessarily 1) sitting on land, 2) not living up to a commitment to build and to provide new jobs, and 3) had forced out a number of important businesses.
I reviewed all of the public information prepared by the Boston Redevelopment Authority, Harvard, and the very active Allston Community Planning Group. I can say that there has been no shortage of effort and creativity in the joint planning for North Allston. But I can also say that I do not accept the claims of the opposition.
1. Is Harvard “sitting on land?”
The answer is yes. Harvard has been sitting on land in North Allston since the turn of the century. Harvard Stadium opened in 1903; the Business School in 1924. Of the 200 acres of land Harvard owns in North Allston, 100 acres have been owned by decades.
The recently acquired 100 acres represent a coherent and concentrated assembly of land along Western Avenue, North Harvard Street, Soldiers Field Road, and adjacent streets. Any entity, in planning to construct a major facility, be it scientific labs or a sneaker factory, must assure that it purchases sufficient land to enable the scope of development necessary to accommodate its plans.
Harvard’s purchase of land actually led to a master plan for over 760 acres of land in North Allston. From a planning standpoint alone, Harvard’s purchase triggered intense public scrutiny of what the community wanted not only Harvard but anyone to do or not do in North Allston.
Sitting on land is a bit of a vague term, but I think I understand the complaints of those who feel that Harvard may just be buying up buildings and land with no purpose in mind. There has been very little construction other than the completion of the foundation of the new Science Center and Harvard’s work in assisting in the development of the new Charlesview Apartments, approved today by the City.
But, in looking through every document issued by the city, by Harvard, and by the community, nowhere will one find a time-specific commitment made by Harvard or by the Community to build or occupy space at any time. In fact, I will quote from the report “Strategic Framework for Planning, Thomas M. Menino, Mayor of Boston; Mark Maloney, Director, Boston Redevelopment Authority, May, 2005” (see References).
This report was prepared by the BRA, the Mayor’s Office of Neighborhood Services, and the North Allston Community Planning Group, consisting of forty representatives of residents, businesses, institutions, and non-profits with interests in the area. I know that term “community group” is often overused and rather amorphous. I included a list of all of the members at the end of this post. This group was later expanded in 2009 to include 30 additional local entities.
In this report, which is one of many reports of which reference is made at the end of this post, the following statement is made quite prominent:
“It was understood that the planning framework’s timeframe would
cover the next 20 years of a development strategy that would occupy
Harvard over the next 50 years.”
Yes, Harvard is sitting on land. But they are doing so in accordance with a plan that the community approved. While I can understand that this may upset some members of the community, I think it is fair to say that any member of the community has had ample opportunity to air his or her thoughts.
2. Has Harvard reneged on its promise of new development and new jobs?
The answer is no. In some ways, this is another way of phrasing the issue of sitting on land. Harvard made no commitment to immediately begin construction on any property or any commitment on dates when specific jobs may be available. However, Harvard has already set up a separate office for all inquiries regarding future job opportunities at the Science Center and in North Allston in general. But the key issue is simple: Harvard in the most prestigious univerisity in the world, whether you like it or not. And I’m a Dartmouth guy having to write this! Its endowment, at over $27 Billion is nearly twice the size of Yale’s, which holds the second largest endowment. For local reference, BU, who has battled the community many times, has an endowment as well. Harvard’s endowment is 33 times the size of BU’s. Harvard receives more government research money than any other university. Its student body is over 18,000 and Harvard is the 3rd largest employer in the entire state.
The land that Harvard purchased in North Allston was primarily abandoned industrial space, weeded asphalt lots, truck depots, rail yards, and an assortment of low-end retail. Other than the soon to be redeveloped Charlesview, there were and are no residents. Yes, I recognize that people miss Charlesbank Cleaners, the VW dealer, and Kmart. But if anybody thinks that those uses are what is best for North Allston in the long run, as opposed to simply the possibility that Harvard will build, then I will say that is not only shortsighted but preposterous. There’s a reason North Allston has been economically dead for decades. Nobody has had any interest in building anything there. Harvard is the Golden Goose. Is it good for Harvard? You bet. In fact, it’s perfect. Is it good for the community? Consider the alternatives. There are none.
