The Alewife

Developments by Daniel Moss

Natural disasters or unchecked development?

[Daniel R. Moss is a real estate consultant with a master’s degree in city planning from M.I.T. He can be reached at: danmoss99@verizon.net.]

Whether it’s flooding, wildfires, or drought, natural disasters seem to be dominating the news lately. Flooded streets in New Orleans are etched upon our minds. Southern California is on fire for the second time in four years. And now Atlanta is suddenly worried about running out of drinking water.

The human interest stories abound – homes lost, people displaced, insurance claims, and business disruption. Less often do we think about how decades of poor planning and development decisions have put so many human lives at nature’s mercy. Even more rarely do we make hard choices to prevent the same disasters from happening again.

Let’s start with Katrina. New Orleans has always been subject to flooding, since much of the city lies below the Mississippi River and other water bodies nearby. There is a good reason that the historic parts of the city were settled in the first place – the French Quarter and the Garden District are higher in elevation than the rest of the city, and they can be adequately protected by existing levee systems.

As the Army Corps of Engineers has known for years, the rest of the city is in great jeopardy of flooding from major hurricanes, even if the levee systems are built to code and properly maintained, which they usually are not.

Furthermore, extensive canal and levee building in southern Louisiana has channelized the Mississippi River, eliminating natural relief points upstream, and is slowly eroding vital wetlands areas downstream that buffer New Orleans from coastal storms. Faced with the devastation in low-lying New Orleans neighborhoods, one might expect local politicians, housing non-profits, and the few remaining residents to see the light. Instead, most of them seem to want to do everything they can to put everything back exactly the way it was.

Only a few out-of-town planners have been willing to propose the controversial idea of keeping residents out of low-lying areas and turning them into parks which could also serve as catch-basins for floodwater. In a city that can barely provide basic infrastructure and services for a much-reduced population, this seems like a pretty rational idea.

Ultimately, the difficulty of trying to do business and develop real estate in New Orleans may overcome the politics. Although there are a number of national investors, non-profits, and developers who are trying to rebuild the city, they are finding it very hard to put together viable deals, due to uncertain market conditions, inadequate infrastructure, and limited insurance availability.

The end result will be a smaller city. But without a centralized planning effort, the devastated neighborhoods will continue to look and act like wastelands, with little pockets of development surrounded by a sea of blight. As New Orleans continues to struggle, other cities in the Gulf region are booming as they gladly pick up the slack.

Next let’s look at Southern California. In general this is a region that gets less than 10 inches of rain each year, and only survives by importing fresh water from hundreds, if not thousands, of miles away.

Developments by Daniel Moss

The sub-prime mortgage fall-out

[Daniel R. Moss is a real estate consultant with a master’s degree in city planning from M.I.T. He can be reached at: danmoss99@verizon.net.]

Real estate developers turning to rentals.

Real estate sales data from around the country is gradually making it clear that the fall-out in the sub-prime mortgage industry is only one symptom of a bigger problem.

Over the past five years, banks and the Wall Street credit markets have provided too much financing to home builders and condo developers, as well as too many mortgages to speculative buyers who never intended to live in the homes they were purchasing.

The speculator’s strategy was to take advantage of rising prices by either flipping or refinancing the property as quickly as possible. High-growth markets like Miami and Las Vegas boomed, resulting in the development of thousands of new condo units, many of which are still under construction and haven’t hit the market yet.

These boom towns will undoubtedly experience the sharpest correction in prices, as too much supply in the pipeline continues to come on-line, and many buyers can’t get the financing they once could for second homes or investment properties.

On the opposite side of the spectrum, there are the genuine sub-prime borrowers who considered themselves fortunate to get mortgages, either to purchase new homes or refinance existing homes to take advantage of rising values.

Sub-prime lenders exist so they can serve lower-income borrowers with shakier credit. But this time around, too many borrowers qualified for mortgages that their incomes obviously couldn’t support, usually because they were given unsustainable loans with teaser rates and low initial payments that didn’t last.

The hardest hit sub-prime markets tend to be in states like Ohio and Michigan, where job losses and stagnant incomes are compounding the issues. Foreclosures in the Cleveland area are so numerous that entire neighborhoods are threatened, and some local municipalities have had to step in to maintain the abandoned properties.

