The Patrick administration’s decision to put 11 Massachusetts Turnpike service plazas out to bid is the dramatic opening of a sustained sell-down in assets, several sources have told Banker & Tradesman.
Gov. Deval Patrick’s new transportation secretary, James Aloisi, announced the service plazas sell-off plan at a press conference last Tuesday.
However, the wider context of Aloisi’s announcement was clear: The Turnpike is going away, and it’s going away quickly. Patrick is going to tear it apart and scatter its ashes to the four corners of the Earth. That process will cost money.
The Turnpike appears willing to raise that money by selling itself off, piece by piece.
“I’m in my job to be a change agent, to shake things up and do things differently,” Aloisi told reporters Tuesday. “One of our missions is to dismantle the Turnpike Authority.” Aloisi used the word “dismantle” several times, saying at one time that part of that dismantling will mean weighing “the value of [Turnpike] assets.”
“We can’t go to the public and talk in a serious way about new revenue until we demonstrate that we’re committed to changing old habits,” he added. “We have to show we mean what we say.”
‘They’re Broke’
“Before they condense the agencies, they’re going to have a fire sale,” predicted one Beacon Hill insider, who declined to be named so as not to anger the governor. Noting that the pace of the Turnpike’s real estate activity has accelerated recently, the source said, “They could’ve done a lot of this stuff a while ago; now, they want to do it while they still can. They’re going to do it quickly.”
“They’re broke – there’s no other way to view it,” said another.
One source who works in development noted the Authority is sitting on “a number of good-sized parcels” that were taken for the development of the service plazas,.
“They don’t even know what they have. It’s very interesting real estate, and it’s completely underutilized,” the source said.
“Within [Route] 128, air rights are our only remaining significant asset,” said the Turnpike’s chief development officer, Stephen Hines. “Outside 128, there are other properties that could conceivably be developed in the right market. The market has had a limited interest in them in the past. We’ll be taking another look at those in the near future. Whether there will be interest in them or not, I don’t know.”
A Closer Look
There are also several parcels left behind by the Big Dig that are under the Turnpike’s control.
The Turnpike is currently weighing leasing proposals for Parcel 7, the 310-space garage overlooking Haymarket Square and the Rose Kennedy Greenway. The Parcel 7 complex also includes 26,000 square feet of first-floor retail and 46,000 square feet of office space. Matt Amorello, the Turnpike’s deposed executive director, originally wanted the building to serve as the authority’s headquarters. He’d secured $8 million for building renovations two weeks before the fatal Big Dig tunnel collapse.
The Turnpike, long under fire for letting the building’s commercial space sit idle, issued a request for lease proposals last October. That was 13 months after a Turnpike official told the Associated Press that an RPF for the building would be issued in the fall of 2007. When it was issued, the RFP requested an unusually high deposit from bidders – $250,000. That dollar figure was intended to pare down the field of prospective bidders to include only those with large amounts of cash on hand – a sign the Turnpike wanted to dispatch with the RFP process quickly.
Just two firms answered the Parcel 7 RFP: WinnDevelopment and Harrisburg, Pa.-based hotel developers Hersha Developers.
Hersha pitched a plan to add two floors to the building and convert it to a 100-room boutique hotel, while Winn proposed using the bulk of the office space as WinnResidential’s new headquarters. Both proposals included a form of the public food market plan the Boston Redevelopment Authority began pushing last summer. The Turnpike is expected to name a winning bidder by early Spring.
Next Up For Sale
Observers are expecting a neighboring piece of real estate, Parcel 9, to come on the block soon. Turnpike officials have spent the past months engaged in community outreach that will be used in tailoring an RFP. The parcel, adjacent to the Greenway, is assessed at more than $5.5 million.
Developers have been designated for the prime development parcels north of the Greenway, in the Bulfinch Triangle. Taken together, development proposals from Hines Interests, Simpson Housing, Boston Development Group and Salvatore Tecce represent 250 units of housing, 500,000 square feet of office space, two hotels and 100,000 square feet of retail, including a long-awaited supermarket. The price tag for those projects tops $500 million. The Raymond Property Co. had been partnered with Hines to develop residential, retail and office space on three parcels, but is now actively trying to exit that joint partnership to concentrate on its Government Center Garage proposal.
And it’s not just multi-million dollar pieces of property on the auction block.
Last week, the Turnpike put Parcel BB on the block. It’s a 2,135-square-foot sliver of a parcel that wraps around a block between Broad and India streets downtown.
Running Out Of Time
Former Attorney General Scott Harshbarger, who’s now with the law firm Proskauer Rose, said Patrick and Aloisi are feeling an urgency to act because they can’t afford to carry the Turnpike’s debt load.
“Time’s running out. The economic situation is creating such pressure on the state, and the Pike comes with such a huge carrying cost,” he said. “The service plazas are a small piece. The broader question is: What exactly have we gotten out of the public management of the Pike? There are serious questions about the capacity of the Pike to manage its operations now.”
Aloisi certainly sounded in a hurry last week.
He predicted that, within a week, the Turnpike Authority would issue a request for proposals for the sale or long-term lease of the 11 plazas, which stretch from Natick to Lee. The plazas will be offered as a single unit. Previous estimates pegged their value at upwards of $300 million.
Aloisi said he expected to have a decision on the service plazas “in a matter of a couple months.” He added, “We want it expedited. We don’t want it to linger. We need to know.”