3. Has Harvard forced out a number of businesses?
The answer is yes, and this was addressed above. The real questions are; 1) what is the impact on the community of the departure of these businesses in the long run? 2) what will Harvard do with the vacant properties it now owns and 3) what is the long term value to North Allston and to the City in Harvard’s purchases?
1) The departure of the local businesses, while perhaps temporarily inconvenient, has no impact on North Allston in the long run. The businesses were primarily small retail establishments providing few jobs and few tax dollars to the City.
2) Harvard has begun a very public leasing program for all of its vacant properties. On January 10, 2010, President Drew Faust specifically addressed the leasing program in her Letter to the Community of January 10, 2010. The link follows this post. (Harvard has made over 100,000 square feet available after renovating existing properties it purchased. In the past 10 months, Harvard has signed leases with six new companies, primarily research and technology tenants, and has signed a new lease with Mahoney’s Garden Center on Western Avenue that will significantly expand its outdoor market area in 2010. On the public side, this week Harvard opened a free skating rink on Western Avenue.
3) Long Term Value
When I speak of the “value” that Harvard brings with its purchases, I speak of what is known in the real estate industry as the “highest and best use” theory of land ownership. Simply put, every piece of land has a theoretical “best use”, defined in the private sector as that use which will return the greatest profit to the owner of the land over a given period of time. For example, the highest and best use for a parcel of land on State Street in Boston is not a gas station. But for a parcel on any within ½ mile of any exit of route 93, a gas station is ideal.
Measuring a return in terms of profit for Harvard is difficult since it is a non-profit and, by law, any surplus Harvard sees at the end of any measured period of time must be retained by the University, most typically through its endowment. But what of the community? What of its highest and best use? The community does not own the land, but it is the nature of our government that land planning is not only acceptable but is the norm throughout the country. Harvard cannot do whatever it wants to do nor has Harvard at any time not acknowledged this fact.
Earlier I said that Harvard and the community have both agreed that Harvard’s development plans are long-term. So how do we determine whether Harvard’s purchase of the land will result in the highest and best use not only for Harvard but for the community in the long term?
I reviewd 41 separated land purchases Harvard has made over the past 8 years. Harvard does not occupy any of these properties, which are all assessed by the City as “Commercial Land” or “Commercial.” In other words, Harvard pays real estate taxes on all of the 41 parcels.
The 41 parcels represent 38 acres of land or roughly 40% of the total land purchases made by Harvard. Property values for any purpose, including for tax assessment, use one or a combination of any of the following three methods: 1) by the use of comparative sales information; 2) by the use of replacement cost; or 3) by the income approach. Overwhelmingly, number 3, the income approach, is the method used by the City to determine assesed value of commercial properties. This is particularly the case in North Allston where there have been few comparable sales and where valuing a property based on the cost to build an outdated industrial building simply makes no sense. Land and property value is all about the potential income of the improvements made to the land, where improvements mean whatever is built on the land.
Public assessed values do not necessarily reflect what a given parcel of land or building will sell for in an open market sale. However, I used these values to determine the “potential” of Harvard’s land by analyzing comparing the assessed value of the 41 Harvard parcels with a sample of 23 developed properties in North Allston and Cambridge. Each of these parcels was “improved” by a midrise office or research and development building, the type of buildings Harvard is contemplating for North Allston.
To determine Harvard’s land “potential”, I looked at the ratio of assessed building value to assessed land value. I used this as a proxy for highest and best use, where the higher ratio is considered a higher and better use.
In the aggregate, the 41 parcels purchased by Harvard have a total assessed value, as of 2008, of $92 million, of which $60 million is assessed building value and $32 million is assessed land value. The ratio of assesed building to land values is 1.9. Of all of the 41 parcels, only 10 have a higher building value than land value.
In the 23 parcel survey of developed land in North Allston and Cambridge, the average ratio of assessed building value to assessed land value is 4.1. North Allston is woefully underdeveloped and this is reflected in the relative lack of value realization of the land in North Allston. And the only way that will change is when Harvard changes it. Will this also be better for the community? If we determine community benefit based on new development intended to house new employees, how can it not be?
