Boston-based Development Management Corp. has put its development plans for Battery Wharf on hold, opting instead to use the property as a parking lot.
Acknowledging continued difficulties in securing financing, the developer of a luxury hotel/residential complex along the waterfront in Boston’s North End has hit another snag in launching the $220 million project. The outlook is so bleak that Boston-based Development Management Corp. is pursuing plans to operate Battery Wharf indefinitely as a parking lot.
In a letter to public officials and waterfront activists obtained by Banker & Tradesman, DMC principal Harold A. Theran said the project is now in a stand-by status and will resume construction activity when the financial structure is 100 percent locked in place. After initially announcing delays last November, DMC had pledged it would wrap up financing by the end of 2001, with construction on the North End site slated to begin in the first or second quarter of this year.
The tragic events of the last several months … have caused the capital markets to pause and recalibrate when this project should begin construction in order to be successful, Theran said in the letter. He insisted the project is still feasible, claiming Regent International Hotels remains firmly committed as operator of the hotel and stressing that the city will still receive its $1.5 million in linkage funds. To be known as the Regent Boston Hotel & Residences at Battery Wharf, the complex calls for a 185-room hotel, 99 luxury condominiums and 33,000 square feet of retail space, as well as 376 underground parking spaces.
In a bid to generate income over the near term, especially with a higher tax bill in the offing, DMC has retained Standard Parking to run the property as a surface lot for 60 vehicles. The facility would be open seven days a week, Theran explained, adding the developers will install new lighting and fencing and pave the property to accommodate the use.
Theran did not immediately return phone calls to Banker & Tradesman, but said in the letter that the previous owners had a special permit allowing the site to operate as a commercial parking lot. Others questioned whether that permit would still be valid, however, including Alice Boelter, a specialist in waterfront zoning. Boelter said the owners may need a modification of the state Chapter 91 license they obtained allowing development of the parcel. Such a process could delay the opening of the lot indefinitely, she said, adding there is likely to be resistance to the effort.
I just can’t see a parking lot [opening] on the waterfront without somebody saying, ‘Wait a minute,’ said Boelter, principal of the real estate consulting firm Boelter & Assoc. in Boston. Surely, some [agencies] are going to raise questions about it.
Residents may also have concerns, Boelter said, given that a parking lot would bring in traffic without creating jobs as an offsetting benefit. While he did not provide numbers, Theran said the forecasted revenue from the parking would partly pay for a higher readjusted fiscal year 2002 real estate tax. With 60 vehicles at an average rate of $10 per day, the lot would generate $4,200 per week, or more than $218,000 annually. It is unclear what the FY 2002 taxes would be, but real estate records show Battery Wharf had a tax bill of $251,473 in FY 2001.
The Battery Wharf delay is just the latest holdup in a seven-year attempt to redevelop the dilapidated wharf, formerly the home of the Bay State Lobster Co. An initial proposal by the Raymond Co. for condominiums was quashed because it did not fit into the Chapter 91 waterfront development guidelines, resulting in the final plan for a hotel, retail space and condominiums. Raymond sold the 4.6-acre property to DCM in August 2000 for $27 million, and the new owners have been working ever since to finalize permitting and begin construction.
