Redevelopment Projects
JSM Update – Somerville Towne Center - April 2009
Since our last update in 2008, a number of events have taken place that affects this project and the development world as a whole.
The most significant of these is of course the collapse of the economy worldwide. This began with the housing market in the USA starting to fail in early 2008 and rapidly spread to the banking sector as it became apparent that a major portion of the loans they made were not backed by any or very little collateral.
This has affected the Borough and its redevelopment projects across the board, with the JSM project being one of them.
Without going into a long history of the project; the Borough has continued to work with JSM management since the project was first approved by the Planning Board in 2005.
There were and still remain many reasons for this cooperative effort:
-First was to ensure that the design and layout of the project was as the Borough had specified in the redevelopment Plan for the area.
-Second was to create an agreement between the developer and borough that provided guarantees and protection to the borough and its residents and offering similar conditions to the developer.
-Third as the property is privately owned a redeveloperÕs agreement is the only device that can provide additional requirements of a developer over the zoning and planning ordinances.
The construction of the Davenport Street extension was one of these additional requirements.
The requirement for a food store was another.
The Pathmark litigation is a subject that has been discussed at length suffice to say that with a court ordered injunction on demolition and construction the project went into hiatus for over a year beginning in 2006.
Following the lifting of the injunction in late 2007, the McDonalds building was demolished as the belief was that the project would recommence early in the New Year (2008) once minor revisions were made to the site plan to take into account market changes since 2005.
In early 2008 as the financial situation worsened JSM advised that their financing had collapsed and they were seeking a new source of financing to continue the project.
In mid 2008 JSM advised that no financial institution would commit to a construction loan for a project the size of the redevelopment project in Somerville and asked if we could work together in the declining economy to find a way to keep the project moving forward. The result of these discussions was the Boroughs decision to ÒloanÓ JSM $13 million to construct parking for the project, JSM agreed to pay the entire debt ensuring that the loan would have no financial impact on the property owners of Somerville.
It appears that even this assurance of Public support for the project was not enough for the flagging financial industry as on February 25th 2009 Mr. Jack Morris President of JSM at Somerville, LLC presented to the Borough Council in a special Public Meeting his inability to proceed with the redevelopment project as approved by the Planning Board in 2005 and modified as late as September 2008.
In this presentation Mr. Morris described how the collapse of the financial markets had made it nearly impossible for any developer to get loans for construction projects of this size and complexity in todayÕs conditions.
In addition he stated that if the project is downscaled he believes he should be able to finance it in stages and would like the council and the community to agree to a downscaled project.
Following the public meeting the Council discussed the revisions to the project at their regular council meeting the following Monday (March 2nd) the consensus was the project should move ahead with certain provisions and delegated the negotiation of a revised project and RedeveloperÕs Agreement to the West End Redevelopment Committee for action.
The five major conditions were;
Developers escrow must be maintained at pre-agreed levels
The Redevelopers fee deposit is to remain
Affordable housing should be addressed, dependent on COAH rules and challenges
Define conditions and timing of a PILOT if one is requested
South Street Parking usage must be resolved, who uses and when
Other items needing resolution:
Stipulate when Davenport Street extension construction starts
Stipulate when demolition starts
Define conditions for when construction starts
Define conditions of food store exclusivity
As of April 7th, four of the five major conditions have been resolved and we continue to work on the resolution of those remaining, we are waiting for a response to these conditions from JSM.
Download Workable Relocation Assistance Plan
Mayor's remarks regarding Pathmark - 9/06
A letter from the mayor about Pathmark
Redevelopment agreement
•
Revised West End Redevelopment Plan
•
Revised West End RD Plan Table of Contents
•
Revised West End RD Plan Cover Page
•
MEMORANDUM OF UNDERSTANDING BETWEEN THE BOROUGH OF SOMERVILLE AND JSM AT SOMERVILLE, LLC.
•
Memorandum of Understanding between Borough and JSM, December 2008