By Michael Coughlin Jr.
A project at the Chain Forge building at 105 First Avenue that would have brought several public amenities, including a hotel, to the Navy Yard is no longer happening after the Boston Planning and Development Agency (BPDA) revealed in a letter to the community late last week that the redeveloper is in default of its ground lease.
According to a Boston Redevelopment Authority (BRA) memorandum dated March 12, 2015, Kavanagh Advisory Group, LLC was designated as the interim developer of the building in 2009.
The group had its interim developer designation extended three times between 2010 and 2012 before it was granted tentative designation in September 2013, a designation that was also extended in November 2014.
Then, in March 2015, a project was approved, proposing a 230-key hotel and restaurant space according to the above memorandum and the BPDA letter.
“This plan would have revitalized a blighted and deteriorating building into a thriving asset for the community and beyond,” reads the BPDA’s letter released last week.
Following the March 2015 approval, in May 2016, the BRA authorized its Director to award final designation to Kavanagh Advisory Group, LLC as the redeveloper.
A couple of months later, in July, the final designation was clarified to be for First Avenue Hotel LLC, an entity “within which Kavanagh Advisory Group, LLC, currently controls at least 51% of First Avenue Hotel’s beneficial interests,” according to a December 14, 2017, BPDA memorandum.
That same December 14, 2017 memorandum outlines a joint venture approved by the BPDA between First Avenue Hotel, LLC and CV Properties, LLC or an “affiliate thereof” to redevelop the building.
Furthermore, a December 2022 BPDA memorandum revealed that just weeks after the joint venture was approved in 2017, the BPDA entered into a long-term ground lease for the redevelopment of the building with CVPA Chain Forge, LLC on December 29, 2017.
Moreover, it should be noted that the BPDA letter released last week indicated that the ground lease was entered “prior to completion of permitting and financing of the project to enable the proponents to unlock tax credits for the property.”
As part of the original long-term ground lease, the redeveloper was supposed to obtain the required permits and financing by June 29, 2018. However, that did not occur, and the redeveloper had the ground lease amended to increase its deadline according to the December 2022 BPDA memorandum.
The exact memorandum details that the redeveloper had its ground lease amended an additional 11 times between October 2018 and December 2021 following the initial June 2018 extension.
It also explains that at one point, the redeveloper considered a program change from hotel use to a “compact living” use due to the hit the hotel industry took from COVID. However, that programmatic change was never officially pursued.
The aforementioned lease amendments eventually began to cost the redeveloper, as the December 2022 memorandum states that the redeveloper committed to paying the BPDA $3,428,333 in extension fees incurred from July 2019 to December 2021 — $2,441,290 of which had been paid as of the release of the December 2022 memorandum.
The lease was amended for the final time in December of 2022, according to last week’s BPDA letter. The redeveloper was given until October 31, 2023, to “obtain all required building permits, close on equity and construction financing, and complete the Article 80 development review process” and until December 1, 2023, to start construction.
It should be noted that the December 2022 memorandum indicates that the remaining balance of $987,043 in extension fees was increased to $1,500,000, and the redeveloper was required to pay $125,000 a month to the BPDA plus $7,500 a month in rent as a condition of the final lease amendment.
Fast forward to 2024, last week’s BPDA letter states, “As of January 1, 2024, the Chain Forge redeveloper has failed to make all required payments to BPDA and secure all necessary permits and financing to enable construction.”
Adding, “Therefore, the BPDA has notified the Chain Forge redeveloper that it is in default of its lease obligations and that the BPDA is taking all legal actions required to recapture the Chain Forge building.”
Lacey Rose, the BPDA’s Chief Communications Officer, told the Patriot-Bridge via email on Tuesday that the redeveloper “failed to pay the BPDA $75,000 in Fixed Rent and $1,282,500 in Extension Payment, totaling $1,357,500.”
It should be noted that attempts from the Patriot-Bridge to get comments from representatives at Kavanagh Advisory Group, LLC and CV Properties, LLC before this story was published were unsuccessful.
With the redeveloper of the Chain Forge building in default, a whole new process will have to begin to determine its future.
Mark Gallagher, a resident of Charlestown, acknowledged he just moved to the area three years ago but was still looking forward to the now-canceled project.
“I knew that it was going to be a luxury hotel with a restaurant, and I was looking forward to it,” said Gallagher, later explaining how cut-off the Navy Yard is from the rest of the neighborhood and the limited dining and grocery options.
“Having that here was something I and others were looking forward to,” he added.
Moving toward the future, Gallagher underscored concerns about the building becoming permanent supportive housing, the same type of development approved at the old Constitution Inn by the BPDA’s Board in December amidst significant opposition.
“There’s a lot of people that are concerned that the mayor or BPDA is going to keep pushing this type of thing through,” he said.
In corresponding with others about the Chain Forge situation, Rosemary Macero, a resident, suggested that the extension fees incurred by the redeveloper should go back into the neighborhood.
“Now on Pier 5 with some of the fees/fines from the Chain Forge ‘de-designation’ or forfeiture and fees/fines owed. These fees/fines could be used to restore Pier 5 to 100 psf (which is what is needed for walking traffic) and make it an open public park,” wrote Macero in an email.
As for the next steps in this process, the BPDA’s letter from last week indicates that community outreach concerning a new redevelopment process for the building will begin in the spring.
Rose provided more clarity on the upcoming redevelopment process, comparing it to the recent Austin Street parking lots process.
“The BPDA will host a series of community meetings to discuss community development objectives for the site and work to collaboratively identify goals to inform a future RFP. BPDA staff will use information from those meetings to draft and publish a RFP for the site,” wrote Rose in an email.
Although residents of Charlestown will have to wait even longer for the Chain Forge building to be redeveloped, the BPDA seems committed to eventually finishing the process.
“We acknowledge that the process to bring this project to life has been a long and frustrating experience for residents, and we are committed to taking actions to ensure that this site delivers on benefits to the Charlestown community,” reads last week’s letter.