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2019-07-25 SRA MinutesSRA July 25, 2019 Page 1 of 7 City of Salem Massachusetts Public Meeting Minutes Board or Committee: Redevelopment Authority, Superior Court & County Commissioners Buildings, and 252 Bridge Street RFQ Interviews Date and Time: Thursday, July 25, 2019 at 5:00 PM Meeting Location: 98 Washington Street, First Floor Conference Room SRA Members Present: Chair Grace Napolitano, Gary Barrett, David Guarino, Dean Rubin, Russ Vickers SRA Members Absent: None Others Present: Tom Daniel – Director of Planning and Community Development, Kathryn Newhall-Smith Recorder: Colleen Brewster Chair Napolitano calls the meeting to order. Roll call was taken. Interviews of Request for Qualifications Respondents for the Superior Court and Count Commissioners Buildings and 252 Bridge Street 1. 5:05 – 5:45: North River Partnership for Community Reinvestment, LLC Merrill Diamond (Diamond Sinacori), Jeff Hirsh (Development Partner - VP of Operations at Urban Spaces), Steve Tise (Architect at Tise Design Associates – to be in charge of site planning and new construction of the crescent lot), Mark Meche (Architect - Winter Street Architects), Brad McKenzie (Civil Engineer – McKenzie Engineering Group), Mary Rimmer (Rimmer Environmental Consulting), Howard Stein Hudson & James Dowling (Traffic Engineer at), (Affordable Finance), Laurie Gould (Aviva Consulting), Attorney Joseph Correnti (Serafini, Darling & Correnti), Dave Groom (Groom Construction). Recently added team members; April Anderson (Infrastructure Financing - Anderson Strategic Advisors), Albert Rex (Historic Tax Credit Consultant – MacRostie Historic Advisors, LLC), Elena Kazlas (Museum Consultant – ConsultEcon Inc.), and Mickey Northcutt (North Shore CDC). Mr. Diamond & Mr. Tise presented the qualifications for their new, additional, team members and provided a letter from Ken Foster of Salem Five who will provide the financing for this project. Mr. Diamond stated that this project would be a joint venture between Urban Spaces and Diamond Sinacori, and Jeff Hirsh of Urban Spaces would be the key day to day point of contact. He noted that he always completes his projects, and they are proposing market rate and affordable housing in the historic court buildings, as well as a Salem Children’s Museum. Mr. Diamond noted that 60% or more of every project he’s completed has been adaptive reuse and historic preservation. This speaks to his interest in architecture as a former Commissioner of Mass Historical Commission and a member of Preservation Mass, and on a special committee for historic preservation. He’s had Ch. 91 experience on 3 projects: St. George on Revere Beach waterfront, James Landing on the Scituate waterfront where he completed a 50-unit condominium with ocean access at the marina, and a sub-division in Duxbury. They haven’t had any challenges to speak of and received permits easily and quickly, although they have learned some things along the way. Ch. 91 does include some of the courthouse and they’ve dealt successfully with this requirement before. Mr. Diamond stated that they have 10 units under construction in Newburyport and 7 are sold, a 5- unit building in Brookline, a couple others in the works with Urban Spaces; however, they are waiting on this project. Mr. Hirsh stated that they’ve worked as a joint venture for the past 6-7 years. They’ve worked on 55-units at Allston/ Brighton called The Lancaster and they will soon begin construction on 65 Washington Street here in Salem, 61 units with underground parking and 3,000 SF of retail. They recently completed a 60,000 SF mixed-use office building at 121 Cambridge Street across from The CambridgeSide Galleria Mall and will complete a 10,000 SF of retail tenant fit-out space within the next 3 months. They’ve also started construction on 136-units, also across from The Galleria Mall. This project fits in with their schedule and they anticipate a 2-year permit and design process. 65 Washington Street will be finished 6 months before this project. Mr. Diamond added that they’ve started 13-units at Brookline Reservoir historic estate for which they received unanimous approval which they hope to pre-sell. It will be completed before this project begins and their other projects won’t interfere with this development. Mr. Tise stated that he currently has no project requiring historic tax credits or low-income tax credits, although he is working as a consultant on other projects that do. There are 232-units low income to break ground in New Haven that hae been in the works for 7 years. They would want to avoid low-income and 9% tax credits on this project and they have more timely subsidy strategies they can discuss. Mr. Tise stated that they have the premiere historic tax credit firm in the State on their team. The State arrives at allocations incrementally and applications can be submitted up to 3 times a year per project, and between $250-350,000 are typically awarded at a time. The amount of time you spend going through the process depends upon on how much you are looking to receive. The consultant firm has over 40 current rolling applications in for State historic tax credits. Getting the application in early then start the formal process is their suggestion. Mr. Diamond stated that getting designated would be their greatest challenge. 