No, thank you, Mr. Kraft

On October 25, 2012, in Latest News, by The News Staff

By William C. Shelton

(The opinions and views expressed in the commentaries of The Somerville News belong solely to the authors of those commentaries and do not reflect the views or opinions of The Somerville News, its staff or publishers.)

Some illusions shine so brightly that we will sacrifice our wellbeing to let them burn. Visions of prestige and economic benefit accruing to Somerville with construction of a major league soccer stadium at Assembly Square could be such an illusion.

The Kraft group is talking with Somerville and Revere officials about locating a 20,000-seat stadium for its New England Revolution team in those cities. Fall River’s mayor wrote to Robert Kraft last week, pitching his city as well.

There is no doubt as to which would be the best location. Assembly Square is in the urban core, bestrides $7 billion worth of transportation infrastructure, and is close to immigrant populations that love soccer. Its Orange Line station will directly connect to every other line and to key bus routes, unlike Revere’s Blue Line station.

But major-league sports franchises extract major-league economic concessions from the jurisdictions in which they locate. These involve subsidies for land acquisition and stadium construction, and/or tax abatements. The jurisdictions pay for these subsidies by issuing municipal bonds and taking on debt.

Such a deal might be good for Revere or Fall River. But for Somerville, it would be fiscal folly, and in one scenario, fiscal disaster.

There are two possible Assembly Square sites that a soccer stadium could locate on and around: the 12 acres that were slated for IKEA construction and the 9 acres at 5 Middlesex Avenue that host the shuttered AMC theater, a fully-tenanted 200,000-square-foot office building, and their parking lots. I say “on and around” because a major league stadium would require more land than either site by itself.

A soccer stadium would absorb more room than just the IKEA site.

The IKEA site is the size of six city blocks. Somerville’s zoning ordinance would allow developers to build 5 million square feet of office or mixed-use buildings there. Using the rule of thumb of 4 permanent jobs for every 1,000 square feet of office space, this would translate into 20,000 new jobs.

At current construction costs of $300 per square foot, such a development would produce city property tax revenues of $33 million per year. The city currently collects only $100 million from all the taxable land in Somerville. A $120-mlllion stadium would generate property taxes of $2.6 million per year, before accounting for any subsidies. And it would cost the city more in public safety expenses than would office or R&D space.

Buildings that were constructed on those portions of the Middlesex Avenue site that are beyond 1,000 feet of the Orange Line station could rise to only 125 feet, as opposed to the 250 feet allowed throughout the IKEA site. But the maximum density permitted there would still produce tax revenues and jobs many times greater than a stadium would.

The city would need to amend its zoning code to accommodate a stadium, since it is not now a permitted use. And if the current landowners understand the true market value of their property, they will not sell for a price that makes stadium development economically feasible. So the city would have to take either property by eminent domain and sell it to the Kraft group.

The landowners could probably not legally prevent this. But they could go to court and demand to be paid their property’s true market value. The land portion of total development costs for a $300-per-square-foot building is about $50 per square foot. Assuming the maximum possible development of the IKEA site, this would put its land value at $250 million.

Imagine that a court found the land value to be only half that. It would still be more than the value of a fully constructed stadium. To settle the judgment, the city would have to borrow the money, degrade its credit rating, and over multiple generations, pay amounts far greater than whatever taxes it would derive from the stadium.

This is a worst-case scenario, but it is well within the realm of possibility. What is almost a certainty is the negative impact that a stadium would have on the potential value of surrounding property. Examples of major league stadiums that work well within an urban fabric are rare. And those located next to taxable Class A office or R&D space are exceedingly rare.

The Comprehensive Plan that city officials presented earlier this year is a remarkable product of hard work, broad cooperation, and wisdom. Building a major league stadium at Assembly Square would make a mockery of the plan’s process and principles.

Last year I wrote a column asking whether the city’s issuing of District Improvement Financing bonds to support private development in Assembly Square would be a risk or a gamble. There is no doubt that going on the fiscal hook to bring a soccer stadium here would be a gamble. The uncertainty is how much we would lose.

 

 

 

25 Responses to “No, thank you, Mr. Kraft”

  1. j. connelly says:

    Soccer Stadium! Not while mayor Curtatone is in office with his sweetheart deals for his developer buddies. This would only be a positive gain for SOME elected officials and their cohorts. A negative cost for the taxpayers/renters. This city’s administration only knows
    how to spend. The mayor has his personal development goals. Yet the reality is the citizens want a city they can afford to live in, in this tough economy.

  2. A. Moore says:

    This is a first. I actually agree with Mr. Shelton on this one. I do respect his opinions even though they are usually the opposite of mine. I say no thanks also.

  3. Bill Ritchotte says:

    Mr. Shelton is batting .1000 with me! I never agree with him. Now he’s an architect, city planner and engineer. Multi-talented. Of course if you know anything about the Kraft group and building stadiums, you would know they built Gillette Stadium with 0% public funding for construction, which is an anomaly in the NFL. I guess the facts don’t fit your narrative. Again.

