Newton’s full Board of Aldermen finally take up debate on the proposed mixed-use development at Austin Street tonight. (They are not expected to vote until December.)
The all-important draft Board Order that was approved by the Land Use Committee last week can be found here other documents are here.
You can watch the proceedings live on NewTV tonight and comment here as the drama unfolds.
The Austin Street project stinks to high heaven as it stands right now. The 99-yr lease of the publicly-owned land have yet to be fully vetted, and we are entrusting the public assets to be negotiated by city attorneys and the attorneys for the petitioner – Schlesinger and Buchbinder.
At tonight’s full board meeting, Alderman Marc Laredo made a commitment of oversight on the Austin Street project by the board. The oversight of the Board of Aldermen was horrendous for the NNHS project. The building commissioner was signing multi-million dollar add-on change orders for over a year until Ald. Lenny Gentile finally put a stop to it. If this was board oversight when Newton was were paying for the work, what’s to insure the board’s oversight on private development?
L aredo’s delivery last night was horrendous. After sitting in Land Use with all of those community meetings ” listening and taking into account the publics passionate opinion and concerns “, to have him come out as forcefully as he did in the blatant selling of Austin Street, he did himself no good service as a spokesman for any of his constituents, or the people of ward 2. There was no recognition or single question of doubt that theLUC might have felt, not a breath of critical thinking as to the process involved, and no recognition of the opposition to the project.
Like the state steamrolled the City of Newton in the slicing up of the city with the turnpike in the 50’s, the city is steamrolling ward 2 forcing Austin a Street on Newtonville. If you can’t learn from history, mistakes are bound to be repeated
It is entirely appropriate (and expected) for the chair of a committee which overwhelmingly voted in support of the project to speak favorably about it when reporting back to the full board.
Chairman Laredo’s introductory remarks were spot on. He summarized the history of the committee’s process as well as the many benefits of the project, including the many improvements that were the direct result of community input.
I also commend the board for sending the project back to Land Use for one more working session to essentially polish up the board order.
It was Ald Laredo who requested the board order be sent back to land use.
Yes Marti and the board which voted unanimously to do so.
Greg, I was only pointing out to Blue that Ald Laredo was doing an admirable job for Newtonville. He wanted to review the board order one more time and the board agreed.
Stall tactics. Let the full board discuss this already without any further back room discussions with the Mayor, James Freas (Planning), Mark Duftin (ASP) and the whomever else the Warren brings to the table.
@Janet: An entirely without proof accusation.
I did not attend. Three different outcomes could have played out last night. Someone needs to tell me which one occurred.
First, (best case scenario) the aldermen considered the financial impact on the city and demonstrated independent analysis beyond the developers’ projections.
Two, (not very good) the aldermen considered the financial impact on the city, but confined their analysis to the developer’s horrendously biased estimates.
Three (worst case), the discussion omitted all consideration of the city’s finances, but plenty of time was spent on the width of the parking spaces.
Please tell me we got the best case scenario. Regardless of how Austin Street turns out, I fear that all city decisions are variants of case three.
Info came to me from TWO sources
Jeffrey, is your concern with city finances based on additional kids in the schools?
As for me, I’d be happier with the permit if they forced ASP to bury the power lines. That is the one remaining component that I don’t understand why we aren’t getting.
As for the lease not being fully vetted, I think you are getting hung up on the word “lease”. If this was a sale of the property instead, would that comfort you? As for not being fully vetted, I’m think this proposal has been vetted far more than any recent project in Newton, and certainly vetted far more than the other major projects that have occurred over the past 10 years.
For some of us (Janet/Blue on this thread, but others as well) nothing that occurs with this project will ever be enough compromise by the developer. That is their right, but I take their complaints with the appropriate grain of salt.
And Blue, considering that Lynne placed 3rd in Ward 2 (and 4th overall), how do you say that Austin Street is being “forced” upon the Ward or the City? Doesn’t that mean something? Wouldn’t you agree that she was most identified with stopping Austin Street? If anything the Ward is split 50/50.
And Janet, I’m not quite sure what you are implying (or what your two sources are implying). Do you think that ASP is being forced to make additional compromises to sway Board members? If so, good! Bully for the Mayor! Just because I want the project doesn’t mean I don’t want the best deal for Newton. If sending it back to Land Use gets us something more, I’m happy to do that.
My comment on the lease is directed at Janet, NOT Jeffrey.
In addition to ASP paying to underground the utilities, I want it made clear that the up front payment goes toward Newtonville (Center?) and not to “enhance the redevelopment of the site” but looking back at previous documents I see that it’s always said both. ASP needs to take care of the site.
Could someone show me where the “service corridor at the rear of the building” is located on any drawings?