65 Washington Street went well, all other Salem boards were in favor of it, there were many community meetings to discuss it and they took that input seriously. Salem is great and that’s the reason they are here now. Mr. Diamond stated that the SRA should take a leap of faith and select their team. The Salem Children’s Museum may be his last project. He’s completed a museum at the Waterworks for 3 historic steam engines that has been open for 10 years This is an excellent site given the pedestrian, vehicular and train access. They’ve investigated the differences between a children’s museum and a family museum, both have advantages and disadvantages, and in a children’s museum no adult can enter unless accompanied by a child. He’s so optimistic about this concept because the PEM has an $8M operating budget with 200,000 visitors a year while the Acton Family Museum has a $2M operating budget and draws more people that the PEM. This could become the signature regional children’s or family museum, and the concept would be educational. Salem was the original home to Parker Brother’s, and they would use that theme in an educational and interactive way to prepare children for the next generation of technology and educational tools. Salem has an influx of children and this would be a great opportunity to provide a space for them. Mr. Tise added that a family museum is one of several proposed uses, they’ve considered a law museum in the law library, or something like District Hall as an additional use, which can be discussed in more detail. This is an ambitious undertaking and they want to maintain public access. The Registry of Deeds can be accommodated since their SF requests have diminished. Mr. Tise noted that they were vague in their proposal for the new construction on the crescent lot. The Ch. 91 will influence the plan and there needs to be some reconciliation. Their current proposal is for 130-units of rental housing, a retail wing on first floor that connects to the train station entry plaza with a public viewing platform to the North River. This is a challenging site for Ch. 91, and it would require altering the entrance to train station. Mr. Northcutt stated that he wanted to join this team. The CDC has used historic tax credits in the past 10 years and have 16 projects in their pipeline. They wanted to work with a team with tangible experience and the CDC’s role will be to rethink the County Commissioners Building and make it 100% affordable housing, which is not contingent upon tax credits. Nothing else is small in their pipeline like this one. They’ve built a 2,000 SF community space on Congress Street in the Point Neighborhood. It’s a flexible space that can be rented for various uses. ‘Espacio’ is a local example that’s used by 30 partners per month, it’s offered for free for organizations running free services for low-income people. Board meetings and party type uses generate revenue to cover the cleaning expenses, so it’s not a profit-making venture. They knew there was a need for it and didn’t know if people would take advantage of it, and they are just about at capacity. In their project pipeline they are looking at what other complimentary spaces they can create. These are some of the most beautiful buildings in the state and this team is committed to them being in public use, and this would be a good opportunity for programming. They have a commitment to affordable housing, which is 60% of median income and below for the County Commissioner’s Building and want to see some units at 30-50% of AMI. Mr. Diamond stated that this is a public private partnership, they want input on the income level mix in the new construction and would put affordable units in the new construction too. They are open to work-force housing, but the mix is not set in stone. DCAMM were amused at his museum idea for Waterworks but he is tenacious developer. If designated he will make the museum a success and it will happen in a timely manner. This will be his legacy. Mr. Meche stated that his firm has completed historic preservation work and they have high level goals to preserve the building and the character defining interior. The uses are adaptable, and they will need to construct bathrooms, etc., but nothing special will go away, and the building systems can go into the attic. Mr. Tise stated that they have a vision plan and they won’t interfere with the long history of Bridge Street but might want to modify the Bridge and Washington Street intersection, to enhance the connection to the train station. Their strategy is to maximize the use of infrastructure subsidies in place of housing tax credits to create a financial base for their proposal. Ms. Anderson will help tie down the subsidies and has experience with working in downtown areas and with train stations. They will mine all monies to ensure that the understructure is supported to allow them to construct the new building without the low-income housing tax credits. Board Questions: Mr. Vickers asked about air rights over MBTA approach area mentioned in their proposal. Mr. Tise replied that the crescent parcel has boundary limitations. On the Northern boundary they would conceptually build residential decks that may extend over the MBTA property. The feasibilities already made those assumptions. Mr. Zahler stated that if this team moved to the proposal phase, they would need to provide the underwriting assumptions and costs for infrastructure and building. Mr. Diamond replied that they have a detailed pro forma to provide if they are selected to submit a full proposal. Mr. Zahler noted that it wasn’t clear if they’ve used the Federal or State historic tax credit programs. Mr. Diamond replied no, most of his work has been for-sale housing and tax credits only apply to rental house. It’s their consultants that have that experience. Mr. Rubin asked if the concepts they developed would be affected by Ch. 91. What would be the fallback if those items aren’t viable? Mr. Diamond replied it will be adjusted accordingly. They can convert it to housing instead of a public use for an economic generator. They would sit down with the SRA to determine a project that works for the SRA; however, he really wants to incorporate the children’s museum. Mr. Daniel asked when they will determine that a new plan is needed if their proposed children’s museum use in the Superior Court is not feasible and how that impacts all project components. Mr. Diamond replied that if they hit a roadblock, they can discuss a less daunting use. They don’t want time to be lost and they are open to thoroughly analyzing another use that makes sense. Mr. Daniel asked if everything will be happening at the same time. Since some uses are more speculative, how will they proceed with each component. Mr. Hirsh replied that each will take their own path, but they will all come together and be linked to one another. They can develop the children’s museum concept but there is time to change the concept. 