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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 ( Sawmill 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 ( Sawmill 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

 


 

 

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