GloucesterTimes.com, Gloucester, MA

December 4, 2008

Park gets TIF from City Council

8-1 OK seen as final approval

By Richard Gaines

The city and developers Sam Park and DeMoulas supermarkets have forged a financial partnership that clears the way for construction of what will be the biggest shopping center the city has ever had.

The agreement, approved by the City Council on an 8-1 vote shortly before midnight Wednesday night, resolves three years of passionate public argument, dueling newspaper letters and online postings about a change of unprecedented scale for Gloucester — tax relief for a developer sinking roughly $60 million into 30 vacant acres adjacent to the Fuller School off the Route 128 Extension in a project that will bring a mall-style package of chain-brand names to the island.

Advocates have held Gloucester Crossing out to be a job creating boon and the city's investment in it — roughly $2.3 million in taxes not collected over 12 years — a tonic for the project.

"I'm sick to death of sitting in budget meetings to decide what to cut," said Councilor Jason Grow.

Opponents countered that the $60-million in construction of a mall not far from Main Street could weaken the downtown shopping district and argued that DeMoulas, Park's private lender did not need financial help.

The organized opposition's name and message was "No Free Lunch for Gloucester Crossing."

As approved late Wednesday, the agreement is structured to encourage the opening of Gloucester Crossing's three big name stores — Market Basket, Marshalls and Staples, the only tenants signed so far — within a year.

Park said those chains, dedicated to volume sales and low prices, were faring well in the general economic decline.

"They'd like to be open by next Christmas," Park's lawyer, Michele Harrison, said yesterday.

DeMoulas for many years has been anxious to enter the local market.

Park said he would break ground in January. He praised both sides for "a lot of spirit and passion," and said he took the council's action as evidence he'd made compromises and proved the case that the project earned the city's support. Joe Ciolino was the only councilor to vote against the agreement.

Councilors Wednesday night took in final arguments — the clashing views split pretty evenly — asked questions, and explained the reasons for their votes at the end a nearly five-hour, single-item special session.

The next steps, Harrison said, will be for Park to hire a construction manager, then begin pulling construction permits and convert letters of intent by retail tenants into leases.

"As Sam likes to say, we're 'going vertical,'" Harrison said.

Loose ends do exist. The Conservation Commission has not ruled on the clear cutting of an unofficial vernal pool by a contractor performing site work, and the state has not finalized deliverance of a $2-million grant to the project that was announced last spring.

To take full advantage of tax-increment financing — or TIF — terms hammered out by Mayor Carolyn Kirk's official negotiating team that included council representatives, Park also must pull a building permit for a business hotel by the end of 2009 and one for an assisted living facility by the end of 2012.

At the heart of the agreement is the tax instrument, written under the auspices of the state's TIF program for job-creating economic investors.

DeMoulas must create 45 full-time jobs at an average wage of $40,000 a year for Park to keep the TIF deal.

By the arrangement which was written with incentives and penalty milestones, the city agrees to forgive for 12 consecutive years one half of the new taxes generated by Gloucester Crossing, an amount projected to be roughly $2.3 million.

But the deal also involves a "Host Community Agreement," a side contract of real estate and easement exchanges, infrastructure investment obligations, commitments to market and advertise on behalf of the shops of Main Street as well as Gloucester Crossing.

Even Valerie Nelson, a outspoken opponent of the city's investing in the project, praised the negotiating team for writing a deal with "teeth."

It also obligates Park to surrender a building permit for a 240-apartment development on the site, which he acquired with the property for $3 million two years ago.

That Park was willing to replace Captain's Row — a nearly universally opposed project organized under the affordable housing law, Chapter 40B — with retail, a hotel and an assisted living facility earned Park "white knight" status on his arrival on the scene with an option on the property.

Council President Bruce Tobey praised the opponents of the TIF for a productive fight. They "made this a much better arrangement," he told the council chamber, which still was half filled at 11:30 p.m., just before the climactic vote.

Yesterday, Tobey was euphoric.

"I don't want to hear people trash talking Gloucester any more," he said in a telephone interview.

It was the opportunity for Gloucester to continue its economic revival that supporters of the TIF continued to site.

Christine Sherman introduced a petition with signatures of 50 fishermen and their families, and Kirk at the outset speaking briefly urged the council to "keep your eye on the prize — tax base, jobs and consumer choice."

Opposition from the public also stayed on the themes developed by "No Free Lunch."

Ruth Sullivan questioned the ethics of the city's partnering with Park and DeMoulas to lower the taxes of new competition for existing businesses.

"These people (merchants on Main Street and elsewhere) have held the city together and deserve better," she said, adding that DeMoulas has long coveted a place in Gloucester and would not be deterred should the tax deal be withdrawn.

Laura Fillmore Evans also found an ethical issue in the city's partnership with Park and DeMoulas that creates "competitive advantage with public tax dollars."

Nelson, a former councilor and spokeswoman for No Free Lunch, remained fiercely opposed to the concept. She argued that the project would weaken existing retail businesses.

"The Main Street shops recycle dollars at a much higher rate" than chains, she said. Nelson returned to the authenticity issue, that making a "mall" here eroded it and harmed the community character.

"You have to keep the things that are special about Gloucester," she said.

"Gloucester is not a mall town, and we are not a mall people," added John O'Hara.

Environmental activist Stevan Goldin, predictably, added his weight to the opposition, while Michael Faherty — who has clashed often with Goldin — on this night agreed with him that the TIF was bad policy.

Faherty, attorney for the Cape Ann Savings Bank, The Building Center and Varian Semiconductor Equipment Associates, also urged the council to "resist the temptation" to disrupt "the balance of economics. Let the chips fall where they may," Faherty said.

The tax forgiveness — worth $1.2 million in "net present value — was balanced in the analysis of the TIF committee and the council by the $6.8 million in spending commitments by Gloucester Crossing under the final agreement.

These include purchasing and installing a backup generator on the water pumps for Blackburn Industrial Park, financing the purchase of a new ambulance, expanding the sewer line on Staten Street, upgrading the electrical line, building, maintaining for 15 years and giving to the city repaved the roads around the Fuller School, improving the intersection of Route 128 and Eastern Avenue, and widening and improving access to Grant Circle.

"The enhanced value of city property is phenomenal," noted Grow, who represented the council on the TIF committee.

Finding himself alone, Ciolino firmly refused to support the full 50 percent tax forgiveness for 12 years. Instead, he reminded colleagues that the state has agreed to invest $2 million in the project and that DeMoulas will qualify for a 5-percent income tax credit on the $10.5 million it has pledged to spend building its supermarket.

But Ciolino got no support for his motion to cut the TIF in half.

"The common thread is jobs," said Councilor Jackie Hardy. She and Sefatia Romeo urged DeMoulas to find local people to hire.

Richard Gaines can be reached at rgaines@gloucestertimes.com.