2. 5:55 – 6:35: Winn Development Larry Curtis (President and Managing Partner of WinnDevelopment), Talia Cannistra (Cube 3), Maureen Cavanaugh (PAC), Kenneth Carpi (Nine Zero Washington / Development Partner – on phone), Michael O’Brien (WinnCompanies), Tim Mustacato (WinnDevelopment), Matthew Curtin (WinnDevelopment). Mr. Curtis stated that 97% of all of their projects have been completed. Mr. Carpi added that their private development company has developed over 4,500 residential units, they own approximately 200,000 SF of retail, and they have over 100,000 SF of office space. They completed the City Hall Annex at 98 Washington Street in Salem to which they received positive feedback. They are looking forward to developing the courthouse buildings and partnering with WinnDevelopment on the crescent lot and they have a team in place and the financial whereabouts to enter this process. Mr. O’Brien stated that their development team will be active participants and Larry Curtis and Gilbert Winn are always a phone call away and ownership can be personally involved should an issue or need arise. They understand the direct partnership with the community and SRA and at each step there will be a need for interaction, engagement and communication, as well as any challenge resolution to overcome, and they take pride in that connection. The co-developers will be constant presence and they will hire local; their success is the City’s success. They integrate with the community and aren’t just in this to get the project done. They will be a constant presence in the community and when possible, will support local events and charities. Mr. Carpi stated that in terms of adaptive reuse, they will maintain the historic nature of the Federal Street structures and maintain multiple uses. They have Ch. 91 and MEPA experience in Lynn and are currently constructing 500-units at another property in Lynn. They would use a similar strategy as they did with 98 Washington, which was successful. Ms. Cannistra stated that they’ve completed work all over Massachusetts, particularly in Quincy, Medford, and Boston and they are familiar with the Ch. 91 process. They typically involve a Ch. 91 consultant and will work as a team to make sure the process is a success. Mr. Curtin added that Mr. O’Brien assisted with Ch. 91 at the Clipper Ship Wharf in East Boston that was recently completed. Mr. Curtin stated that as a co-development partner Mr. Carpi and his team will take the lead on the Federal Street properties and Mr. Curtis will oversee the crescent lot. Mr. Carpi stated that he finished 98 Washington Street, he has no other historic tax credit projects in his pipeline and is committed to see this project through. They will maintain the exterior and interior character of the court buildings. Mr. Curtin stated that the crescent lot building would be mixed- income, middle income, and work force housing; however, their priority will be middle income. The proposed completion date for the crescent lot is 2021. Mr. Curtis noted that he’s worked with The National Multifamily Housing Council, a trade group for apartment developers, and housing is a major issue and that needs to be a focus of this project. In Massachusetts there has been traction through funding to bridge the gap to be met and bring down the costs through subsidy, so families can afford to live in the communities of their choosing. From a funding point of view, it won’t compete with other competitive resources. Mr. Curtis noted that this project would be Mr. Carpi’s focus and his only project before the MHC, and the Federal Street properties would be Winn’s number one middle-income deal for 2021. Mr. Curtin added that the strength of their partnership allows them to hit their target dates and working with the City to lobby so those subsidy resources are prioritized. Mr. Curtis noted their similar projects; The Watson in Quincy designed by Cube 3, a 140-unit development, 20% affordable, 60% middle-income, 20% market-rate. It has stalled with other developers for year before Winn came on board. Also, a project about to start in Lowell in their Hamilton Canal District that was similarly funded, and other work-force housing projects too. Mr. Curtin stated that their biggest challenge will be navigational and is not specific to Salem. They are committed to working the SRA and the MHC to determine the preservation restriction. He and Ms. Cavanaugh will sit down with Salem Historical Commission, which will drive the design process. Parking around the Federal Street buildings will be another challenge and they want to work with the City to identify the possible alternative solutions. Ms. Cavanaugh stated that she has historic preservation experience and used Federal and State tax credits for preservation and protection. There are many unknowns when it comes to spaces that need to be retained. They need to know what they will have to preserve. Mr. Zahler noted that they will need to work with Cube 3 to envision the different scenarios. Mr. Curtin added that they will need a meeting with SHC and SRA to determine the programming goals and where they overlap. Mr. Curtis stated that although this will be a challenging project, it won’t be an obstacle that would render the project non-viable. Mr. Mustacato stated that for the historic buildings, they will work with the City, SHC, and the Parks Department to determine the proposed use and the best end-user for the space, so they need to determine the outcome of the restriction. The crescent lot’s work force housing