The vast power plant campus on the Mystic River offers one of the most promising development opportunities on Boston’s doorstep, with that $2.6 billion Encore casino now open across the street.
Don’t get too excited, folks. Before this industrial stretch can join Everett Mayor Carlo DeMaria’s dream of an entertainment district, he may need to resolve his beef with the current owner of the property over taxes. That fight comes to a head on Tuesday when lawyers for Everett and energy giant Exelon duke it out in Suffolk Superior Court.
It’s a safe bet Wynn Resorts will be watching closely. The casino owner has a keen interest in seeing some of the sprawling 69-acre Mystic site redeveloped, in part to make the place look more like Las Vegas and less like, well, the industrial Everett waterfront.
But it’s not just about appearances. Wynn has made it clear its real estate ambitions didn’t end when the casino opened its doors in June. The company has already gobbled up 12 acres across Route 99 from the casino. It has made overtures for some of the power-plant land. And it’s working on linking this area with the Assembly T station on the Somerville side of the Mystic River — either by footbridge or gondola.
Then there’s the question about whether the Krafts fit into this puzzle. Rumors continue to swirl about Everett’s emergence as the latest potential home for the New England Revolution. (The pro soccer team currently shares Gillette Stadium in Foxborough with its more popular corporate sibling, the New England Patriots football team.) DeMaria says the newest soccer-stadium speculation includes the Gateway shopping center, on the other side of the casino. But DeMaria says he won’t put much stock in those rumors until he hears from the Kraft family directly. (He says he hasn’t.)
Even with six units out of commission, Mystic remains the biggest power plant in Massachusetts, a crucial electricity source that keeps the Boston economy humming. However, the stretch closest to the casino is no longer needed. Exelon says it hasn’t put that part up for sale yet, but developers have expressed an interest.
Now, the property’s fate could hinge on the outcome of a courtroom drama over a tax incentive deal for the power plant from 20 years ago. There’s a different mayor now, and he wants to undo that agreement. And there’s a different power plant owner who wants to keep it intact.
Think of it as a TIF tiff. Exelon predecessor Sithe agreed in 1999 to pay nearly $330 million in taxes to the city over two decades, through a tax-increment financing (TIF) plan, as it prepared to build two giant natural-gas fired turbines there. A bonus: The deal resolved a previous tax dispute over the plant that could have hammered the city’s finances.
Usually, tax incentive packages get challenged when a company ends up doing much less than promised. Here, the opposite happened. Sithe/Exelon poured at least $1.3 billion into the property, more than twice what was pledged in 1999.
As the Wynn casino plans advanced, DeMaria says he began to revisit the values of nearby land, including the power plant. DeMaria says the plant ownership misled Everett officials, and now should pay up because the plant is worth far more than the company’s initial estimate. Tens of millions of dollars in back taxes could flow to the city if it wins. DeMaria voted for the initial tax deal when he was on the City Council, but says he regrets that decision, knowing what he knows now.
Everett appealed the TIF deal to the Economic Assistance Coordinating Council, a state panel that oversees tax incentives, to rescind the original agreement. The argument: Representations made by Sithe were “materially at variance” with the end result.
No dice. The EACC rejected the request, and the mess ended up in Suffolk Superior.
Exelon has fought back aggressively. The Chicago-based company argues that it has lived up to its end of the deal, that the city has received all the economic benefits from the plant that it bargained for. The original cost estimates, Exelon say s, were accurate at the time. A company spokesman says the Mystic payments represent more than 10 percent of Everett’s total tax levy.
Complicating matters: A revaluation of the Mystic property is expected in 2020.
Maybe a new agreement can be reached, one that could put this entire fight to rest. Then again, city officials reached a détente for a similar situation 20 years ago — and look how that turned out.