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Roxbury hotel project may lose investors

Community, political support low, they say

A proposal calls for this lot at the intersection of Melnea Cass Boulevard and Washington Street in Roxbury to house a Marriott Residence Inn, 50 apartments, and retail space.
A proposal calls for this lot at the intersection of Melnea Cass Boulevard and Washington Street in Roxbury to house a Marriott Residence Inn, 50 apartments, and retail space.(Sean Proctor/Globe Staff/File)

Two investors who have pledged millions in federal tax subsidies to a proposed $42 million hotel complex in Dudley Square are now threatening to pull out of the project, saying community and political backing for the proposal appears to have fizzled.

The investors’ warning is the latest wrinkle in a project that promised to breathe new life into a dormant section of Roxbury and that seemed to be sailing toward city approval. The developer had hoped to break ground next month.

In a letter to the Boston Redevelopment Authority this week, one of the investors said if the authority is not going to approve the Roxbury plan, which developers say could bring much-needed jobs and thousands of guests each year to the area, his company “will likely have no other choice but to invest the capital elsewhere.”

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“These credits need to be allocated and spent. That’s the basis upon which we receive them,’’ said Joseph L. Flatley, president of Massachusetts Housing Investment Corporation, who wrote the letter. “We are basically on the verge of saying we are going to put the tax credits elsewhere.”

David Ennis, president of Affirmative Investments and AI Wainwright, said he and Flatley had been assured the community and city were behind the Roxbury project. With it now seemingly stalled in City Hall, the investors said they are likely to target projects ready for approval.

Ennis said AI Wainwright is eyeing other projects outside Massachusetts, and Flatley said his business will likely target one by the Appalachian Mountain Club in rural Maine.

The two said investors compete for the new market tax credits, given by the federal government to help fund projects that revitalize high-impact, low-income communities. They have about a year to use the subsidies or lose them.

“We keep being told [the project] is going to the BRA, and it just never shows up on the agenda,’’ Ennis said. “So, we said if it’s not on this week’s agenda, we have to move it’’ to another project.

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A spokeswoman for JP Morgan Chase, which also pledged to invest in the project, said if the city and community can agree on the proposed hotel the company will back it.

At issue is a proposal for a $42 million hotel complex on a long vacant lot — known in planning lingo as Parcel 9 — at the corner of Melnea Cass Boulevard and Washington Street. The proposed complex would include a Marriott Residence Inn, 50 apartments, and retail space.

The planning authority had supported the proposed hotel, but tabled its approval in January, citing a divide in Roxbury about wages for the hotel workers and their ability to easily unionize. Jobs advocates and political leaders had pushed for wages to start at $13.90 an hour.

But there was no agreement on unionization. The authority has not revisited the matter since then.

Tito Jackson, the Roxbury district city councilor helping to lead the opposition, said any development on public land in the neighborhood needs to build wealth for residents. It should also allow workers to unionize without fear of retribution, he added.

“I cannot support this project in its current iteration,’’ Jackson said of the hotel project.

BRA director Brian Golden said the authority would like to see the city-owned lot targeted for the proposed hotel redeveloped, but the authority cannot proceed with a vote without political support.

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“I don’t remember anything going before the board that did not have some political support,’’ Golden said. “This project right now does not have any support’’ from elected officials.

Urbanica Inc., selected by the BRA in 2012 to redevelop the tract, had worked on the project for years and secured crucial support from a Roxbury committee. The company also garnered crucial financing, such as $6 million in private equity from the hotel operator, a $15 million construction loan, and $5.3 million in equity from federal tax credits.

“We continue to believe this is a good project for Roxbury,’’ said Darryl Settles, a private investor in the project. “It would bring in construction jobs, permanent jobs, and people . . . into Dudley Square.”

Kamran Zahedi, Urbanica’s president, contends that losing the tax credits could significantly hamper other financing for the hotel part of the project.

“If the . . . tax credits go, the bank will not finance the project, and the equity fund from the hotel operator will not be sufficient to do the deal,’’ Zahedi said .

Meanwhile the hotel project is widely debated in Roxbury. The hotel has many supporters in the community, incuding an influential Roxbury committee that voted to approve the project.

But Brian Lang, the president of the union that supports hotel workers, said his union is strongly opposed to the hotel project. State Senator Sonia Chang-Diaz said she wants the hotel operator to not harass or fire workers if they choose to unionize. And City Councilor Ayanna Pressley said she wants a union hotel.

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Mayor Martin J. Walsh, urging community consensus, said the developer should work to resolve any impasse.

“There are a lot of unanswered questions,’’ Walsh said. “It’s up to the developer to bring comfort to the neighborhood and comfort to the elected officials so they can support it.”


Meghan E. Irons can be reached at meghan.irons@globe.com. Follow her on Twitter @meghanirons.