Advisers call lease deal at Fenway ‘irresponsible’
The Boston Finance Commission wants Mayor Thomas M. Menino to block a vote scheduled for Thursday on a $7.3 million deal between the Red Sox and the city for use of two public streets near Fenway Park, saying the agreement has been not sufficiently vetted and “will shackle generations of Bostonians to an agreement that over time will prove to be financially irresponsible.”
In a letter to Menino, the commission’s executive director, Matthew A. Cahill, objected to terms granting the Red Sox air rights over Lansdowne Street — behind the ballpark’s famed left-field wall — and permission to close a 17,000-square-foot strip of Yawkey Way for gameday concession sales for as long as the baseball team plays at Fenway. Under a plan detailed last Friday, the club would pay about $734,000 in each of the next 10 seasons — four times what the city has charged over the last 11 years. After that, payments would cease.
Dot Joyce, a spokeswoman for Menino, accused Cahill of “trying to make headlines” and said the mayor would not intervene to stop the Boston Redevelopment Authority, which controls the portions of Yawkey and Lansdowne used by the Red Sox, from voting on whether to finalize the arrangement.
“It’s a good deal for the public, and the mayor supports it,” Joyce said.
The Red Sox declined to comment on Cahill’s letter.
The Finance Commission is an independent body created by the state Legislature to review unadvertised city contracts over $25,000. It makes recommendations to city officials but has no authority to block decisions.
Cahill said the BRA is attempting to “give away rights to a public street without reasonable public notice, without public advertisement, and without utilizing a public process.” There were no public hearings about the deal, though the board will vote during a public meeting.
Cahill also said the city should not sign a lifetime contract with the Red Sox and should seek a slice of the revenue generated by the team’s use of Yawkey and Lansdowne — a total of about $4.5 million annually, according to the team.
BRA director Peter Meade said last week that the agency believed a predictable stream of money from the Red Sox would be preferable to a revenue sharing arrangement in which the city’s take would fluctuate from year to year.
Susan Elsbree, a BRA spokeswoman, said Wednesday the agency has attempted to explain the rationale behind the deal to the Finance Commission but has been unable to set up a meeting with Cahill since he wrote the letter to Menino Tuesday.
“I think it’s irresponsible for the head of the Finance Commission to fire off this letter to the press when we’ve made a good-faith effort to walk him through it,” Elsbree said.
The proposed contract between the Red Sox and the BRA differs significantly from the original pact they signed before the 2003 season. The new agreement is not a fixed-term lease, like the first deal, but rather a limited easement on Yawkey Way and a purchase of air rights on Lansdowne Street. Part of the seating section on top of the Green Monster wall in left field extends into Lansdowne air space.
In addition, the new yearly price more closely approximates fair market value for the usage than the original.
Under the first deal, the Red Sox received a steep discount because a real estate firm hired by the BRA based its Yawkey Way appraisal on lease rates for pushcarts in shopping malls. On Lansdowne Street, it relied on nearby property values, but reduced its valuation by 75 percent, reasoning that there would be no commercial market for the air rights.
The result was a $150,000 annual price tag for Yawkey Way and a fee of just $15,000 for Lansdowne Street. The prices increased slowly over ensuing years, tracking changes in the local consumer price index. During that time, however, Red Sox grew revenue much more quickly, partly because of steep ticket prices for Green Monster seats.
In the latest agreement, the BRA arrived at a purchase price for the Yawkey Way easement by referencing rental rates for retail space in the Fenway neighborhood, which it said average about $60 per square foot annually. The agency deemed a fair rate for the Red Sox to be roughly $20 per square foot, since the club uses the street no more than a third of the time.
The BRA said the real estate market suggests annual rent represents 7 percent of a reasonable purchase price, so it charged the Red Sox slightly less than $4.9 million.
On Lansdowne, the agency said it used the going rate for development rights in the area, about $80 per square foot, to set a purchase price of just under $2.5 million.
The figures failed to satisfy Cahill, who noted that the new agreement could wind up costing the Red Sox less than the old deal, on a yearly average, if they stay at Fenway long enough.
The Finance Commission proposed a 5-year lease with a base fee and a revenue sharing arrangement on top, which could be renewed before the 2019 baseball season.