In cleaning up the board order, I think words like “intend to” need to be replaced with “will do,” such as the city “intends to” improve Newtonville after completion of the project.
And is ASP paying $35,000 to lease 20 parking spaces from Star Market during construction or not? Or is that up to the full board?
@Fig. The RKG analysis for the incremental cost on Newton Public Schools is wrong. I have not read the whole analysis for other costs in the RKG report, but given this, I would be surprised if the rest of the analysis was correct. RKG is hired by the developer. Pop quiz. Can you predict if their cost estimate is too high or too low? The aldermen should know the answer to this.
My big picture concern is not with Austin Street per se. Some of the mistakes in the RKG school analysis follow past mistakes. I suspect that the Aldermen never really give anything full financial scrutiny. It is OK if we sometimes estimate the per student cost to be a little too high or a little too low. The problem is when we always estimate costs that are drastically too low. We can’t make good decisions with bad numbers.
Jeffrey:
On this we definitely agree. I’d like for the city to keep track of the kids each project add to the system. I’ve assuming they are keeping track of prior estimates and which ones were high, which were low. Perhaps that is a foolish assumption, but I have no desire for my city to blindfold itself in negotiations in order to get something built. Better numbers equal a better (or more fair) deal.
Good decisions come from good numbers. Perhaps I have more faith in the city planners than you, but we definitely agree on the concept.
I’d be interested if any aldercritters can weigh in on how accurate we were on other deals, and why they think the numbers will be the same/different this time.
Marti, agreed on ALL your points. Thank you for reading the permit closely and focusing on those.
@Jeffrey Pontiff wrote “RKG is hired by the developer.”
That is not correct. RKG was hired by the City of Newton.
@Austin Street Partners,
You are quibbleing,.. What difference does this make ? You and the mayor are partners in this. You both will argue the same points for the same objectives, and come up with the same statistics.
And the parking 50 cars on site ? Does your GC have his bond yet ?
@Fig. We agree!
Let me say that there are two issues regarding the incremental school cost. The first is how much each kid costs. The second is how may kids the development attracts. For the first assumption, it is clear to me that RKG is underestimating the per student cost.
The second assumption, which you brought up, is guesswork. I not prepared to weigh in too much on this point. That being said, I have heard grumblings that historically the city his badly underestimated the number of new students. Maybe someone can verify this. RKG claims they use estimates from the NPS. I don’t know if the current estimate fixes past wrongs. Regardless, we should recognize that Austin Street is closer to a school than any development we have seen. Many families might be attracted to it since it provides high school students with the opportunity to independently go back and forth from school without driving. This would result in a higher than historical proportion of students.
@Austin Street Partners. Thanks for clarifying it. Sorry for the mistake.
Just so I don’t misunderstand the relationship any more, can you confirm that Austin Street Partners (and the individual firms that constituent ASP) have never hired RKG, that the City of Newton selected RKG without consulting ASP, and that the expense of RKG is being paid entirely by the City of Newton? If you can answer a quick, “yes, yes, yes,” or “yes, no, yes,” or whatever is true, it would be great.
fig, it’s been clear to me for a while you are satisfied with the vetting process on this project. (Can’t this be said in one sentence?)
I am in agreement with Jeff’s concise comments about the possible outcome(s) of this process as well as the missing puzzle piece, AKA an independent financial project analysis.
@Jeffrey Pontiff,
I completely agree with you on the issue of per pupil costs. According to this document at page 170, http://www.newton.k12.ma.us/cms/lib8/MA01907692/Centricity/Domain/4/FY15%20Superintendents%20Proposed%20Budget_0.pdf
Newton’s fiscal year 2013 per pupil expenditure was $17,149.00. If I recall correctly, the developer is using something close to this number going forward, when per pupil expenditures have already increased. I’m frankly concerned that the developer has significantly underestimated the actual per pupil expenditures.
It’s been quite fascinating to me to watch this project unfold. I attended a public meeting quite some time ago at Newton North when all of the developers revealed their projects. My overall reaction to their drawings was that they reminded me of those ads for swimming pools where they mess with the scale by using tiny people to make the pools look huge. In this case, it was the opposite effect where I felt like the drawings all enlarged the trees and surrounding buildings to make the project look more in scale to the area. I’m neither strongly for nor against the project. I see value in developing the lot, yet there are some remaining issues relating to the construction phase and post completion that are disquieting.
@Jeffrey Pontiff. Yes, yes, yes.
