How does $55,000 sound for a lot on waterfront?
The front patio of the Atlantic Beer Garden on Seaport Boulevard could prove to be the best real estate bargain in Boston.
The 3,000-square-foot swath of sidewalk is currently owned by the City of Boston, which leases it to developer Jon Cronin for use as outdoor seating at his waterfront bar. Now Cronin plans to replace the Atlantic Beer Garden and an adjacent bar with a $260 million luxury condo tower, and he needs the patio space for his project.
He’s offered to buy the sidewalk outright from the city for $55,000, the price determined by an appraisal commissioned by Cronin.
The land transfer received preliminary approval from the board of the Boston Redevelopment Authority last week, but it still needs a final signoff from another city board. The city hasn’t yet agreed to Cronin’s price, and the BRA could yet counter with a higher number. But the agency routinely relies on private appraisals to value odd little pieces of city-owned land, and a major change in price, BRA officials say, is unlikely.
“Our goal is to arrive at fair market value, not to make undue profit from takings,” BRA spokesman Nick Martin said. “Ultimately, our objective is to facilitate sensible development.”
But Cronin’s $55,000 offer has budget hawks, and some local real estate specialists, saying city officials should drive a harder bargain for this piece of prime — if slightly awkward — land. After all, the condos in the new building will probably sell for more than $2 million apiece, and land deals in the red-hot Seaport routinely fetch a much higher price, on a square foot basis.
“Fifty-five thousands dollars seems a little light to me,” said Matt Cahill, executive director of the Boston Finance Commission. “Certainly, if anyone in the City of Boston was offered that site for $55,000, I think they’d jump at it.”
The parcel is an odd piece of ground left over from when the city redesigned Northern Avenue in the late 1990s. Effectively a wide stretch of sidewalk, it has been leased in recent years by Cronin for his Atlantic Beer Garden for $1,720 a month, according to city records, and today it holds about a dozen outdoor tables behind a low fence and decorative plantings.
The patio area would help Cronin fit a 22-story condo tower onto the tight footprint of his property and give him the ability to expand upper floors of the tower out over the sidewalk along Seaport Boulevard. Cronin commissioned an appraisal from real estate firm Cushman & Wakefield, which surveyed similar small, nonbuildable, sites around the city — most located in Roxbury and Dorchester — and used them to value the Seaport land at $9.12 per square foot. There have been similar sales of odd city-owned lots in the Seaport, Martin said, but many involved land swaps with developers. That makes them hard to use as a price comparison.
With the air rights above the sidewalk added in, Cushman & Wakefield’s appraisal valued the total package at $55,000.
That may be reasonable for a truly worthless piece of ground, said Eric Reenstierna, a veteran appraiser based in Cambridge. But the site clearly has worth to Cronin, he said, and the city would be well-justified to push him to pay more for it.
“It’s very unusual to see anything downtown at $10 a foot,” he said. “You can find these little pieces of land in the North End that sometimes sell for as much as $500” a square foot.
Robert Gray, a spokesman for Cronin’s firm, said the developer followed BRA protocol for land purchases and hired Cushman & Wakefield off a list of appraisers precertified by the agency. As for his offer, he said, Cronin will follow the BRA’s lead.
“It’s up to the BRA how to proceed,” Gray said. “We’ll wait to hear from them.”
The agency received the appraisal only recently, BRA general counsel Renee LeFevre said, and hasn’t fully reviewed it. BRA staff will go over the figures and reserve the right to get a second opinion, she said.
“If we think anything is odd, which is unusual, we’d commission a second appraisal,” LeFavre said. “I don’t see anything on its surface that tells me anything’s odd here.”
The BRA has come under scrutiny for real estate appraisals before.
In October, state Inspector General Glenn Cunha rapped the agency for its 2013 deal with the Boston Red Sox, saying the BRA undervalued, probably by millions of dollars, the rights to Yawkey Way on game days for concession, and air rights over Lansdowne Street that enabled the Green Monster Seats. (Disclosure: The principal owner of the Red Sox, John Henry, also owns The Boston Globe.)
In his ruling, Cunha urged the agency to set clearer rules for eminent domain deals and share appraisals with board members before asking them to vote. BRA officials have since pledged greater transparency.
The BRA’s board, though, was not given the appraisal before Thursday’s vote, and will not get another vote before the matter goes to the city’s Public Improvement Commission for approval.
A spokesman for Cunha declined to comment on the 150 Seaport deal.
But critics of the condo project say they’ll keep a close eye on the BRA’s deal with Cronin as it moves forward.
“Superficially, it does not look like what an arms-length price would look like,” said Peter Shelley, senior counsel at the Conservation Law Foundation. “Coupled with the city, and the BRA, having such a strong interest in promoting expansive development on this site, it’s pretty suspicious.”