Thanks to my Newton Villages Alliance colleague Ron Mauri, for actually reading and calling attention to the provisions of the “Ground Lease Preliminary Term Sheet” signed by Mayor Warren and Austin Street Partners on May 12, 2015. It was sent to the members of the Board of Aldermen on that same day, as an attachment to the announcement of the filing of the Austin Street Special Permit. However, it does not seem to have ever been posted on the city website.
In posting it on the Newtonville listserve, Ron notes that, outside of the public process:
It seems, however, that there is an ongoing parallel not-so-public process between the Mayor and the developer…. It is curious that the Mayor has executed this agreement prior to the approval of the Special Permit, particularly given some of its provisions.
Although this ‘term sheet’ says that it’s not intended to be a legally binding agreement to lease, it contains what seem like significant concessions the mayor is willing to make. There’s no indication that the Board of Aldermen has been consulted on these terms, just informed after the fact.
One notable provision is:
Lease Term: Ninety Nine (99) years from the Commencement Date. Tenant shall have an option to extend the Lease Term for up to an additional Ninety Nine (99) years.
As Ron notes, that’s it. There’s no mention of what the lease payment would be for a renewal, or if there would be any payment at all. And it would be an unrestricted option for the Tenant (presumably Austin Street Partners — but more on that below) to renew; the city would have no option not to renew.
Think about it. The “ground lease” was supposed to be more palatable than an outright sale, a way for the city to retain ownership of the land, but suddenly the time period has doubled, without any public discussion. One hundred ninety-eight years. That’s like from the Declaration of Independence in 1776, to almost the Bicentennial.
There’s more. As Ron notes:
What if the Special Permit is not approved? There is another section “APPROVAL PERIOD” that addresses this possibility. It’s a long section, but here is a key provision contained in the fourth paragraph: “If at the end of the Initial Approval Period …the Tenant has not yet obtained the Permits and Approvals for the Project…then the Landlord and the Tenant shall enter into …negotiations…for amendments to the Development Agreement … to develop the Project or a different project at the Lease Parcel.” What the “different project” might become given this section is unclear, but the mayor and the developer believed specifying an option to continue this non-public process is an important enough contingency to include it in this
I’m wondering about other provisions, like:
Landlord shall be responsible for any real estate taxes, assessments or similar charges affecting the Reserved Rights.
“Reserved Rights” refers to the city retaining rights to the parking spaces, so it appears that property taxes paid by Tenant would be reduced by some amount reflecting the value of the parking lot, leaving it up the the Assessor’s Office to apportion the value between building and land, and making actual property tax revenue from the project uncertain.
Tenant may mortgage Tenant’s leasehold interest in the Lease Parcel.
This sounds like ASP could borrow on the property as if they owned it outright. So if they defaulted on their mortgage, the city could end up with a totally different Tenant?
And the mentions of “provisions for confidentiality and indemnification” that would survive any termination of the Development Agreement: why should anything be confidential about leasing public property, and who would be indemnifying whom for what?