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WVN #319: Lessons for Wayland in failing Maine development?

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  • waylandvoters1
    Dear Wayland Voter, The Oct. 30 closing of a two-year-old Stop & Shop in Kennebunk, Maine, offers some clues about how real estate development can go wrong.
    Message 1 of 1 , Nov 11, 2009
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      Dear Wayland Voter,

      The Oct. 30 closing of a two-year-old Stop & Shop in Kennebunk, Maine, offers some clues about how real estate development can go wrong. This doesn't mean that the planned Wayland Town Center could suffer the same fate, but something similar is one possible outcome.

      One commonsense lesson might be drawn: towns should protect themselves against unforeseen events. Despite assurances from Wayland selectmen, the town could suffer if the Town Center scenario doesn't go as planned.

      There are similarities between the Kennebunk development and the Wayland Town Center: A Stop & Shop anchor, related development companies, plans for housing, an aggressive marketing campaign to residents and officials, controversy followed by lawsuits.

      How slow is business at The Shops at Long Bank in Kennebunk? A Wayland resident happened by the Route 1 shopping center the Saturday before Veterans Day and photographed one car in a sea of empty parking spaces. No people were seen. In addition to the defunct market, a half-dozen stores in the shopping center are vacant. Three small businesses remain. One is a toy store, an established popular business elsewhere, that moved to this new retail area and lacks foot traffic.

      See the Kennebunk photos at:
      http://www.flickr.com/photos/43012683@N03/sets/72157622648217063/detail/

      Kennebunk is half the size of Wayland, and different in other ways. The Stop & Shop there is larger than the one planned for Wayland, the total project is much smaller, and Long Bank was built before the economy tanked. The Town Center will be fully or partly built only if businesses and financing institutions foresee better times ahead; businesses today can make a reasonable guess that the economy is at or near bottom and estimate when it will recover. (Which of course could mean delay.)

      Both projects are related to the same parent companies KGI Properties and Great Island Development, which have a considerable track record of building and acquiring shopping centers (see additional information at end of this newsletter). From the beginning, Twenty Wayland acknowledged that the proposed Town Center was its first mixed-used project. (No housing was built at Kennebunk.) Yet, even during a stronger economy, the developer was never willing to share its market studies with the Planning Board. Wayland selectmen negotiated the 2005 and 2006 Development Agreements and amendments since then without that financial information.

      Developers routinely put together deals under various company names and often sell a project before construction is complete. Chuck Irving, one of the active principals of Twenty Wayland until he stepped aside last week, has been involved in deals with companies under other names, some of which listed the same Route 20 Wayland address as Twenty Wayland. WVN reported on some of them in September 2005:
      http://groups.yahoo.com/group/waylandvotersnetwork/message/107

      So what happens if Twenty Wayland flips the project before it's complete, or even started? The Kennebunk development may offer insight into possible consequences if the Town Center project encounters further troubles. Twenty Wayland hasn't demonstrated to the town what resources it has to continue pursuing the project. The 57-acre site on Route 20 could end up in the hands of another development company, or conceivably a bank, or be split into smaller parcels and sold off.

      Is Town Protected?

      The description of Article 3 and related appendices in the green warrant booklet mailed to all households for the Nov. 18 Special Town Meeting paint a limited view of this complex matter, for which due diligence by an independent outside party was not conducted. The developer's requested changes to the deal include estimated gift payments and housing, which become delayed and uncertain. A two-thirds majority vote at Town meeting is required to modify zoning and meet a Twenty Wayland request.

      The selectmen say the town is protected against adverse outcomes if Twenty Wayland fails to build as planned. But that may not be so. The amended Development Agreement they negotiated last month to grant Twenty Wayland concessions could expire, or Twenty Wayland could simply decide not to apply for building permits.

      If Twenty Wayland's suit against the Wayland Historic District Commission succeeds, the District could be irreparably damaged by road widening even if the Town Center isn't built. The selectmen, who have sided consistently with the developer, oppose the Historic District Commission.

      The mixed-use zoning that permits a large commercial-residential project -- not just the Twenty Wayland design -- will remain, along with a Master Special Permit approved by the Planning Board in January 2008.

      Furthermore, the town could be left without the 70-percent share in the cost of a new wastewater treatment plant that the developer agreed to. The developer's original estimate of $3 million, described by selectmen at the time as conservative, grossly underestimated the cost of the plant ($5.6 million appropriated so far), and even the amended Development Agreement fails to cover all costs. A year and a half after Town Meeting appropriated the money for the plant, the town has taken no action to effect the required land swap for the new plant or to get Raytheon's required approvals. (The former tenant is conducting an environmental cleanup.) Selectmen have spent more than $130,000 on special legal counsel to participate in the negotiated settlement of the litigated discharge permit.

      The cost of the wastewater plant is a liability to the bondholder -- the town. The first $1 million was borrowed earlier this year for the new plant, without the approval of the Wastewater Management District commissioners. Plant customers were stunned by the higher bills they received, which included the cost of carrying that debt. Twenty Wayland has not paid that bill and owes the commission $10,000. During recent board meetings, the town administrator and selectmen have expressed an urgent need to move plant construction forward, which means more town borrowing. The town didn't insist that the developer escrow funds to cover its share of the bond.