From page 8 of RKG’s report prepared for the City of Newton (http://www.newtonma.gov/civicax/filebank/documents/69915):
New residential development accommodates households that oftentimes include school age children. Indeed, the largest single government services cost associated with residential development is public schools. For the purposes of this analysis, the consultant utilizes a methodology employed by Newton Public Schools Office of Business, Finance and Planning in a November 2013 Enrollment Analysis Report (page 105). In the report, an analysis was prepared to estimate the number of pupils that would be generated from the proposed Riverside Housing Development. The analysis was based on the surveys of four existing apartment complexes, three of which have affordable units. A product of the analysis was a group of ratios of students generated by unit configuration. In collaboration with the Newton Public Schools Office of Business, Finance and Planning, RKG Associates has employed the same methodology to estimate pupil generation from 28 Austin Street, but has limited the sample case studies to the three apartment complexes with affordable units in order to be consistent with the 28 Austin Street Development program. Based on this methodology, it is estimated that the 28 Austin Street development will generate an annual average of 13 pupils to Newton Public Schools (Table 6).
@Janet: At the request of the Board of Aldermen, RKG provided an independent financial analysis.
Please see page 22 of RKG’s report to the City of Newton (http://www.newtonma.gov/civicax/filebank/documents/69915):
Based on the assumptions detailed above, RKG Associates analyzed the return on total cost (or internal capitalization rate) and the internal rate of return of the project. The pro forma analysis indicates that the property will deliver a net operating income (NOI) of $1.53 million in the first year of stabilized occupancy (analysis Year 2). When compared to the estimated total construction cost of nearly $25 million, the overall return for the project is 6.3%. When compared to the current DHCD minimum threshold of 6.7%, the project has an internal capitalization rate consistent with the Commonwealth’s definition of economically viable albeit slightly below the established threshold. That said, it remains above the current market capitalization rate estimate of 6.0%, indicating the project is financially viable from an initial investment measure.
The pro forma analysis indicates the project will yield a 9.1% internal rate of return based on a 10- year hold period (Table 16). The market reversion of the property is estimated to be approximately $31.0 million, reflecting the projected increase in value due to inflation and real estate appreciation consistent within Newton. The developer’s return is slightly below market expectations based on the market range of 10% to 15% for similar mixed-use projects. However, the site’s affordable housing component and its proximity to a T station would make a lower IRR acceptable from a risk-return assessment. Regardless, it remains below the opportunity cost threshold for a project.
In conclusion, the project’s profitability falls at the lower end of the financial return spectrum for the Boston market. That said, the project’s location and mix of uses makes it a relatively low-risk project. It is RKG Associates’ assessment that the City has maximized the value of the land based on the proposed development program, particularly in light of the $2.0 million in community investment/public realm improvements already being provided as part of the purchase agreement. The City would have to increase the development program to create greater value for the lease.
@blueprintbill:
From the Draft Board Order (http://www.newtonma.gov/civicax/filebank/documents/69881):
12. A final Interim Construction Parking Plan shall be submitted to the Commissioner of Inspectional Services in consultation with the Director of Planning and Development and the Director of the Transportation Division of Public Works. The Interim Parking Plan will accommodate no less than 50 short-term parking spaces on Site throughout the construction of the Project. The 50 short-term parking spaces on the site shall be monitored by the Petitioner and signed for a mixed duration of parking to be adjusted from time to time with the advice of the Liaison Committee established under Condition #8.
@ASP. Thanks. This explains why the RKG report did not receive scrutiny from the Aldermen, although it does not change my criticism of the extra cost on NPS.
@Lisap. The FY2014 NPS per student expenditure was $17,581. The RKG report assumes that in 2014 dollars, the extra cost of an Austin Street student is $12,934. Part of the difference is attributable to the fact that RKG does not know the particulars of all of the costs (which is no reason to omit them) and part of the difference is due to the fact that they assume that as NPS gets bigger, it gets more efficient. This logic is questionable and at odds with studies of district sizes and with casual observation of the differences in costs in small versus large localities.