will serve the population that needs it, but it won’t be exclusive, it will be mix-income housing. Mr. O’Brien stated that the Registry’s current level of rent would be a concern in this move, and they will need to determine how to overcome those economics. Do they have a role here and what would those processes be, are their questions. Community involvement will be needed. He’s served 20 years in public service and 10 years as the City Manager of Worcester. They will go above and beyond to meet or exceed expectations, but all the proper procedures will be followed, and they will meet or exceed the community’s expectations. Board Questions: Mr. Rubin asked if they have any similar work experience for adaptive re-use, since this is such a complex property. Mr. Curtis replied that they are currently redeveloping The Boys and Girls Club of Worcester next to a vocational high school they also developed, that has gymnasiums and auditoriums that were essential and retained. In Albany, NY they completed another high school, the aspects of school become more complicated than the typical mill building whose restoration is typically just the exterior. They are also currently working on another school in East Haven, CT. The rules are clear and with great consultants you can navigate them. The answer to historic requirements is always yes, but there needs to be resources that flow to create viability, and generally there is a give and take with getting to the finish line. Mr. Carpi stated that they were told to demolish 98 Washington Street, but they were determined to make it work. They worked through the challenges and are proud of this project. Mr. O’Brien stated that in Springfield across from City Hall sat 1331 Elm Street. It was vacant for years with safes in all the rooms and narrow hallways. There were 30-years of adaptive reuse attempts by others that came at great cost. There are gaps in what leases and rents cover and there was a cost of approximately $30M to bring that project back to life. After 3 years of hard work and building local and state level partnerships, they are close to announcing that project. They had to find a way to make narrow hallways ADA accessible, and safes in the middle of the rooms, and to bridge that $30M gap, and finding the right partners, including some private, to do so. Mr. Zahler stated that they’ve made a delineation between their two partners, but he’s heard a lot of overlap, so both names should be on the application to maximize the credits raise for the project. With two separate projects, mixed use and residential, there are inter connections that need to happen, and the corridor needs to be livened, but programming must be part of that. You must clear the blurred lines of the partnership. Mr. Daniel noted that residential on crescent lot seems defined and asked if that would progress while the courthouses are in pre-development. Mr. Curtis replied ideally together but given the nature of the process there will be some lagging on the courthouse properties, but with the City and SRA’s support is can happen faster. With their strong development team some of the capital can be bridged and they can close on a development prior to all the allocations coming in. The new construction can happen first to help prime the pump and speed up the awards on the historic properties. If the Federal Street structures were started within 3-4 years from now, it would be in the best interests of the City to start on the crescent lot project as soon as possible. Mr. Rubin asked what they learned from the 3% of projects that didn’t work. Mr. Curtis replied you must pick developments that are truly within the public’s interest of happening. There are many plots of land and historic buildings within Salem, but none are more prominent than this one. They failed on the ones where the localities didn’t see them as important. Not all projects get funded on the first go-round and several of their projects need several applications to get funded. Mr. Daniel noted that their proposal listed the Registry as their main user and asked what else the space would be used for if the Registry wasn’t in the building. Mr. Carpi replied that the downtown may have a need for a multi-use office space, retail, or a boutique hotel. They have some interested parties that would love to relocate there. It’s too premature to be specific at this time but it will fit in nicely in the surrounding area. Mr. Daniel asked if they were in favor of the Registry being in the building. Mr. Carpi replied that he is not in love with the idea and he’s not banking on it, but it is an option. There are other uses for the space. Mr. Curtis added that they have 3,500 employees and 25 people on their development team. They consistently lead on minority business enterprises and business hiring, which they are proud of. Their mission statement is to do well by doing good, to create long term assets for the community in a manner that works for all. Executive Session Guarino: Motion to enter into an Executive Session to conduct an interview debriefing session of the development teams that submitted responses to the Request for Qualifications for the redevelopment of real property located at 32-34 Federal Street and 252 Bridge Street, Salem, MA because an open meeting may have a detrimental effect on the negotiating position of the public body. Seconded by: Rubin. Roll Call Vote: Chair Napolitano, Barrett, Guarino, Rubin, Vickers. Passes: 5-0. The SRA entered executive session at 6:35PM. Roll call vote to adjourn to Executive Session at 7:30PM. Chair Napolitano, Barrett, Guarino, Rubin, Vickers. Passes: 5-0. Chair states that the Open Session will not reconvene at the conclusion of the Executive Session Adjournment Guarino: Motion to adjourn the meeting. Seconded by: Vickers. Passes 5-0. Meeting is adjourned at 7:30PM. Know your rights under the Open Meeting Law M.G.L. c. 30A §18-25 and City Ordinance Sections 2-028 through 2-2033.