May 9, 2016

Worcester is eminently serious

Nate Fiske
Joseph Donocan, vice president of the company that owns the Paris Cinema that Worcester has slated for possible eminent domain, stands across the street from theater while the firm's plan for mixed-use retail is overlayed on the existing structure.

Eminent domain.

Those might as well have been the only two words in the 184-page Urban Redevelopment Plan when it comes to the message of the document released in April by the Worcester Redevelopment Authority (WRA). In that plan, 24 properties were singled out amid a 118-acre redevelopmentarea to be taken away from their owners if movement is not made on the parcels.

Eminent domain is the most extreme measure the city can bring to the negotiating table, potentially seizing land to sell to private developers, and is something city officials say they are willing to pull the trigger on, even though costs this time may run more than $100 million.

"At the end of the day we have made a decision that we are not going to maintain downtown the way it is. If we have a development in mind and a developer lined up, we are going to pull the trigger on eminent domain," said Michael Traynor, the city's chief development officer and the chief executive officer of the WRA. "[Property owners] are going to know we are very, very serious, so try to negotiate the best deal you can."

By putting the redevelopment plan in place, which is still pending public hearings and approval by the state, the city gains the power to take properties from their current owners and sell them to private developers who plan to develop them in line with the city's proposal for the property.

This power is usually reserved for large projects, such as highways and private development of a large area of land, as was the case with St. Vincent Hospital and the Worcester Center Galleria. However, this latest plan has pinpointed properties that officials say are blighted and not being put to a high use.

Before using eminent domain, the city will work with property owners to make improvements to their properties or facilitate selling them to a new developer, said City Manager Edward Augustus Jr., who added the city is required to relocate any displaced businesses.

"You want to get these properties that frankly have not been fully participating in the renaissance of downtown into the game," Augustus said.

That the Paris Cinema property is on this short list was not a surprise to Joseph Donovan, vice president of Quincy real estate development firm MG2, which owns the former theater along with a grid of other properties around it. Demolishing the cinema the company acquired in 2006 is part of a plan to build up 530 apartments, 60,000 square feet of retail commercial space and approximately 325 parking spaces as part of a development of the properties that has been dubbed The Grid District.

"We are not surprised by the city's desire to have someone do something with that building, and it overall jibes with our plan for the building and overall portfolio," Donovan said.

The property will be brought down this year and, in the short-term, feature a pop-up retail space using a shipping container to help bring life to the area. In his view, Donovan said the city has been clear eminent domain will only be used as a last resort and saw MG2's plans as fitting with what the city has laid out.

"The city is going to encourage private developers to undertake these efforts individually, and if there is no progress, they will attempt to match owners up with others who are interested in undertaking redevelopment," he said. "I don't take offense, and I don't see that occurring with our portfolio."

Donovan said he could not speak for other owners, but that in general he supported the redevelopment plan. Furthermore, he said the WRA's plan along with the current activity in the area gives potential developers a better understanding of the area's vision.

Valuing the properties

However, not everyone agrees with the use of this power. An online poll of the business community in Worcester carried out by this business journal found 34.7 percent of respondents felt that taking people's land oversteps the government's power.

Eminent domain has been argued all the way to the U.S. Supreme Court, upholding a municipality's right to take land and distribute it to another private party that will yield a higher tax return, said George Tetler, partner at Worcester law firm Bowditch & Dewey LLP.

It is a power Worcester has used in the past such as in the creation of St. Vincent Hospital through the WRA's Medical City Urban Renewal Project in 1997.

To create the 24.5-acre site, $11.4 million was budgeted for land takings but the final cost was $30.9 million once the landowners' legal objections went through the system,. according to the city solicitor. Tetler represented some property owners arguing the pro-tanto amount – the third party valuation that the city pays property owners – was too low.

"Those are tough cases. The process involves full-blown litigation, and it takes time," he said. "The value can be in the eye of the beholder a little bit."

A powerful tool

Craig Blais – president and CEO of the Worcester Business Development Corp. that owns the 20 Franklin St. property within the redevelopment zone – said eminent domain is a great tool to remove blight. This will help build on the momentum of the City Square 12-acre redevelopment and its creation of new commercial and residential buildings.

"The city is making a bold move here for the future," Blais said.

The Worcester Regional Chamber of Commerce supports eminent domain, with CEO and President Tim Murray saying it is time these properties were improved or moved on to new owners. Some of those 24 properties are the same parcels that were around when Murray was mayor from 2002 to 2007, he said.

"Owners have let properties deteriorate, and they have not been vigilant in the quality of their tenants," he said.

Traynor said hopefully merely threatening eminent domain will work. With costs estimated at more than $100 million to complete the takings, ideally, landowners would move forward on their own.

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