NorthPoint, the beleaguered $2 billion Cambridge mega-project, is once again being hauled before the Massachusetts Supreme Judicial Court.
The SJC has agreed to hear an appeal on the project that will determine, in part, if more than 25 percent of the site’s 45 acres were improperly permitted and should be classified as state lands.
Since the SJC’s crippling decision two years ago, two attempts at selling the NorthPoint land and permits have fallen apart. Now, as NorthPoint’s squabbling owners continue to shop the development at ever-increasing discounts, the state’s high court has thrown another colossal roadblock in their way.
The new suit was brought by Elie Yarden, one of the same Cambridge residents who successfully challenged NorthPoint’s state environmental exemptions two years ago. Yarden is leading the charge because two of the lead plaintiffs on the case, which stretches back to 2003, have died.
In 2007, those plaintiffs convinced the state’s highest court that the Department of Environmental Protection had exceeded its authority when it exempted NorthPoint from certain waterfront licensing regulations. That SJC decision didn’t just derail the then-struggling 5 million-square-foot construction project. It also threw into question the titles on several million square feet of building space in Boston and Cambridge, setting off panic in the state’s development community and requiring a special corrective law from Beacon Hill.
Yarden wants the NorthPoint development to provide more public benefits and better connections to the surrounding neighborhoods.
“I know of no grounds on which anybody might want to prevent development in an urban area, and I certainly have none,” Yarden said. “But there are two kinds of development. One is determined by financial markets, and the other is answerable to the substantive economy, the economy that is concerned with how people provide with their social needs.”
Improper Permits?
NorthPoint’s neighbors are currently arguing that the special law the Legislature passed in response to their first lawsuit didn’t specifically clear the clouds surrounding NorthPoint. In fact, they say, a full 13 acres of the 45-acre site was improperly permitted and later put on the market. They’re asking the SJC to rule on whether the state, not Pan Am Railways, controls those 13 acres, which cut through the middle of the project site, a former Boston & Maine Railroad yard.
“The railroad had a license to fill in” 13 acres of disputed tidal lands, said Steve Kaiser, the Cambridge resident who conducted much of the research into the site’s title history for the plaintiffs. “But they had no right to use that land however they wanted, or to sell it. They don’t own it. They don’t have fee title to it. The license, from 1962, says they need a new license for a change of use.”
In 1962, state officials granted the Boston & Maine a license to fill in the last stretch of the Miller’s River. The river, which had been choked with fill and industrial effluvia for several decades, cut through the heart of the current NorthPoint project site. The river was tidal – a fact that project opponents successfully exploited to sue the developers and DEP, under Chapter 91 waterfront protection statutes.
DEP had exempted most filled tidelands from such statutes, but the SJC’s 2007 ruling found that only the Legislature could issue such exemptions. The high court stayed its ruling so that the Legislature could pass a bill granting the filled tidelands exemptions, and when the plaintiffs argued the court hadn’t addressed their complaints about the NorthPoint project, they were told to air those complaints in a lower court.
This past January, a Superior Court judge brushed aside a number of outstanding complaints about NorthPoint. Among other things, the Cambridge residents argued that the Legislature’s 2007 tidelands bill didn’t specifically exempt NorthPoint from tidelands review; that the new law didn’t address the public purposes furthered by the tidelands exemption; that a drainage pipe serving the site should open it to Chapter 91 waterfront regulations; that the 1962 permit forbidding development on the site was still in effect; that the fill covering the Miller’s River below the tidal water line belonged to the state, not the railroad; and that control of those 13 acres of fill should revert to the state.
However, in late May, the SJC granted a motion brought by Yarden that not only kept the Cantabrigian’s suit alive, but allowed it to leapfrog state Appeals Court and proceed directly to the SJC. Oral arguments on the case are expected be heard this fall, at the earliest.
Potential Cloudy Skies Over NorthPoint
The SJC’s willingness to tackle the project again will only further hinder the ongoing efforts of Pan Am Railways (the railroad company that now controls the NorthPoint site) and their development partner, North Point Cambridge LLC, to sell the project site. The two entities have been warring in a Delaware courtroom for years.
“If I were advising a buyer, I wouldn’t say, ‘Don’t worry about it.’ There’s a chance that the SJC could invalidate the legislation,” said Matthew Kiefer, a director in the real estate practice at Goulston & Storrs. “The SJC has taken it up, and until they’ve spoken, it’s an issue that any buyer would have to take seriously.”
If the SJC were to side with the plaintiffs, Kiefer said, “It would be difficult to sell or develop NorthPoint, and it would certainly cloud the title.”
Twice in the past two years, the splintered development partnership has tried, and failed, to unload their 45 acres in East Cambridge, along with the development rights to 2.2 million square feet of commercial space, 150,000 square feet of retail, and 2,700 residential units.
Archon took a long look in late 2007, for a reported price of $175 million, but ultimately backed out. Last December, Berkeley Investments followed suit. In that case, the developers had an offer of $103 million on the table, but held out for Berkeley’s offer of $106.5 million.
Recent chatter has the project’s buy-in cost dropping to $25 million. It’s getting no takers, though – largely because of concerns about the cost of relocating the MBTA’s $70 million Lechmere Station, and because of the title clouds hanging over the 13 acres of Miller’s River land.
Congressman Michael Capuano recently dismissed talk of the Lechmere project getting federal stimulus funding, telling Banker & Tradesman, “They’re not ready to go. They would be [a candidate] if they were ready to go, but right now, they’re not ready to go.”
‘It’s A Shame’
David Begelfer, CEO of NAIOP Massachusetts, said the latest NorthPoint lawsuit won’t bring the industry-wide aftershocks the first suit wrought, because this suit is narrowly tailored to the NorthPoint site. Still, he said, “It’s a shame [litigation] keeps stalling a valuable property. Things like this do not motivate a buyer’s interest. One community group doesn’t like it, but it’s been approved by Cambridge, Somerville, Boston – it’s a phenomenal opportunity. It’s a shame it’s caught up in the politics of this issue. This is the type of project we need to be ready when the economy returns.”
Executives at North Point Cambridge had no comment. Pan Am Railways and the railroad’s attorney did not return phone calls.
