THE KESSELER WOODS STORY
An Inside Look at How this Minor Miracle
Came to Pass
Remarkably, the City of Newton has prevailed
in its effort to acquire the 42-acre Kesseler
Woods property owned by NStar (formerly Boston Edison). The story
of how this extraordinary achievement came to pass is only partially
known, because of the need for secrecy at critical points along the
way, given the decision by NStar to sell the property by auction. A
more public process would have jeopardized the city's ability to succeed
in this competitive process, but now the details of the story can be
revealed. Interestingly, local news organizations have shown little
interest in telling this story in a thorough and accurate way. So here's
how it looked from the inside.
When NStar notified the city in January that it intended to sell this
property on the southeast corner of Newton by auction, three things
became clear. First, NStar had no intention of giving the city a break
in its effort to acquire the land. The Newton Conservators had been
informally discussing ways to transfer the property to city ownership,
so the company was aware that the city was interested and that other
avenues were open for achieving this result.
Our belief at the time was that NStar felt constrained because of the
oversight role of the Attorney General to create a process that demonstrated
that it would get the maximum value for the land. The AG's oversight
role resulted from energy deregulation legislation enacted in the mid-90s
that required ratepayer relief through the disposal of all surplus assets.
Kesseler Woods was NStar's last remaining unused property.
The second thing that became clear when NStar announced its intention
to sell the property by auction is that the city had too little time
under NStar's six-week bidding schedule to craft a qualifying proposal.
The public sector requires more time than private developers to make
things happen, and we would need an extension in order to participate.
Mayor Cohen was successful in convincing the Attorney General to require
longer bidding period, and the time frame was extended from February
21st to June 20th.
Finally, it was clear that the city could not afford to purchase this
land by itself, even though preserving the entire 42+ acres as open
space was everyone's initial goal. Reluctantly, the task force convened
by the Mayor to advise him in this process agreed that a private development
partner, who would share acquisition costs with the city, offered the
city its best chance to succeed. The question then became how to find
a partner who had the interest, the cash and a willingness to work with
the city to achieve it's goals for the property.
Three steps would be needed to move in this direction. First, a series
of conceptual designs would be needed to understand the development
constraints, how the property might be developed under various scenarios
and the highest and best use of the property from the city's point of
view. Second, a land appraisal would be needed to help the city determine
the value of the property. And third, a set of goals needed to be articulated
for the benefit of potential partners as well as our own purposes in
crafting a bid strategy.
A request for up to $50,000 was submitted to the Community Preservation
Committee to fund the services of a land planner and an appraiser. This
expenditure was approved by CPC and the Board of Aldermen in February.
Sasaki Associates and LandVest, both highly respected firms, were hired
to handle the land planning and appraisal projects, respectively.
Out of this phase of the process came a set of goals (see April/May
Conservators Newsletter) and a template for use of the land that
became the basis for issuance of a Request for Interest to the development
community. To our surprise, xx developers submitted proposals to the
city. These proposals covered a wide range of ideas, including some
that were very creative in responding to the city's goals and others
that seemed not to have read our criteria (one developer proposed up
to 246 housing units). The list was quickly whittled down to a handful
of the most responsive proposals.
After careful evaluation of each developer's proposal, track record,
financial capacity, and flexibility in working with the city, Cornerstone
was selected as our partner. Several factors distinguished Cornerstone
from the others:
" Their proposal fit our open space preservation and development
goals closely,
" The cluster housing they suggested for the area off LaGrange
Street was cleverly designed to look like large single-family homes,
making them visually more in keeping with the neighborhood,
" They were willing to work flexibly with the city toward a final
bid agreement, and
" They proposed a contribution toward land acquisition that made
the financial part of the project work.