Finally, there are the more stable markets, which includes the Boston area, most of the northeast, and the largest metro areas across the country. On the whole, these are markets with diverse economies and healthy job growth, where people buy condos and houses in order to live in them and work at decent-paying jobs nearby.

In these markets, there is usually enough healthy growth related to income and employment to keep them on track. There is not much likelihood of massive over-supply and big price declines in Boston, New York, or Washington, although a long period of market stagnation is likely to balance out the last five years of unusual price increases.

Even in more stable markets, most banks are taking a long, hard look at any potential condo deals. Lenders have to get their money from somewhere before they can loan it out, and the credit markets on Wall Street have shrunk considerably in recent months, which means banks have a harder time selling loans to secondary investors.

In addition to having less capital to play with, banks are being much more careful about their underwriting and loan terms. While developers try to make rosy projections about the future, banks tend to look at the market as it exists today and in the recent past.

This approach has its pros and cons. The bank may think it’s being realistic, but the cyclical nature of the development industry is often ignored. Most development projects take about two years to come to market after they are financed, and values can change quickly.

Banks have to find ways to mitigate the two main risks in condo deals – that the project isn’t completed, or that the units don’t sell. One mechanism is to require the developer to sign a completion guaranty to ensure that the project gets built, no matter what the ultimate cost.

Developments by Daniel Moss

[Daniel R. Moss is a real estate consultant with a master’s degree in city planning from M.I.T. He can be reached at: danmoss99@verizon.net.]

Developing the Last Piece of Nature

Conservation, housing, and flooding collide at Belmont Uplands

At The Alewife’s July 27 contributors meeting held at the back table of the Porter Square Books store, State Rep. William N. Brownsberger, D, North Cambridge, came to discuss the controversy surrounding the Belmont Uplands property.

This unique property, one of the last large undeveloped sites in the area, is contiguous to the Alewife Reservation and contains a mature silver maple forest and rich wetlands.  Despite its natural beauty, the site was recently approved by Belmont for a dense residential development under the state affordable housing law known as 40B.

State Rep. William N. Brownsberger, D, North Cambridge, spoke at the July 27 contributors meeting of The Alewife. Brownsberger filed a bill to appropriate $6 million towards the purchase of the Belmont Uplands.

Alewife Photo by Neil W. McCabe

Some local citizens and conservation groups immediately appealed the decision to state superior court.  In the meantime, Brownsberger has introduced a bill which would have the state provide up to $6 million to help purchase the property and preserve it in its natural state.

Brownsberger said he was also working to implement recommendations from the 2003 Master Plan for the Alewife Reservation.  Both the Uplands and the Reservation are located in Brownsberger’s legislative district, which includes the entire Town of Belmont, as well as parts of North Cambridge and East Arlington.

Ever since the 15.6-acre Uplands property was acquired by O’Neill Properties in 1999, community residents and conservation groups have protested that developing the land would result in the loss of valuable habitat and more area-wide flooding from big storms.

The Uplands was the last piece of a larger assemblage that O’Neill bought and sold to create the Cambridge Discovery Office Park. 

The original zoning of the property was for two-family residential dwellings.

In 2002, the developer convinced the Town of Belmont to create a special zoning district that would allow more intensive office and R&D land uses.  O’Neill agreed to keep at least 65 percent of the property as open space and made several financial concessions to the Town.

The rezoning resulted in a large increase in value. 

But instead of flipping the land, O’Neill started to think about residential uses for the property, reportedly because the market for commercial space appeared weaker than he had expected.

In 2003, the developer submitted a new application to the Belmont Planning Board for an upscale condominium development. 

The application was determined to be incomplete and was dismissed by the board in the spring of 2004.

Finally, O’Neill used the much-maligned 40B process to force Belmont to accept a 299-unit rental apartment complex with 464 parking spaces.

Developments by Daniel Moss

Land Protection Is No Walk In The Park

Belmont Uplands may be worth the fight, but why can’t we do better with the Alewife Reservation?