In reality, even the $17,581 estimate is too small. NPS is almost always either building or selling schools. This is a real cost (or benefit when you sell). We can’t avoid it. The $17,581 estimate includes maintenance, but it does not include construction costs. Construction costs need to be added in. Whether or not land costs should be included is debatable, although I think lost property tax revenue should certainly be included. Bottom line, I think the cost per student is a lot higher than $17,581
@blueprintbill: Condition #12 of the Draft Board Order dated 11/13/15 revised from the prior 11/6/15 draft provided above says in part in response to concerns like yours:
The Petitioner shall also provide a Construction Management Plan which shows the 50 public parking spaces on Site and indicate any instance in which there may be any short term disruption (defined as one day or less) of the public parking which is required to be provided on Site due to construction activities. No longer term disruption shall be permitted. [word order corrected; see below for typo in original]
And the full text (http://www.newtonma.gov/civicax/filebank/documents/70065):
12. A final Interim Construction Parking Plan shall be reviewed by the Liaison Committee, and then submitted to the Commissioner of Inspectional Services in consultation with the Director of Planning and Development and the Director of the Transportation Division of Public Works for review and approval. The Interim Parking Plan will accommodate no less than 50 short-term parking spaces on Site throughout the construction of the Project and 20 short-term parking spaces at Star Market if those spaces become available or 20 short- term parking spaces along Austin Street if the Star Market spaces do not become available. In addition, 3 short-term parking spaces shall be provided on Bram Way during construction when Bram Way is restricted to one-way travel from Highland Avenue to Austin Street. The short-term parking spaces identified in this Condition shall be monitored by the Petitioner and signed for a mixed duration of parking to be adjusted from time to time with the advice of the Liaison Committee established under Condition #8. The Petitioner shall also provide a Construction Management Plan which shows the 50 public parking spaces on Site and indicate any instance in which there may be any short term disruption (defined as one day or less) of the public parking which is required to be provided on Site due to construction activities. No longer shall term disruption be permitted. The Interim Construction Parking Plan will also specially set out how the interim parking on Site, at the Star Market if such spaces become available, and at Aquinas shall be managed.
I’m glad Austin Street Powers is addressing my concerns and those in the Newton community who ask questions on this blog. This assuredly could put the kibosh on Austin Street skeptics, after all, “The Great OZ has spoken!”
😀 😀 😀 😀 😀
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ASP ,
OK lots of Plans, city approvals etc. all outlined in the Board Order. Even calls for a contractors drawing of construction fencing outlining where construction staging , construction vehicle access , etc.
no mention of where construction trailers , construction dumpsters , crane (s), might be located.
Given the necessity for accommodating all of the above, before the BOA approves the PLANS , don’t you think the BOA should be getting some assurances from the major player here , the General Contractor , that all this is going to be able to work?
I repeat ,… Will the General Contractor be able to get his bonding with 50 cars parked on his construction site ?!!!
City of Newton ,… Aren’t you going to require that the General Contractor provide a bond ??? Lot of liability here,.. Lots of open questions !
@Austin Street Partners: In addition to Blueprintbill’s question re: bonding, what are you anticipating your profit – in dollars – will be from this project? Specifically, what are you anticipating on both the high and low end?
@Greg
The commenting rules also state that posts should not be overtly commercial. I don’t know what is more overtly commercial than a BUSINESS, not a PERSON, defending their own business interests. If a PERSON wants to clarify facts about Austin St that should be welcome, but a BUSINESS should not be able to post, consistent with the commenting rules.
ASP’s responses fall within the commenting rules:
“Posting overtly commercial material is not allowed” is meant to discourage spam (we get some on occasion), not to discourage people – or businesses- directly relevant from a discussion to contributing on-topic comments.
I would personally love to see a named person behind the ASP comments, knowing they still speak for the organization, as that puts a more human face on things, but I think the comments are very germane to this thread, whether you agree with them or not.
ETA: I can guarantee if we did not allow the comments, there would be multiple cries of “why doesn’t ASP answer these questions directly?” I could probably take bets on an over/under to such complaints (I’d set it at 4.5)
I agree Doug.
I’ve been pleasantly surprised at how much time ASP has devoted to answering questions on Village 14, and I’d expect people to protest if they stopped.
How is ASP adding to the discussion? They are rote responses with excerpts from the draft board order and RKG’s report. Not actual answers to questions posed above. “In response to concerns like yours” is a rote reply, not an actual reply.
In email exchanges with ASP representatives, a verbal exchange takes place. These replys could be from anyone.
Get ready for a bombshell. I discovered an analysis that RKG did for the Riverside development. Here it is, http://www.newtonma.gov/civicax/filebank/documents/46199
In the great consulting tradition, I expected the Austin Street analysis to be a copy and paste of the Riverside analysis with different numbers. Au contraire, the methodologies are different. Either the Austin Street analysis is wrong, the Riverside analysis is wrong, or they are both wrong.
The Riverside analysis uses the full expenditure per student. There is no mystery loss of $1K per student. There is no adjustment for efficiency gains. If RKG applied the Riverside methodology to Austin Street, the cost per student would be $17,581, not the $12,934 estimate that is in the Austin Street analysis.
The Riverside analysis, although better, still fails to include building costs. The Riverside document shows that RKG is clearly sensitive to the importance of building costs. They devote a lot of effort to argue that the extra students won’t force NPS to build a new a school. Of course, we know that development increases the number of students in perpetuity and at some point schools will need to build to accommodate the actual number of students.
@Jeffrey Pontiff- nice research!