Monday, January 9, 2012

Stop Simon Properties Group & Neiman Marcus' "Jim Crow" Skyscraper Reconstruction Project at Copley Place in Boston's Back Bay: Part 6

The Indianapolis, Indiana-based Simon Properties Group [SPG] should not be allowed to enclose the public open space at Stuart and Dartmouth Street in Boston’s Back Bay/South End neighborhood and add a massive 47-story “Neiman Marcus Tower” skyscraper of mostly luxury residential units to the Copley Place project (atop the shopping mall’s Neiman Marcus anchor store) for the following nine reasons:

1) As Judge Caffrey noted in his August 17, 1981 memorandum in the Munoz-Mendoza v. Pierce case, “ Copley Place is a…multi-use development of housing, 25 percent of which are to be subsidized.” Yet of the 318 units of additional residential housing units that SPG/Copley Place Associates now proposes to add to Copley Place , less than 16 percent are to be subsidized, in contradiction to Judge Caffrey’s August 17, 1981 legal memorandum.

2) As Judge Caffrey also noted in his August 17, 1981 memorandum:

“In April of 1980 the City of Boston submitted to HUD a UDAG [Urban Development Action Grant] application for Copley Place , and HUD announced preliminary approval of the funding on October 9, 1980…The City of Boston and HUD signed a formal UDAG contract in the early months of 1981.”

Regarding the contract between HUD and the City of Boston that provided the original developer of Copley Place with over $18 million in public UDAG federal funds, in its August 11, 1980 “Response by the City of Boston To An Administrative Complaint Submitted By Greater Boston Legal Services To HUD Concerning the Copley Place Urban Development Action Grant,” the attorneys for the City of Boston indicated that the Boston Redevelopment Authority [BRA]'s previous review of the proposed Copley Place project determined that HUD’s $18.8 million UDAG was to be used to develop “landscaped open space” at the Dartmouth and Stuart Streets site—not an enclosed “winter garden” that’s linked to a 47-story skyscraper residential addition to Copley Place and reconstruction of its anchor retail department store, Neiman Marcus. As the City of Boston noted in its August 11, 1980 response:

“…The development site will be landscaped open space dedicated to public pedestrian circulation…These areas include…the plaza near the corner of Dartmouth and Stuart Streets…At the Dartmouth/Stuart entrance to the retail center the public mall and plaza entrance will be constructed over the Turnpike deck. This entrance is designed to provide a park-like extension of Copley Square and a gateway to Copley Place …

“At the Dartmouth/Stuart Street entrance to the proposed retail development, the Turnpike will be decked and a public plaza and mall entrance will be constructed. This entrance will provide a spatial extension of Copley Square and act as a major focal point. The public plaza and mall entrance will cover approximately 21,800 square feet…

“…The project would not reach a fair level of return without such a UDAG investment…

“The Boston Redevelopment Authority will be the recipient of the UDAG funds from the City. The BRA will administer the grant and loan portions of the UDAG…UDAG funds are in fact necessary to the construction of Copley Place …”

The terms of the 1981 UDAG contract between the City of Boston and HUD do not authorize any current or future private developer (such as SPG/Copley Place Associates) to construct an enclosed “winter garden” and a 47-story skyscraper residential addition on the “landscaped open space dedicated to public pedestrian circulation” and 21,800 square foot “public plaza and mall entrance” at Dartmouth and Stuart Streets.

So without HUD approval of amendments to the 1981 UDAG contract, SPG/Copley Place Associates should not be allowed to now reconstruct Copley Place --especially given the opposition of most Back Bay and South End neighborhood residents. As section 570.463 of HUD UDAG regulations on “project amendment and revisions” notes, “applicants…must submit to the HUD Central Office, a request for approval of any significant amendment” to a UDAG-funded project and “a significant amendment involves new activities or alternations thereof which will change the scope, location, scale, or beneficiaries of such activities...”

3) In its August 11, 1980 “Response by the City of Boston To An Administrative Complaint Submitted by Greater Boston Legal Services to HUD Concerning the Copley Place Urban Development Action Grant,” the attorneys for the City of Boston also asserted that the “construction of Copley Place will further the objectives of the UDAG program by…creating opportunities for low-and moderate-income people and minorities.”

Yet of the 318 units of addition residential housing that SPG//Copley Place Associates now proposes to add to the partially HUD UDAG program-funded Copley Place project, less than 16 percent of the constructed new residential units would create residential “opportunities for low-and moderate-income people and minorities;” and the Indianapolis-based SPG/Copley Place Associates executives have indicated that if the City of Boston now requires their proposed Neiman Marcus skyscraper/Copley Place residential addition to contain 25 percent subsidized units that are affordable for low-and moderate income people and minorities—as mandated by the late 1970s and early 1980s Copley Place project development legal agreements—they would be unwilling to build any additional residential units on a construction site which previously received over $18 million in HUD UDAG program federal funds.

4) The 1,558 parking spaces that SPG/Copley Place Associates controls are often filled to capacity during the Boston Red Sox baseball season, during the workweek, and on weekends at the peak of the tourist and shopping seasons. So adding at least 300 more cars of the residents of the proposed 47-story skyscraper residential addition will likely force many more non-residents of the neighborhood to park on nearby streets, and, thereby, reduce the parking spaces available to South End and Back Bay neighborhood residents.

5) If the 47-story skyscraper is built, the wind force level on pedestrians on the street at Dartmouth and Stuart Streets is expected to increase by 20 percent; and the shadows cast over Copley Square during workweek lunch hours between October and March—when this public park is most crowded on weekdays during these months—are also expected to increase by 20 percent. In addition, the proposed 47-story skyscraper is expected to cast a shadow over the Commonwealth Mall park space at around 9 a.m. each day—at a time when the Commonwealth Mall is being used most by people in the Back Bay neighborhood who pass through Commonwealth Mall each day as they walk to work or to the Copley Square subway station.