I set out to write this month’s column about the Belmont Uplands property, which has been the subject of considerable dispute between conservationists and the developer for the last eight years. Unfortunately, I got a bit side-tracked, both literally and figuratively.

The Uplands property lies mainly in Belmont, just over the Cambridge line, wedged between Route 2, Acorn Park Road, and the Little River, which comes from Little Pond and becomes Alewife Brook. The property is home to a mature silver maple forest, wetlands, and a number of other valuable ecological features.

The owner and developer of the land, O’Neill Properties of Pennsylvania, first wanted to build office buildings, then upscale condominiums. After facing market changes as well as constant backlash from neighbors and conservation groups, O’Neill used Massachusetts’s affordable housing law, known as 40B, to force Belmont to accept a proposed rental apartment complex with 299 units and 464 parking spaces.

Nearby residents and conservationists have continued the fight, suing to overturn the Town’s approval of the latest plan. To get a sense of all the issues involved, one need only peruse the Friends of the Alewife Reservation website to get a lengthy list of rancorous documents that have been filed thus far.

I thought I would go visit the property myself to see what all the fuss was about. It sounded like a perfect Saturday afternoon adventure. I would take the Red Line to Alewife Station, and proceed upon what would surely be a pleasant trek through the Alewife Reservation parkland, which stretches west from the T stop to the property in question. Boy, was I in for a schlep.

When I got to Alewife, I didn’t see any signs to the park, but I used my directional skills to guide me through a maze of bus ramps to the northwestern corner of the station. So far so good. I was further heartened by the bustling activity along the Minuteman bike path, which runs north from the station to Arlington and beyond.

Developments by Daniel Moss

Harvey Street Lofts delayed by design changes, costs continue to rise

Developer Michael O’Shea freely admits that he doesn’t like to make decisions by committee. So after four meetings with the North Cambridge Stabilization Committee, three meetings with the Cambridge Planning Board, and a final hearing before the Zoning Board of Appeals, he thought he had gone above and beyond the call of duty.

Unfortunately, some recent design changes to his eight-unit loft redevelopment at 95 Harvey St. raised the hackles of the NCSC, and resulted in a stop work order from the City Building Commissioner until the details could be sorted out by the Planning Board.

The two major modifications to the approved plans were a change in the size of windows in a clerestory built above the original roofline, and the substitution of stucco for brick on the new façade. In a memo to the Planning Board, O’Shea said the windows had to be changed when structural beams were discovered in the original roof, and that the bids for a stucco façade came in much lower than for brick.

Last summer, O’Shea pulled permits for interior demolition and the construction of new interior walls, and much of this work has been completed since. He ran into trouble when he started building the new clerestory, with the modified windows, without a building permit or approval of the design changes.

Now he has a number of subcontractors on hold for the completion of the interior work, while he pays his architects to present new drawings and renderings to the Planning Board at their July 17 meeting. He was hoping to be done with the project in time to sign up new tenants this September. Now that’s going to be a stretch.

O’Shea said he estimated that when he is done the entire planning approval process will have cost him $45,000 in legal and architectural fees, in addition to carrying costs and increases in material prices while he waited.

He bought the former ice cream plant in 2004. Self-employed as a cabinet-maker for over 30 years, he said he figured it was time to own his own workshop space, and he and his partner, Linda McJannet, moved forward with a plan to convert the rest of the 10,000 square foot building into live-work rental lofts for Cambridge-based artists.

Developments by Daniel Moss

Kaya hotel plan could clog Porter Sq. more

Not enough parking and too much traffic. For anyone who has attended a neighborhood meeting on proposed commercial development, this is a familiar refrain.

It was a popular one at a recent meeting I attended, hosted by the North Cambridge Stabilization Committee, to discuss a proposed hotel development on the current site of the Kaya House restaurant in the heart of Porter Square. Neighborhood support will be needed for a zoning variance, mainly because the development would occupy part of the site that is zoned residential.

The owner of the restaurant, M.S. Gim, and his planning consultants did their best to explain that the new development would be better than what is there now. There are currently 18 surface parking spots behind the restaurant. The new development, which would place a 54-room hotel on top of a new restaurant, would have 38 parking spots, all underground, and the current surface parking area would be converted to a small park for neighbors to enjoy.