In closing, let’s go back to the importance of Harvard to North Allston. Last week, Harvard went to the markets with a $460 million bond offer for capital projects. The bonds were rated AAA by both Moody’s and Standard & Poors’s, the highest rating possible. Only one company in the United States has an AAA rating—General Electric. And that rating is only from Moody’s. Standard & Poors lowered GE’s rating last March.
Thank you to all of my followers who keep me honest.
References and Information Sources:
From Boston Redevelopment Authority
1. Allston Strategic Planning Framework 2004 http://www.bostonredevelopmentauthority.org/Planning/PlanningInitsIndividual.asp?action=ViewInit&InitID=134
2. Harvard Allston Campus Planning and Institutional Master Plan 3/2006
http://www.bostonredevelopmentauthority.org/Planning/PlanningInitsIndividual.asp?action=ViewInit&InitID=115.
3. Allston-Brighton Neighborhood Planning Initiative 2007.
4. http://www.bostonredevelopmentauthority.org/Planning/PlanningInitsIndividual.asp?action=ViewInit&InitID=123
5. North Allston-Brighton Community-Wide Plan (CWP) 2008.
http://www.bostonredevelopmentauthority.org/Planning/PlanningInitsIndividual.asp?action=ViewInit&InitID=34.
.
From Harvard University
1. 2007 Harvard University Allston Campus Institutional Master Plan Notification Form
http://www.allston.harvard.edu/imp/imp.htm
2. Letter to the Community, January 10, 2010
http://www.president.harvard.edu/speeches/faust/091210_allston.php.)
Members of the North Allston Neighborhood Strategic Planning Group
*Paul Berkeley, Co-Chair
*Ray Mellone, Co-Chair
*Robert Alexander, resident
Teddy Arvanites, Cambridgeport Bank
Harris Band, Harvard University
State Senator Jarrett T. Barrios
Adam Berger, Cabot, Cabot & Forbes
*John Bruno, Brookline Bag & Paper
Jeffrey Bryan, resident
Jim Creamer, McNamara House
*Paul Creighton, resident
*Michael Curran, resident
*Rita DiGesse, resident
Josephine Fiorentino, Charlesview Apartments
*Ellin Flood-Murphy, resident and Gardner School
*Brian Gibbons, resident
State Representative Brian Golden
*Michael Hanlon, resident
Pastor Gary Andrew Heart, Hill Memorial Baptist Church
Father Daniel Hegarty, St. Anthony's Parish
State Representative Kevin Honan
*Proctor W. Houghton, Houghton Chemical
Paige Kane, CSX
Shirin Karanfiloglu, City of Boston
Shaun Keefe, Romar
Kevin McClusky, Harvard University
Councilor Jerry McDermott
Kathleen P. Phenix, Joe Smith Community Health Center
Juan M. Prieto, Cabot, Cabot & Forbes
Beth Shepard-Rabadam, Harvard University
State Senator Steve Tolman
Bob Van Meter, Allston-Brighton CDC
Monday, August 31, 2009
Boston's Fear of Heights and Fear of Greatness
I am on Boylston Street, in front of the Prudential Center. I have always considered Boylston Street as Boston's Broadway, with all due respects to South Boston. It is the only street in Boston, unlike its brethren in the Financial District, that was part of a classic rectilinear plan. I do love the twists and turns of our old city, and by no means am I an advocate of this Roman template.
But Broadway means a "broad way," with wide vistas, and some viewable distance. And so, as I look straight east toward the Financial District, I see a massive, multi-colored arrangement of buildings, each seemingly growing out of each other in glass, masonry, aluminum, and, yes, even Boston brick. And they are all tall. Very tall. And I love it.
I love it because it speaks to me with the same vibrancy with which Carl Sandburg spoke of in describing the true birthplace of and still most stunning assembly of the skyscraper, Chicago, of which he wrote:
"Fierce as a dog with tongue lapping for action,
cunning as a savage pitted against the wilderness,
Bareheaded,
Shoveling,
Wrecking,
Planning,
Building, breaking, rebuilding,
Under the smoke, dust all over his mouth, laughing with
white teeth,
Under the terrible burden of destiny laughing as a young man laughs,
Laughing even as an ignorant fighter laughs who has never lost a battle,Bragging and laughing that under his wrist is the pulse and under his ribs the heart of the people"
Analagous as cities--no. But when did we lose our fierceness and our pride? But, the better question is why?