After a period of negotiation, Cornerstone and the city agreed to bid
$11.3 million for the property, with the city contributing $5 million
and Cornerstone the remaining $6.3 million. In exchange for it's contribution,
Cornerstone would be allowed to build 8 single-family homes off Brookline
Street and 55 units of multi-family housing, 20% of which would be affordable,
off LaGrange. This would leave the southernmost sections of the parcel
undeveloped, which would enable connection of the large pieces of open
space in that area (Saw Mill Brook Conservation Area and Bald Pate Meadow)
already owned by the city. We believed that the development contraints
and associated risks associated with the Kesseler Woods property (see
April/May Conservators Newsletter) would keep the bid prices low and
that a $11.3 million bid could indeed prevail.
The Community Preservation Committee and the Board of Aldermen met separately
and together in executive session to consider a request to fund the
$5 million city portion from CPA funds. This would require bonding against
future CPA revenues over a 10-year period, requiring that we set aside
40% of next year's fund to pay down the bond. This share would decline
by a percent in each of the remaining years to 30% in year ten. The
actual amounts range from $680,000 in year one to $518,000 in year ten.
The main concern of both groups was the amount of affordable housing
included in the plan and, with agreement that the number of affordable
units would be increased to 20% of the LaGrange Street development,
the CPC unanimously recommended to the Board of Aldermen that these
funds be approved. The Board ultimately did approve the $5 million and
the bid was submitted on Friday, June 20th to NStar.
The company indicated in its bid spec that the winner of the auction
would be announced the following week, but the following week came and
went with no word. Finally, in mid-July we learned that there would
be a second round of bidding. An unidentified developer had submitted
a high bid (the rumor is that it was nearly twice as much as the second-place
bid), but had failed to close the sale. Now NStar was opening a second
round to the three or four highest bidders from the first round. The
city was one of those invited to submit a new proposal and bids were
due on Friday, August 8th.
Knowing that there had been a higher bidder and that those invited back
would be re-examining their assumptions, the Mayor went back to the
appraisal data developed for the first round and, working with Cornerstone,
determined how much more the city would need to offer to win the auction.
That led to a discussion about how much the city could afford to add
to the $5 million already approved and how many more units of housing
would need to be added to the first-round proposal to justify additional
dollars from Cornerstone.
By early August, a deal had been struck. If the city put up an additional
$1 million, Cornerstone would add $2.8 million to its previous share
for a total bid of $15.1 million. In exchange for the additional $2.8
million, the developer added three house lots to the eight already agreed
along Brookline Street and seven units of multi-family housing in the
area off LaGrange Street. This meant the total number of units would
increase from 63 to 73 units.
On August 4th, the Community Preservation Committee met, again in executive
session, to consider the Mayor's request for the additional $1 million.
Since there was not time for the Board of Aldermen to act on the request,
the CPC did not take a formal vote that evening. But it did discuss
the proposal at length and gave the Mayor its support in principle.
Later that evening, the committee met in executive session with the
Board of Aldermen for the purpose of presenting its position in support.
The Mayor then asked the Board for its sense of whether he was on the
right track with this deal and whether they would likely approve the
request for an additional $1 million in CPA funds, should the city prevail
at the auction. With another plea for a minimum of 20% affordable units
along LaGrange Street (the number had fallen one unit below that threshold
as a result of the negotiation with Cornerstone), the Board gave its
tentative approval.
On Friday, August 8th, the city and Cornerstone submitted a bid for
$15.1 million for the NStar property. The next week, we learned that
ours was the winning bid. The rumor mill, again, indicated that we prevailed
by a narrow margin, making our success all the sweeter. On August 28th,
Cornerstone and the city signed a Purchase and Sale Agreement with NStar.
The transaction is expected to close on January 7, 2004.
The Community Preservation Committee met again on September 2nd to formally
consider the Mayor's request for the additional $1 million. About 20
citizens attended the meeting, many of whom were neighbors and all but
one of whom spoke strongly in favor of the project. CPC voted unanimously
to recommend to the Board of Aldermen that the city expend the additional
million in CPA funds. If approved, this will raise the share of local
CPA annual revenue devoted to acquisition of Kesseler Woods to 48% in
the first year. By year ten, that share will fall to 37%. Actual amounts
range from $816,000 in 2004 to $621,000 in 2014, when the bond is fully
paid down.