  4. Matt says:

    I think your math is off. $250 million for 12 acres is $20.8 million per acre. I think it is extremely unlikely that any developer would buy that property at that price.

  5. Mike the revs fan says:

    Obviously Mr. Shelton is entitled to his opinion but he neglects to mention the many benefits it will bring to Somerville.

    Financially, Mayor Curtatone has said on many occasions that he would only pursue the stadium if it made economic sense for Somerville, so many of the fears presented are misguided and irrational. It’s not the full picture.

    I would encourage everyone to read this balanced Somerville Scout article as opposed to relying on one opinion: http://www.somervillescout.com/2012/10/are-somerville-and-the-new-england-revolution-playing-ball/

    As noted in the above article, “A stadium would not generate the same sorts of property tax revenues or jobs as high-end densely-packed office buildings but it would present a major draw to the neighborhood and the city, not just for Revolution games but for other sporting events, concerts and more.”

    Go revs.

  6. Daniel Bonaire says:

    I completely agree with Mr. Shelton. And I’m a die hard soccer fan to the nTh degree. I’d love for the Revs to have a home on a T line in close proximity to Boston, etc. Finally ridding ourselves of that Giant Man Mall monstrosity in Foxboro.
    Municipalities, should NEVER EVER be left footing any bills for a Sports Complex! If Somerville, the community, decided by majority, that that’s what they wanted, then by all means. However, why should public money, by people who may never attend one game there, help a Billionaire like Kraft, build ANYTHING..in and around that area?

    If a team/club wants something bad enough..they’ll sink into their moth infested wallet and come up with the cash on their own..plain and simple.

  7. Tyler says:

    Even if a stadium is not subsidized, I dont see how using the land for a stadium could possibly generate any where near the revenue or jobs that would come from a mixed-use assembly square that was more like a liveable/walkable Kendall Square. Let Revere have the stadium, the debt, and the traffic. Somerville should stick with its plan for assembly square and start attracting all the businesses and residents that are fighting for R&D, office and residential space in Kendall and South Boston. To give up what little developable (and profitable) land we have left for an inefficient stadium would be a mistake. Especially considering the fact that there currently is greater demand for space in Kendall than the land can provide. Companies are flocking back to the urban core from the suburbs and are having difficult time finding space. Just look at whats happening in the South Boston Waterfront. Real revenue for Somerville will come from R&D office which is best suited for Assembly.

  8. MarketMan says:

    I agree 100% with Tyler. There is a Boston Globe article that discusses how tech startups are leaving Kendall Square because of high rents and looking for other places to go. Many are going to Boston’s leather district. Somerville should be doing anything to entice them to come to Somerville. Assembly Square is one choice, there are other good ones in Somerville. A stadium in Somerville would be such a wasted opportunity and it would be very hard for Somerville to recover. Remember there’s a $25 million dollar bond taken out for Assembly that we need to pay back. The revenue from the stadium (after offsetting city services costs for games, etc) will not be enough. Also, a stadium is generally a ghost town whenever there isn’t an event. We instead want a neighborhood that is alive day and night.

    http://www.boston.com/business/innovation/2012/10/24/cambridge-tries-hold-onto-start-ups/fMoJbD0g90WG38rShIZRwO/story-1.html

  9. j. connelly says:

    But by doing so it would create a negative financial impact on Dilboy Field which already has many events, including soccer games. There seems to be a mindset of overkill in Somerville by some of its citizens.
    In tight fiscal times we need less of some things like more sports complexes and too many street festivals. Let Bob Kraft build it in his backyard. I’m sure his neighbors would love it and move to evict him.

  10. Harry says:

    Has Bill ever supported any thing? I’ve never seen it.

  11. Wig Zamore says:

    Hi Everybody,

    Just on the Assembly Square land value questions. It is all about the realistically buildable square feet per acre and nothing else. It has nothing to do with price per acre, only price per buildable square foot and the value of each of those square feet. In their wisdom, Somerville elected officials zoned the IKEA site to allow 250 foot heights and a ratio of building square feet to land square feet (Floor Area Ratio or FAR) of 10.

    Any developer of the 12 acre IKEA parcel (over 500,000 land square feet) can reasonably expect that the city consciously knew what it was doing when it passed zoning with an FAR of 10, which in turn means 5 million or more square feet of new building. I would expect that the minimum land value a current land owner would want to realize per building square foot is $50.

    (In Kendall Square that number should be closer to $100 or $150 per buildable square foot, rather than $50, realized partially upfront and fully upon shovel-in-the ground. Base building lab costs on the edge of MIT in Kendall Square run about $600 per square foot.)

    Nevertheless, if one assumes that a developer would only expect 2.5 million square feet of building to be realized on IKEA’s 12 acres, that still works out to $125 million for the land, maybe partially paid upfront and the rest paid at shovel-in-the-ground. And any reasonable seller might want more $$$ if the built square feet turned out to be materially greater.

