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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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