The Walsh administration is ramping up the pressure on the Faneuil Hall Marketplace’s landlord to provide more relief to its small-business tenants that are struggling because of the COVID-19 pandemic.
On Tuesday, Boston Planning & Development Agency director Brian Golden sent a notice of default to Ashkenazy Acquisition Corp., the New York real estate firm that manages the famed tourist destination through a long-term lease with the city.
In the letter, Golden outlined two points in which Ashkenazy is now in default of its obligations under its lease terms. The first one involves taxes: Ashkenazy has missed two quarterly payments, totaling $2.1 million, required under a “payments in lieu of taxes” agreement with the city. The second issue: The $10-per-year lease with the city requires Ashkenazy to prevent any liens from being put on the property, but HVAC system installer Trane placed a lien on the property late last month to recover more than $110,000 from Ashkenazy.
City officials say Ashkenazy has 10 days to address the overdue city funds, and 30 days to have the lien removed. If those issues aren’t adequately fixed, the BPDA would have the right to terminate the lease. (A lender could also step in and make these payments.)
In a statement, Golden said city officials have tried to advocate on behalf of the locally owned businesses at Faneuil Hall during months of negotiations with Ashkenazy, with little success. Ashkenazy did agree to defer several months of rent payments until 2021, but city officials say that’s simply not enough. Golden said city officials are disappointed Ashkenazy has not provided the “necessary financial relief” to support the marketplace merchants.
“As the landowner of the historic property, we will continue to take all the actions within our power to support the small businesses that make Faneuil Hall Marketplace the successful and beloved destination that it is,” Golden said.
Faneuil Hall has been particularly hurt by the sharp downturn in tourism in the city caused by the pandemic, with many restaurants and shops reporting year-over-year declines in revenue of around 90 percent in the weeks after the marketplace reopened on July 1. In late August, about 20 tenants had closed for good or not yet reopened, meaning nearly one-fourth of the storefronts were dark. At the time, merchants said they blamed Ashkenazy for not adequately funding promotions, and for letting cleaning and upkeep slide. They also wanted a new lease structure to reflect the staggering drop in sales they’ve experienced. And they worried Ashkenazy overpaid when it acquired the long-term lease, in a $140 million deal about nine years ago.
The Faneuil Hall Marketplace Merchants Association issued a statement on Wednesday noting that the taxes Ashkenazy owes the city should come from rents that merchants paid in prior years, before the pandemic. It’s disappointing, the association said, that Ashkenazy did not pass along those payments in a timely manner.
“The Merchants have been open seven days a week since reopening,” the group added, “and we will continue to do what we do best — serve our customers and cherish this amazing iconic destination.”
In a statement issued on Friday, Ashkenazy spokesman Chris Santarelli said Ashkenazy has been negotiating in good faith with the Walsh administration and was taken by surprise by the city’s latest position. The company, he said, will work with the city to resolve the matter expeditiously.
“The narrative put forward by some regarding the management of Faneuil Hall Marketplace since the start of the pandemic is deeply flawed and disappointing,” Santarelli said. “The fact is marketplace management has not been collecting rents nor pursuing collections from the local merchants since April, while at the same time securing, cleaning, maintaining and otherwise funding the property in its entirety. As a result of this continued stewardship, the merchants have been able to open for business.”
Note: This story was updated on Friday, Nov. 13, to reflect a statement received from Ashkenazy. The company did not respond in time for the article’s initial publication.