All
the Things That Didn't Happen at Kesseler Woods
They say you make your own luck. But luck
of the kind the city experienced at Kesseler
Woods is difficult to fabricate.
Here are some of the things that could have gone wrong, but fortunately
didn't, in the city's effort to acquire Kesseler Woods through NStar's
auction process, protecting most of the land as publicly-accessible
open space.
The Over-the-Market Bid
When a large institution decides that it needs 42 acres for its own
purposes and can't get it any other way, it may submit a bid so high
that no one else is likely to top it. To attract a bid of that kind
is the seller's reason for the auction. In recent years, this strategy
worked well for the Turnpike Authority and for Conrail in Allston, where
Harvard submitted bids for large parcels of acreage in the hundreds
of millions of dollars, roughly double the land's market price. Kesseler
Woods was potentially attractive to institutions in Newton and Brookline.
But none submitted a bid of this kind.
The Excessive City Bid
If the city's bid exceeded the second highest bid by a wide margin-say,
$15 million from the city versus $10 million from the next bidder-the
City would have been subject to the criticism that it had vastly overspent
and wasted the taxpayers' money. That didn't happen either. The next
highest bid was low by only "the price of a Mercedes," a small
amount in comparison to the total bid.
A Leak
If the city's bid were leaked, the competition could easily have over-matched
the city slightly. Instead, the bid price was kept secret-not a small
feat for a local government.
To Lose Barely
If the city's bid were short, but just barely, the next discussion in
the open space community would likely have been that the city take the
land by eminent domain and pay NStar the winning bidder's price. The
city has that right. To exercise it might have been perceived as unfair
to the winning bidder, of course. And, if the city had spoken of eminent
domain before the auction, it could have unfairly poisoned the auction
process. Eminent domain has its own pitfalls. If it can be avoided,
it is best avoided. Instead, none of that happened. The city never spoke
of eminent domain. And the city was the one that won, just barely.
An auction is about price. The price the city
will pay, $15.1 million, is fair. NStar received unsolicited offers
in the range of $14 to $15 million before it entered the auction process.
It can be argued that, if NStar had marketed the property in standard
fashion, through a broker, over the course of several months, it could
have gotten a higher price. The land was appraised at a higher price-nearly
$20 million-more than two years ago. NStar has made it a practice to
sell its land at auction. The auction process opens the door to very
high bids, if there are very high bidders, like institutions, with a
pressing need. In this case, the process seems to have worked to NStar's
disadvantage-and to the benefit of Newton.
Eric Reenstierna
September 2003
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