And the simple answer is that we suffer from a fear of heights, from a fear of expression, by a false-imprinted visions of city planners that "Thou shalt build small, or thou shalt build not at all."
First, let me point out that buildings are not tall because of the inexplicable egos of those that build them. Is nybody having issues with skyscrapers in Lincoln or Dover, Chelmsford, Wakefield? Buildings derive from the density of those who seek out their counterparts in business, culture, and intellect, all to the great benefit to society. The greatest of ideas do not come from the flowery lunchrooms in Stamford. They come from the great cities--Athens, Rome, Paris, London, New York. Are we not worthy of this, to be called great, or do we relegate ourselves, at least in our architecural restriction, to seek our way into a lesser orbit?
All roads lead to Boston. It has been the port of entry to New England for 400 years. It is a walking city, all the more reason for density on the narrow peninsula on which it sits. Do we begrudge New York with its towers of business? Or Chicago, where our economy experienced most closely the shift from agriculture to manufacturing to professional business and thrust up towers to accommodate the need?
Look no further than the models of Willam Alson (1964) who so aptly described the density coefficient of the great cities or the work of Martin Cadwallader at University of Wisconsin-Madison in 1985 in his work on the density gradient of the American city. Of visit the Coloseum in Rome.
So I look down Boylston Street and I mentally start tearing down the buildings that would not meet our planning code. NOTE: There really is no such thing as a planning code in Boston--we pretend there is and the Mayor uses it selectively to deny a tall building. Or he reverses it and pulls out the magic "PDA" trump card, the "Planned Development Area", in which "if the Mayor didn't plan it, don't even think of developing it.
But this fear of heights is not the Mayor's alone. It is the acquiescence of the everyday Bostonian to believe in the false credo of urban planning in which all things tall are all things evil. We have countless choppers, cutters, pickers, none of whom has ever adequately explained why tall, in and of itself, is bad.
Please do not talk to me of shadows, of wind, and of rain, of private views now obscured. Those who advocate the small are no more than the cousins of the country mice that come to the city, enjoy its delights, but seek to turn the homes of their hosts into the tiny pieces of miceland they crave.
Our so-called zoning calls are subject to paroxsms of peripatetic behavior. The Mayor literally shuns the efforts on The Chiofaro Company to construct towers on what we are all afraid to see is our new deadspace, green though it may be along the waterfront. Quick, count how many people you saw on a Sunday afternoon in the three parcels that face The Federal Reserve, International Place, and Rowes Wharf. I counted 6 last Sunday and I think two were about to get married at the Langdon. Buth this same Mayor, 3 years earlier, wakes from a nap and declares that we shall have a 150 foot tower on Federal Street. Of course, nobody sees the point in this tower but fear not, the parking is still cheap in the city's parking garage on the site.
OK, OK, back to my view. I have just torn down the Custom House, the Federal Reserve Bank, and One Beacon Street. I miss the clock, I miss the glow, I miss the mass. But we must do what we are told. I just smashed all the glass to the Ritz Carlton, laid waste to One and 100 Federal Street and to the new State Street Global Tower. I miss the audacity and guts to turn the Combat Zone into a luxury zone. I can only commit to memory that Federal Street served as the reawakening of modern finance in Boston (my apologies, Mayor White). I say farewell to a business outpost that tried to bridge the Financial District and Chinatown. There is so left much to do but I do not have the time. I am not sure what I will see--I am not sure what our fear of heights wants us to see--squart stubby buildings with all of the dynamic flair of lego construction.
The Gods be ware. I just turned my head toward the Hancock.
Oh, yes, the maximum height that all of the buildings I just tore down, were such an arrogant attempt be made, without special favor from the mayor, could not, by law, exceed 10 stories.
But Broadway means a "broad way," with wide vistas, and some viewable distance. And so, as I look straight east toward the Financial District, I see a massive, multi-colored arrangement of buildings, each seemingly growing out of each other in glass, masonry, aluminum, and, yes, even Boston brick. And they are all tall. Very tall. And I love it.
