The redevelopers of the nearly-completed Ropewalk residential project have asked the Boston Planning and Development Agency (BPDA) to defer six years of ground lease payments in exchange for four more affordable housing units on site due to several financial issues that have crept up on the lingering project.
In a filing by the BPDA, the Board on Thursday will be asked to amend their agreement so that the project can get on more solid financial footing – as it is not viable under the terms of its financing at the moment.
According to a BPDA document, the terms of the project’s financing indicates that the debt service coverage ratio not fall below 1.35. What that means, it explains, is that rental payments from the project can never fall below 1.35 times the cost of paying the debt on construction.
“This critical requirement will likely not be met in the early years of the Project for the following reasons: although 90 percent completed with construction, the later than anticipated construction start date has resulted in a missed rental market window – generally July and August. Also, delays have resulted in project budget overruns and premium overtime costs, and there was an underestimation of ad valorem tax liability – deflating projected cash-flow.”
The BPDA did hire consultant Robert Nahigian of Auburndale Realty to analyze the financing, and he confirmed that the financing problems are accurate. He reported that critical dates for lease-up of the units and for tax credit benefits have been missed or are in danger of being missed.
In order to prevent the development team from defaulting on the project with the BPDA, they have agreed to and are requesting that the first six years of ground-lease rental payments – which total $533,000 – be deferred. In exchange for that accommodation, the developer has agreed to add four more affordable units to the project – taking it from 20 to 24 units. Those affordable units are available in two-bedroom and one-bedroom units, and they will be added incrementally through 2028. The affordable units would be available to those making 70 percent and 100 percent of the Area Median Income, (AMI). There are a total of 97 units in two buildings.
In 2028, the rental payments will increase from $190,350 to $218,000 due to the changed payment schedules.
“As a result of these proposed lease term changes, the BPDA will recapture all forgone rent and will increase the affordable unit count to 24,” read a BPDA document. “BPDA will also benefit from increased Transaction Rent payable for every transaction after the initial exit of Charlestown Ropewalk, LLC.”
The BPDA Board is set to consider and vote on the matter at its meeting tonight, March 12.
•The Anthem Group has been invited back by the BPDA to embark on another year of The Anchor event space and beer garden in Shipyard Park. The second year pilot program will run from May 1 to Jan. 1, 2021 – an extension through the holiday season for the operation.
“Given the success and popularity of Anthem’s activation, while noting areas of improvement for both the BPDA and Anthem’s processes, we would like to invite them back to continue to refine their objectives under this extended pilot similar to last year, and renew their license for a second year “pilot” activation for a period of time that will now continue thru to the holiday season portion of their activation,” read a BPDA document.
The base rent in the proposed agreement is at $2,000 with a 15 percent assessment monthly for gross receipts generated from commercial activity at The Anchor.
It is to be voted on at the Board meeting tonight, March 12.
•Boston Sand & Gravel has agreed to a short-term renewal of its lease on 2,800 sq. ft. of BPDA-owned land that it has used for many years to house its scale to weight trucks. The land is adjacent to the Bunker Hill Community College parking lot, which is now under review for possible new uses in the PLAN Charlestown effort.
The new lease starts in April and ends on Sept. 1, 2021. The regular portion of the lease include Boston Sand paying the BPDA monthly installments of $3,000.