6) At a recent public meeting in the Boston Public Library, little specific information or visual material indicating how the construction site area at Dartmouth and Stuart Streets and the surrounding neighborhood streets are going to be affected or inconvenienced during the 3 years it would take to complete the proposed 47-story skyscraper/enclosed “winter garden”/over-development project was provided to the public. No mention was made, for example, of the amount of fugitive dust that will be created so close to the Back Bay Station (which is used by large numbers of commuters) during the demolition part of the proposed construction project. Nor was there any discussion of whether current crane safety precautions in Boston to assure pedestrian, commuter driver and construction worker safety are sufficient to build a 47-story skyscraper (over a 1 to 3-year period) in a highly windy area of heavy foot and car traffic, and where the ground regularly shakes as trains pull in and out of Back Bay station (and which even experienced a recent earthquake tremor).

7) Regarding the crane safety issue, the City Council in New York City requires, for example, that in Manhattan “prior to a crane’s initial erection or dismantling, the general contractor must hold a safety coordination meeting;” and “a pre-jump safety meeting must take place no more than 24-hours prior to each instance of a tower or climber crane jump or climb.” In addition, “the general contractor must notify Department of Buildings at least 48-hours before any safety coordination meetings or pre-jump safety meetings are held, and these meetings must cover topics related to scope of work, roles and responsibilities, rigging equipment, sequence of operations, inspection of rigging equipment tools prior to work, review of all equipment, permit validity, qualifications and training of personnel, relevant weather warnings, compliance with the manufacturer’s manual.”

8) Regarding the promise of 1,700 temporary construction work jobs that SPG/Copley Place Associates’ proposed Copley Place Retail Expansion and Residential Addition over-development project would provide, at the recent BPL public meeting no specific break-down on how long each of the 1,700 temporary construction job positions created actually would last or which of the expected temporary construction worker jobs will actually be filled with Boston and/or South End and Back Bay residents was provided. Does the “1,700 jobs” estimate, for example, include particular construction work jobs that will only last less than 3 months? Are the Boston and/or South End residents who get hired to work on the proposed Copley Place Retail Expansion and Residential Addition project only to be allowed to fill the temporary construction jobs that pay the lowest hourly rate and/or last less than 3 months?

9) Between the time that SPG/Copley Place Associates first proposed to build a 47-story “Neiman Marcus” Tower and enclosed “winter garden” (mainly to apparently provide more potential local residential customers for its anchor retail department store tenant) and April 2009, construction work on 29 skyscraper construction projects in the United States were halted because of the U.S. economic recession. And since the U.S. economy is expected to be in an even deeper economic recession in 2012 and 2013, there’s a possibility that SPG/Copley Place Associates would also eventually be forced to halt construction of its 47-story skyscraper and enclosed “winter garden” if its proposed Copley Place Retail Expansion and Residential Addition project is begun in 2012.

Given the Simon Properties Group’s current financial condition, it’s not totally impossible that it might be forced financially to halt construction of this proposed 47-story skyscraper construction project before completion, if a post-2012 economic recession intensifies. Regarding SPG’s current financial condition, Wayne Gorsek, for example, expressed the following opinion in his September 2 and September 5, 2011 column on the Seeking Alpha website:

“Simon Property Group, Inc (SPG) is a mall REIT that owns and manages retail mall properties…Fundamentally, the stock looks way overvalued….There is a high chance the USA will enter another recession and this will cause people to stop spending at high price retailers (Saks (SKS), Nordstrom (JWN), etc.) in the malls that Simon owns. This can reduce their revenues as part of their revenues are based on the sales of the retailers in the malls….Look at 2009, these high price retailer sales plummeted as did their stocks, 2011 2nd half and 2012 will look very similar to 2008 and 2009, in my humble opinion, based on massive fundamental facts regarding world debt, deficits and economies.

“Reviewing cash flow at Simon Property Group, Inc. (SPG) and using it to support an approximate $34 billion valuation does not add up. Cash flow ending in 2010 shows a negative cash flow of $3.1 billion. First half of 2011 shows negative cash flow negative of about $7 million.

“Massive debt and liabilities at SPG total $19.648 billion dollars. This creates a high degree of risk for a company relying on high priced retailers in mall locations to maintain profitability. Another risk would be higher interest rates and this could rapidly destroy their earnings.

“The risk of world and USA economies heading into a double dip recession is a high probability. If this occurs, look at the 2008 and 2009 performance of SPG during the prior recession, it dropped from over $100 per share to under $30 per share in less than one year! A potential loss of 70%! … A quick review indicates numerous insiders (executives and directors) sold over $60 million worth of stock from Dec 2009 to August 30, 2011. In fact there was not one insider purchase during this time frame as indicated by Yahoo finance reports. Massive insider selling by numerous officers and executives as in the case of Simon Property Group is a major red flag….”

For all these reasons, the SPG/Copley Place Associates’ “Copley Place Retail Expansion and Residential Addition” reconstruction project that would over-develop the Back Bay’s Copley Place (mainly for the benefit of private, special corporate interests) should not be allowed by the City of Boston and the State of Massachusetts to go forward; and the “landscaped open space” at “the plaza near the corner of Dartmouth and Stuart Streets,” which is now “designed to provide a park-like extension of Copley Square” and a “spatial extension of Copley Square” in “the public plaza,” should now be maintained in accordance with the terms of the HUD-City of Boston formal Urban Development Action Grant contract of 1981.

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