I love it because it speaks to me with the same vibrancy with which Carl Sandburg spoke of in describing the true birthplace of and still most stunning assembly of the skyscraper, Chicago, of which he wrote:
"Fierce as a dog with tongue lapping for action,
cunning as a savage pitted against the wilderness,
Bareheaded,
Shoveling,
Wrecking,
Planning,
Building, breaking, rebuilding,
Under the smoke, dust all over his mouth, laughing with
white teeth,
Under the terrible burden of destiny laughing as a young man laughs,
Laughing even as an ignorant fighter laughs who has never lost a battle,Bragging and laughing that under his wrist is the pulse and under his ribs the heart of the people"
Analagous as cities--no. But when did we lose our fierceness and our pride? But, the better question is why?
And the simple answer is that we suffer from a fear of heights, from a fear of expression, by a false-imprinted visions of city planners that "Thou shalt build small, or thou shalt build not at all."
First, let me point out that buildings are not tall because of the inexplicable egos of those that build them. Is nybody having issues with skyscrapers in Lincoln or Dover, Chelmsford, Wakefield? Buildings derive from the density of those who seek out their counterparts in business, culture, and intellect, all to the great benefit to society. The greatest of ideas do not come from the flowery lunchrooms in Stamford. They come from the great cities--Athens, Rome, Paris, London, New York. Are we not worthy of this, to be called great, or do we relegate ourselves, at least in our architecural restriction, to seek our way into a lesser orbit?
All roads lead to Boston. It has been the port of entry to New England for 400 years. It is a walking city, all the more reason for density on the narrow peninsula on which it sits. Do we begrudge New York with its towers of business? Or Chicago, where our economy experienced most closely the shift from agriculture to manufacturing to professional business and thrust up towers to accommodate the need?
Look no further than the models of Willam Alson (1964) who so aptly described the density coefficient of the great cities or the work of Martin Cadwallader at University of Wisconsin-Madison in 1985 in his work on the density gradient of the American city. Of visit the Coloseum in Rome.
So I look down Boylston Street and I mentally start tearing down the buildings that would not meet our planning code. NOTE: There really is no such thing as a planning code in Boston--we pretend there is and the Mayor uses it selectively to deny a tall building. Or he reverses it and pulls out the magic "PDA" trump card, the "Planned Development Area", in which "if the Mayor didn't plan it, don't even think of developing it.
But this fear of heights is not the Mayor's alone. It is the acquiescence of the everyday Bostonian to believe in the false credo of urban planning in which all things tall are all things evil. We have countless choppers, cutters, pickers, none of whom has ever adequately explained why tall, in and of itself, is bad.
Please do not talk to me of shadows, of wind, and of rain, of private views now obscured. Those who advocate the small are no more than the cousins of the country mice that come to the city, enjoy its delights, but seek to turn the homes of their hosts into the tiny pieces of miceland they crave.
Our so-called zoning calls are subject to paroxsms of peripatetic behavior. The Mayor literally shuns the efforts on The Chiofaro Company to construct towers on what we are all afraid to see is our new deadspace, green though it may be along the waterfront. Quick, count how many people you saw on a Sunday afternoon in the three parcels that face The Federal Reserve, International Place, and Rowes Wharf. I counted 6 last Sunday and I think two were about to get married at the Langdon. Buth this same Mayor, 3 years earlier, wakes from a nap and declares that we shall have a 150 foot tower on Federal Street. Of course, nobody sees the point in this tower but fear not, the parking is still cheap in the city's parking garage on the site.
OK, OK, back to my view. I have just torn down the Custom House, the Federal Reserve Bank, and One Beacon Street. I miss the clock, I miss the glow, I miss the mass. But we must do what we are told. I just smashed all the glass to the Ritz Carlton, laid waste to One and 100 Federal Street and to the new State Street Global Tower. I miss the audacity and guts to turn the Combat Zone into a luxury zone. I can only commit to memory that Federal Street served as the reawakening of modern finance in Boston (my apologies, Mayor White). I say farewell to a business outpost that tried to bridge the Financial District and Chinatown. There is so left much to do but I do not have the time. I am not sure what I will see--I am not sure what our fear of heights wants us to see--squart stubby buildings with all of the dynamic flair of lego construction.
The Gods be ware. I just turned my head toward the Hancock.
Oh, yes, the maximum height that all of the buildings I just tore down, were such an arrogant attempt be made, without special favor from the mayor, could not, by law, exceed 10 stories.
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