    Notwithstanding the great respect many New Englanders rightly feel for the Kraft family’s accomplishments and the desire to see their teams do well, few in Somerville who understand our municipal fiscal situation and local quality of life impacts are likely to want to trade Assembly Square’s full potential for the presence of large scale entertainment.

    And most experienced urban mixed use developers are going to view a stadium next door as decreasing their land and multi-story building values, not increasing them. Street level retail might episodically benefit from a stadium, but the value of Assembly Square to the community lies almost entirely in job creation in its upper stories within a friendly every day mixed use environment. Same as Kendall Square or the South Boston Waterfront, which are both getting there, albeit slowly.

    Thus for any stadium built in Assembly Square to add to total district value, or even breakeven, it would have to be developed in a way that guaranteed compatibility with a dense urban mixed use street and block grid, right up to its edges. And an affordable parcel would have to be found that is not more valuable for other purposes. This could only happen if the rest of the district’s development potential is fully preserved, including its day to day livability, all of which would have to take precedence over stadium planning. The stadium would have to adapt, not the district plans.

    Cheers, Wig

  12. somkid says:

    thank god we have Wig to come into Somerville and tell us whats best for us. Last week they were calling you a city official. Got a new job? Assembly square is already fizzing out. Block 5 and 7 are now scheduled to be parking lots for 10 years.

  13. Winter Hill Barney says:

    Go Fall River!!!!!

    21 home games on the 2012 schedule. That’s what, 60 – 80 hours of economic draw in a year for a soccer stadium? And it sits empty for the rest of the time. Maybe an occasional concert or event.

    Why? Why? Why would this even be considered? Somerville needs office space desperately.

  14. The Comprehensive Plan was developed to work out the highest and best use of sites like Assembly Square. Putting a soccer stadium there is far from its highest and best use. We need multistory office and R&D that produces lots of tax revenue and lots of jobs, not a soccer stadium that produces a little tax revenue and a few jobs. If we go along with this, we are guaranteeing that Somerville will struggle for the rest of our lifetimes.

  15. Ray Spitzer says:

    A stadium there makes no sense. Thanks Wig, for articulating the arguments.

  16. The Wizard says:

    Say no to the stadium idea-it will be trouble.

  17. Mary says:

    yes to the stadium, its a great idea and a way the city can get revenue without posing questions on the ballot like that Question 4 next week…I think the soccer stadium is a great idea, what great revenue and jobs that could be created.
    Notice that the liberals like this guy Shelton and Wig are against it, that’s because they would rather see our taxes go sky high and support socialist programs instead of a real job for many people without becoming a public sector leach. All public sector does is create a kingdom for certain few, like the DPW commissioner Stan Koty and his family look how many of them get paid by us taxpayers here in Somerville, and they are not the only family that has many members on the payroll. How come this paper or the Journal doesn’t investigate the several families that have several members on the city payroll?

  18. Ray Spitzer says:

    Mary, there are no numbers in your post, unlike Wig’s.
    No wonder you will vote for Romney and his 5-point plan with no specifics on how to make everybody happy and pay fewer taxes at the same time.
    I have a great piece of land you may be interested in, Mary…

  19. NoNoNo says:

    please don’t think this will solve the revenue problem. They will just spend the money as it comes in, and then go back to homeowners to kick in even more. I’m all done with paying for everything while these people spend $$$$ like drunken sailors. More revenue=More spending

  20. Jim says:

    I don’t have numbers or charts. But I know when I drive up to Patriot Place, I see an incredible retail area and an incredible job done on the stadium and the area by the Krafts. It would be great to have something like that in Somerville.

  21. MarketMan says:

    Mary: To be blunt, you need to support your arguments. If not, then they hold no water and sound ignorant. I’m willing to hear your arguments, but please support them. How is it that a stadium will help Somerville’s economy more than an urban office park with retail, restaurants, and housing? Please tell us, because the numbers don’t add up. Shelton and Wig make great arguments, but if you want a simple argument… look at Winter Hill Barney’s post.

  22. Harry says:

    The only reason I’d support a stadium is because the alternative is we get nothing over there. Assembly sq has been a crappy area ever since I was a kid – nothing will ever get built there if we keep hand wringing and “discussing”.

    We’ll all be sleeping on the wrong side of the grass before any retail/office/biotech locates there. Only the newcomers and the true morons think that property will attract investors making it the next Kendall square. Never. Going. To. Happen….Ever.

    Again…just build something there – anything! Throw a strip joint or two over there and a casino — that would bring in the money. We got to DO something!

  23. Jim says:

    Innerbelt Rd. was the next tech boom property. Anyone take a look down there lately?

  24. Ray Spitzer says:

    LOL, funny that each time Mary is addressed, Harry jumps in… Making the same points… Perhaps Harry is the ONLY dumb teabagger in Somerville after all?

  25. Harry says:

    Ray, were you dropped on your head as a child or thrown? I’m not Mary. Lay off the oxys your back doesn’t hurt.

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