The Importance of Good Partners
We’ve been hearing from a lot of people who don’t know what to make of the mayor’s position on the FRIT affordable housing waiver: Is it true that the City would face legal fallout if the mayor or the planning staff were to take a position on the FRIT waiver?
Make no mistake: Fear of a lawsuit, if grounded in reasonable concern, would absolutely be cause for the city to take no position. And in all fairness, there may be legal considerations. There are certainly economic considerations at stake, for Assembly Square and for the city as a whole.
The Role of the Planning Staff
But let’s stick with the legal question for a moment. Given how strong that case would be, you’d expect it to show up in the city’s planning memo which was submitted to the Planning Board on April 20 to help them weigh this decision. Nowhere in this memo did the planning staff cite concerns about putting the city at risk of a lawsuit, a striking omission given the concerns laid out in the mayor’s letter.
The planning staff makes recommendations to the Planning Board all the time. Three of the four recommendations on April 20 were positive recommendations, with the planning staff recommending in favor of Federal Realty on sign height, site plan review, and right of first refusal. It’s true that affordable housing is not a design recommendation. It relates to Federal Realty’s compliance with an existing zoning ordinance.
Back in 2016, the Board of Aldermen considered including a provision in that legislation that would have preemptively exempted developments proposed as part of an already approved Planned Unit Development, like Assembly Square. The Board of Aldermen decided NOT to include that provision, preferring that the developer go through the public process of requesting a waiver from the Planning Board.
Nothing in that legislation prevents the City or its planning staff from taking a position or making a recommendation on that request. It may well be a reasonable stance to take. But it’s hardly unprecedented for the planning staff to weigh in, as they have done on many other issues.
Can Federal Realty afford it?
Federal Realty is a billion dollar company that owns 96 properties nation-wide, including 22.6 million square feet of leased space that annually generates over half a billion dollars in rental income. They claim that having to make an additional 37 units affordable would render the project infeasible, yet in 2016 alone they boasted the following returns:
We grew our total revenue 7.7% to a record $802 million through higher rents and newly developed and acquired real estate placed in service. We grew net income available for common shareholders by $40 million to a record $249 million. We produced funds from operations (FFO) of $406 million, resulting in FFO per share growth of 6.2% to a record $5.65 per share. . . . We increased our dividend to shareholders to an annual rate of $3.92 per share; a REIT-record 49th consecutive year of dividend increases. — 2016 Annual Report
In other words, FRIT is in pretty good financial shape. Yet when the recession hit during the planning phase for Assembly Square development, they were not above demanding (and winning) City financing of over $25.75 million in bonds (a projected loss of $46 million in property tax revenues for the City over the 30 year life of the bonds) to pay for necessary infrastructure that many believed the developer should have covered.
When the Ikea that had been planned for the development dropped out of the picture, FRIT was not above asking for $40 million in state “Infrastructure Investment Incentive (I-cubed)” bond funding, again covering its development costs at the expense of the taxpayer.
When FRIT needs government assistance, it has no problem demanding it. Now that the City of Somerville is asking FRIT to provide few more units of affordable housing, FRIT is arguing that the change in the rules of the game is unfair and prevents them from moving forward.
FRIT’s actions aren’t the actions of a good development partner. They’re the actions of a bully.
On this particular project, they’re the actions of a bully for whom the lunch money doesn’t even matter. The planning staff already pointed out that FRIT can well afford 37 units, even without the density bonuses.
Their response? If we don’t get it, we walk away. We won’t build. We’ll tell our friends not to invest. Of all the arguments listed by the planning staff in favor of the waiver, the second point — the implicit threat that Federal Realty will simply not build if they don’t get their way — is chilling. Pair that with the gentle threat of a lawsuit (as implied by the mayor’s response) and reasonable-minded people should be concerned about the cost of saying “no.”
Mayor Joe doesn’t cite this in his response, but it factors into the calculus.
The truth is, Somerville doesn’t matter to FRIT, but FRIT matters to Somerville. Our tax base, our ability to fund large-scale infrastructures, our attractiveness as a future development location — all rely on playing nice with developers. Our ability to build affordable housing at all relies on large developers being willing to move forward on projects (20% doesn’t kick in for buildings under 18 units; to date, very few projects this size are being built outside of Assembly Square). That economic calculus — the need to keep the development train moving forward — surely weighs on the mayor, the planning staff, and the Planning Board, all of whom have done incredible work trying to push Somerville towards a sustainable economic future.
But time and again, that economic calculus — will this make Somerville more desirable for development in the future? will FRIT make good on their threat not to build? will public pushback tarnish our reputation among developers? — outweighs the realities for everyday people.
There are costs to saying “no,” for sure. There are also costs to saying “yes.”
Every developer is watching this case to get a sense of exactly how far the city is willing to be pushed. We need to be clear that on affordable housing, the City of Somerville speaks with one voice.
And to a large extent, we have. Nine members of the Board of Aldermen — : Bill White, Mary Jo Rossetti, Dennis Sullivan, Matt McLaughlin, Maryann Heuston, Bob McWatters, Mark Niedergang, Lance Davis, and Katjana Ballantyne — have stood up to make what should be an obvious point: FRIT’s request for a waiver is absurd and should not be granted. Of the candidates for aldermen, four of the seven who have pulled papers — J.T. Scott, Will Mbah, Jesse Clingan, and Ben Ewen-Campen — have testified publicly to say NO WAY to this waiver request. Hundreds of residents have come out to make their voices heard.
Mayor Joe makes a lot of good points, but nowhere does he talk about Federal Realty and their obligations to the city. That’s a win for FRIT, which would like to make this an issue about the independence of the Planning Board, rather than the amount of power and influence that developers wield on questions of economic development.
What can you do to help?
The biggest threat to Somerville’s sanctuary city status isn’t Donald Trump; it’s that the sanctuary will be unaffordable to those who need it. FRIT is taking this opportunity to see how far they can push the city in this regard. Let’s make it clear that the buck stops here.
- We hope you will email the Planning Board — email@example.com- between now and Thursday, urging them to reject this waiver.
- We hope you will email ALL nine aldermen and thank them for their testimony in support of 20% inclusionary zoning
- We hope you will support candidates who came out on this issue.
- And we hope you will join us on THURSDAY MAY 18 at City Hall at 5 pm for the rally and Planning Board vote.
#homemovement #somerville #rejectthewaiver