This recommendation now goes to the Board of Aldermen for consideration.
Two Board committees, the Ad hoc Committee on Community Preservation
and the Finance Committee, will formally review and vote on the request,
followed by the full Board, probably sometime in October.
Meanwhile, a number of steps will be set in motion to move this project
along. First, the conceptual plans developed during the bidding process
will be fleshed out. Cornerstone will likely begin with the single-family
houses along Brookline Street, since most can be built without special
permit or other approvals. The city's agreement with Cornerstone allows
three of these homes to be constructed in rear lots. This will require
special permit approval by the Board of Aldermen under the rear-lot
subdivision ordinance.
Planning for the multi-family housing development along LaGrange Street
will likely follow the Brookline Street subdivision. This part of the
project would also require a special permit because its density exceeds
the number of units permitted by the zoning ordinance. Also, grade changes
of more that three feet are likely to be required, again triggering
a petition for special permit. In approving CPA funds for purchase of
the land, the Board of Aldermen does not by default signal its approval
for special permit applications required for the project. Each special
permit request will be considered on its merits and action will be taken
independent of the Board's earlier votes.
Knowing this, Cornerstone negotiated a fall-back position. If special
permits are not approved, the developer is entitled to build up to 80
single-family homes and/or multi-family units in a configuration that
conforms to the zoning ordinance or that is allowed by the state's anti-snob
zoning law. In either case, 20% of the units are required by the agreement
to meet affordable housing standards.
The lots on Brookline and LaGrange Streets are required to be situated
in a way that creates a substantial buffer zone between the new homes
and existing homes on Harwich Road in Newton and Rangeley Road in Brookline.
If the special permit is not approved by the Board of Aldermen, the
layout Cornerstone chooses may not provide this degree of separation,
since the amount of open space in these two areas will likely be reduced
or eliminated.
Another contingency affecting the number of housing units is included
in the agreement with Cornerstone. If the Board of Aldermen fails to
approve the additional $1 million from CPA funds, Cornerstone will contribute
the million dollars to the deal, but will build three additional single-family
homes off Brookline Street. This too would greatly reduce or eliminate
the buffer zone negotiated as part of the preferred development plan.
In addition to the Board of Aldermen, the developer must go before the
Conservation Commission to get approval to build near the brooks and
wetlands that run through this property (Saw Mill Brook and its tributaries).
The conceptual plan is to keep buildings as far away from the wetlands
as possible and to cede ownership of much of the wetlands to the city,
either by deed restriction or by gift. This wetland will be added to
the approximately 18 acres the city will purchase with its $6 million
contribution to the deal.
Once purchased, the city plans to assign jurisdiction of this property
to the Conservation Commission to be used as conservation land. As mentioned
earlier, it will abut two existing conservation areas of significant
size, creating a large swath of green space in this section of the city.
The land will be used for three primary purposes: passive recreation,
wildlife habitat and wetland preservation, permitting groundwater recharge.
Existing walking trails will be extended and new trails will be constructed,
offering connections among the various conservation areas, new and old.
In meeting in executive session, the CPC and the Board of Aldermen followed
the provisions of the state's Open Meeting Law, which allows municipal
boards to go into executive session to consider land acquisitions, among
other reasons. This part of the law recognizes the sensitive nature
of these transactions and the disadvantage that would be created by
requiring deliberations to be part of the public record. This would
providing potential competitors information that would virtually guarantee
their ability to outbid the city in its effort to acquire land.
The Open Meeting Law does require disclosure of minutes and other documents
after the outcome of the process is known. This information is now available
on the city's Web site at ci.newton.ma.us.
Doug Dickson
September 2003