      Kennebunk Reflections

      In Kennebunk, John Costin, a member of the Kennebunk Budget Board and former member of the Downtown Alive! Committee, summarizes his view:
      "Strangely, none of these folks contemplated the possibility that has come to pass. This despite the fact that we raised this possibility, and that empty Wal-Marts were already starting to dot the landscape in neighboring towns. So now we're stuck with a mucked-up traffic corridor. We've lost the opportunity to use scarce commercial land for other purposes — such as light industry — which are more beneficial to the local economy. We're stuck with an empty, unsightly building and vast parking lot. Our revenue projections need to be thrown out. How far off are our budget plans? We don't know. If things go very poorly, there is a real possibility that Kennebunk taxpayers will have subsidized this whole fiasco."
      http://www.seacoastonline.com/articles/20091022-OPINION-910220386

      There may be as many differences as similarities between the Town Center and Long Bank. The Kennebunk experience isn't necessarily a predictor, of course. But other failed or failing projects, some of them not far from Wayland, raise legitimate concerns about how Wayland would fare if the developer's scenario doesn't succeed.

      Examples: the Natick Collection is in bankruptcy, the financing for proposed mixed-use projects at Westwood Station and Hopkinton's Legacy Place is on hold, and a German bank has bought back the former Polaroid property in Waltham along Route 128.

      -- WVN Staff

      FOR MORE INFORMATION:

      For background on Twenty Wayland's recent actions, see
      http://groups.yahoo.com/group/waylandvotersnetwork/message/373

      For the Historic District Commission lawsuit see:
      http://groups.yahoo.com/group/waylandvotersnetwork/message/370

      Artist's renderings versus what actually gets built was a point of concern at the 2005 Planning Board hearings for the Town Center project. A glossy Long Bank marketing brochure in June 2009 gave no hint of the Stop & Shop closing:
      http://www.paragonre.com/documents/SLBbrochure.Hilary.6.10.09.pdf

      Readers can find public record information about the Kennebunk project, Twenty Wayland, LLC, KGI Properties, and various real estate ventures of Wayland resident Charles "Chuck" Irving (Great Island Development's president) at the links below:

      1) BACKGROUND:

      * In 1999, Chuck Irving's Great Island launched the Windalier Fund with a plan to acquire shopping center properties in the Northeast: http://boston.bizjournals.com/boston/stories/1999/06/21/newscolumn1.html

      * A few months later, the Great Island Development Group LP, Boston, acquired North River Plaza, a 233,821-square-foot shopping center in Pembroke, Mass., made possible by a private fund, Windalier LLC. The fund's primary investor is the Dead River Co., Portland, Maine, which owns an extensive portfolio of shopping centers, industrial properties, and office buildings nationwide. http://retailtrafficmag.com/mag/retail_transactions_25/

      * In 2001, KGI Properties was formed to acquire retail real estate in the Northeast
      KGI = Koffler Group + Great Island Development
      Who's who at KGI: http://www.kgiproperties.com/principals/
      Press releases: http://www.kgiproperties.com/press/release/8/
      http://www.kgiproperties.com/press/release/10/


      2) The Shops at Long Bank, KENNEBUNK:

      2003 Kennebunk project manager was KGI/Great Island Development's Ben Devine:
      http://searchseacoast.com/2003news/yorkstar/ys10_30f.htm

      Marketing the property for Dead River began before construction was completed:
      http://www.portcityarch.com/plan_room/public.php?cat_id=2&project_id=82

      According to recent Maine newspaper articles, it appears the Kennebunk Stop & Shop retail property is still owned by Great Island Development.
      http://blog.kennebunkpost.com/2009/10/08/abrupt-closure-surprises-officials.aspx

      http://www.allbusiness.com/legal/property-law-real-property-zoning-land-use/13147257-1.html

      Looking up GIKennebunk and Dead River at the Maine Secretary of State website:
      https://icrs.informe.org/nei-sos-icrs/ICRS?CorpSumm=19830058+D
      https://icrs.informe.org/nei-sos-icrs/ICRS?CorpSumm=20040658DC


      The one restaurant had already closed, in less than a year:
      http://www.yelp.com/biz/ricettas-brick-oven-pizzeria-kennebunk

      An already existing toy store, relocated to this location, is one of 3 open businesses:
      http://www.seacoastonline.com/apps/pbcs.dll/article?AID=/20070726/NEWS/707260367/-1/rss46


      3) A Windalier/Dead River project that changed hands before it was completed:
      http://boston.bizjournals.com/boston/stories/2008/01/07/daily35.html?q=windalier%20dead%20river


      4) Entities whose paperwork shows an address at 260 Boston Post Rd., Suite 9, Wayland, MA:

      ABCD North Reading Plaza, LLC (Ben Devine & Charles Irving among the managers)
      Windalier North River Plaza, LLC (DRC & GID – Dead River & Great Island?)
      Windalier Springdale Mall, LLC (Dead River & GID Windalier Springdale, L.P.)
      Great Island Development Group, Inc. (Ben Devine & Charles Irving among officers)
      BCA Partners Inc. (Ben Devine & Charles Irving among directors)
      K/G Freetown, LLC (Charles Irving & Anthony DeLuca among managers)
      Koffler/GID Woburn, LLC (Charles Irving & Anthony DeLuca, managers)
      Twenty Wayland, LLC (Charles Irving & Anthony DeLuca, managers)


      5) Corporate filings at the Massachusetts Secretary of State:
      http://corp.sec.state.ma.us/corp/corpsearch/CorpSearchInput.asp

      For readers who want to dig further into the public record:
      Type in (one at a time) Twenty Wayland LLC, Great Island Development, Windalier and Dead River under the entity name, click on the small circle at left, then click on Search. While searching each of those entities, it is possible to review additional documents in greater detail by clicking on "All filings" near the bottom.

      Then go back to the original template and try name searches, e.g. type in Charles Irving, Bernard Devine, etc. (again, one at a time) under the individual's name near the bottom of the form, click on the little circle, and then click on Search.

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      Michael Short, Editor
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