DeMoulas Supermarkets has agreed to provide Sam Park & Co. with more than $10 million in construction financing for his Gloucester Crossing shopping center while negotiating to put a Market Basket in the anchor spot, principals for both companies said yesterday.
A decision to organize Gloucester Crossing around a supermarket rather than a department store would open the area around the Concord Street/Wingaersheek Beach exit of Route 128 to commercial development. DeMoulas has owned the site for a quarter century and had been preparing it for its 59th Market Basket store.
An essential element in the development plan for the proposed Market Basket on the Concord Street site of a former drive-in theater had been DeMoulas' offer to construct and partially underwrite a sewer extension from Essex Avenue and a prorated $2 million tax forgiveness. DeMoulas has received its order of conditions from the Conservation Commission; still, much site work would have to be carried out around two wetlands before a supermarket — or anything else — could be built.
Momentum for the project ceased as corporate interest shifted farther up the Route 128 line to the extension site just past Blackburn Circle. A local developer sold to Park for $3.2 million two years ago the rights to a fully-permitted, state-supported, mixed-income apartment complex that was nearly universally opposed by residents.
Park set about adding desired elements to his initial idea for a shopping center, and last summer won unanimous City Council votes for his special permits. The project was estimated to cost $60 million and return to the city at buildout more than $1 million in revenues, according to a fiscal impact report prepared by the city.
Principals of DeMoulas and Sam Park both described their negotiations yesterday as nearly complete.
Park told the Times he was willing to accept a lesser rental from DeMoulas than might be secured from a department store in exchange for the $10,252,012 line of credit granted by the Tewksbury-based, privately-owned supermarket chain.
Park began site work this spring on a 200,000 square foot mixed-use shopping center adjacent to Fuller School, and announced that Staples and Marshalls had signed on to take junior anchor spots. Kohl's had been identified as the likely anchor store but that was before the onset of the recession which has hammered retail chains, and put Park in position to consider the DeMoulas' offer of construction financing for favorable lease terms for the supermarket.
Park and Michael Kettenbach — vice president for RMD Inc., the real estate division of the DeMoulas company — both said the 33-acre development hinges on a $2.5-million real estate tax forgiveness now that the state has agreed to provide $2 million to help underwrite the infrastructure for what would be Gloucester's largest commercial development.
James McKenna, one of DeMoulas' project attorneys, said he believed the Market Basket would be a stronger magnet than any department store. Referring to the chain's reputation for low prices that has made the idea of DeMoulas in Gloucester widely popular, he said "they are a magnet. Other (chains) will take notice."
Park's team has explained that they believe Gloucester Crossing will enjoy the patronage of a long-frustrated local population that has often felt forced to leave town to shop in the malls of Danvers and Peabody. From the announcement of Park's decision to develop the site three years ago, however, some residents have opposed the shopping center, which would include the city's first assisted-living facility and year-round business hotel, as well as 20 shops and restaurants.
Its design and engineering have evolved in response to events. Park gave up his hope for a traffic light at the access road on the Route 128 extension and agreed to allow traffic to leave via the Blackburn rotary earlier this year, giving some opponents victories, but as the project inched forward, the opposition switched focus to the needed subsidies.
Kettenbach said, "We like (Park's) site, but we also like our own site (on Concord Street). We have made a significant investment in (our site)." He added that DeMoulas considered the Concord Street site the "fallback" option for the Market Basket should negotiations with Park fall through or the entire project sink for lack of the state subsidy via the Tax Incremental Financing program.
TIFs are negotiated locally but approved by the state to incent economic development and job creation. Park flagged his need for a $3 million TIF soon after he emerged as a would-be successor developer for the site near the top of the city which is the largest vacant parcel in the city center.
Mayor Carolyn Kirk yesterday said she had been monitoring the negotiations with hope that they succeed. Typically, TIFs are frontloaded — providing a declining level of tax forgiveness over periods from five to 10 years, but Kirk said the city has such extreme needs for an expanded tax base that she would offer Park a "reverse" TIF that begins low and grows over time.
"We like the (Gloucester Crossing) site," Kettenbach said.
"It better serves the citizens of Gloucester," he said. "It's closer to the community and creates a synergy in establishing a retail center."
Richard Gaines can be reached at rgaines@gloucestertimes.com
