Second effort to develop waterfront failed

Editor’s note: This is the second in a series on the waterfront’s development.

It was probably doomed from the start.

It took four years, but the second effort to develop the Newburyport Redevelopment Authority’s central waterfront ultimately succumbed to economic recession and popular opposition to a key element of the plan.

With the resolution of the 8-year-old “wayes to the waterfront” lawsuit, Newburyport geared up for development of its Merrimack River frontage, looking to expand its horizons beyond what had been traditionally thought of as the central waterfront.

In the fall of 1979, Mayor Richard Sullivan initiated the process by appointing an ad hoc group called the Waterfront Commission to assemble a plan not just for the parcel controlled by the Newburyport Redevelopment Authority, but all the land between the Route 1 bridge and the Coast Guard station.

The commission engaged Boston-based consultant Sy Mintz. After a nearly six-month study, Mintz delivered a plan that proposed a 150-room hotel and conference center on property adjacent to the central waterfront, where the Oldies flea market is now.

On the easterly side of the waterfront, the plan placed up to four buildings, all perpendicular to the river, with retail shops on the ground floors and residences on the upper two stories. The westerly side of the waterfront would contain a federally funded visitors’ center and an enlarged embayment.

The Market Square fire station, which was being vacated by the Fire Department for a new building on Greenleaf Street, would be converted into an arts center and restaurant.

The so-called “Mintz Plan,” unveiled with great fanfare in August 1980, ran into opposition from owners who feared the city could take their property by eminent domain, as the Newburyport Redevelopment Authority had done with downtown buildings during the early stages of urban renewal.

More plans emerge

Interest gradually faded and the focus of everyone’s attention returned to the NRA’s central waterfront.

Meanwhile, the Redevelopment Authority hired a consulting firm to produce a booklet that would give prospective developers guidelines about what they could or couldn’t do on the riverfront acreage.

The authority officially began accepting development inquiries in January 1981, setting an early September date for delivery of the proposals.

Four plans came in at the deadline, one of them for redevelopment of only the fire station. The other three, two from Boston-based teams and one from Waterville Valley, N.H., contained many similarities. All three proposed a new 150-room hotel, although the exact location varied from plan to plan. All three contained a mix of retail and residential uses in addition to the hotel. And all three featured a broad expanse of open space directly behind the old fire station. The fire station itself would become either a restaurant or a “market house” or both.

Sullivan comfortably won re-election to a third term on Nov. 3, 1981, and two weeks later, the authority board picked a team headed by Boston-based Hilon Development to build an estimated $20.6 million project: the hotel, 76 condos and 30,000 square feet of retail space.

As the economy was headed into a downturn, the group came up with what one consultant called a “creative” way to finance the hotel. They would market individual rooms to investors, condominium-style, rather then seek conventional bank financing..

And there was one more judicial hurdle to clear. A state Supreme Judicial Court decision in 1979, between the “wayes” trial in Land Court and the decision by the Appeals Court, found that filled tidal lands could only be developed in the public interest. About an acre of Newburyport’s 6.2-acre waterfront development parcel was filled land.

Land Court Chief Judge William Randall, who had presided over the “wayes” case, was responsible for reconciling Newburyport’s situation with the SJC ruling. In a July 3 decree, Randall held that Newburyport’s urban renewal plan met the public interest test and “the public would be well served” by development consistent with the plan.

Hilon’s development team and the NRA had put their plans on hold while awaiting Randall’s ruling. His decision re-started the clock on the project.

But Judge Randall couldn’t jump-start the economy, and efforts to find financing for the project — especially the hotel — continued to come up empty. Hilon had an agreement with the NRA that the hotel would be started first, before the more lucrative condos, so the lack of financing was holding up the whole project.

In late July 1982, the NRA asked the Boston public accounting firm Laventhol and Horwath to conduct a feasibility study as a prerequisite to approaching lenders.

At about the same time, the city was preparing to sell the old Market Square fire station to the NRA to be included as part of the waterfront project. The fire station had been built in 1823 as a market building and meeting hall, and had been occupied by the Fire Department from about 1860 until the new Greenleaf Street station was completed in 1980.

The Redevelopment Authority had also decided to build a park between the fire station and the river. The approximately two-acre park would divide the 6.2-acre waterfront into two separate parcels.

Work on the park started with a groundbreaking ceremony in early November but the waterfront project was hit with a setback in the fall of 1982 and the development team began to fall apart. The U.S. Department of Housing and Urban Development, which had bankrolled the city’s urban renewal program, ruled in October that the NRA could not use part of a HUD grant to buy the old fire station. City officials instead decided to pursue a long-term lease.

On Nov. 9, Hilon President Haim Eliachar withdrew as leader of the development team, giving way to one of his partners. Eliachar was to retain responsibility for the residential and retail components of the project, while stepping away from the hotel part of the deal. It wasn’t announced at the time, but the move effectively ended Eliachar’s participation.

New team

The new team leader was David Borden, the head of a Boston hotel management company. Borden said he hoped to start construction of the hotel the following March, but that it would be closer to 100 rooms than 150. His financing would depend on a grant from HUD and low-interest bonds.

Laventhol and Horwath’s feasibility study for the hotel was issued in January 1983 and produced only a lukewarm endorsement. There was “sufficient demand” for a 90-room inn, the report found. Occupancy rates would peak at 80 percent in summer and drop to around 36 percent in the winter.

Borden continued to struggle with financing and by the end of April 1983, members of the Redevelopment Authority were running out of patience. In early May, the board gave Borden 30 more days to come up with lenders’ commitments. The beleaguered developer instead brought in a new partner, former Boston Redevelopment Authority Director Robert Kenney, who was described as an expert at putting together financing deals.

With Kenney’s reassurances that the Borden team had the best chance of success, the NRA removed its ultimatum.

One part of the waterfront would have been easy to finance, most people connected with the project agreed. The city-owned former fire station was on the National Register of Historic Places. Redeveloping it would bring tax credits that would be attractive to investors.

City officials were willing to give Borden and Kenney a long-term lease on the structure, but the NRA insisted on seeing progress on the hotel first. Borden and Kenney wanted to install a 90-seat restaurant and “pushcart” retail space on the ground floor, conference rooms on the second level and a wine bar in the basement.

Borden told the Redevelopment Authority that the firehouse was “critical” to obtaining financing for the rest of the project, but grass roots opposition was developing to putting the building in private hands. A group of residents, led by City Councilor Laura Rowe, was circulating a petition, urging the city to keep the historic structure in public hands, and use it as a civic and performance center. The group was called the Firehouse Committee.

In mid-July, the NRA formally cut its ties to Hilon and designated the Borden-Kenney group as developers.

The more desperate Borden and Kenney became to obtain the fire station, the more opposition escalated.

When the City Council voted to grant Borden and Kenney a 50- to 99-year lease, the Firehouse Committee began a signature drive to put the fire station issue on the Nov. 8 municipal election ballot.

The city and the Firehouse Committee went to court to determine whether the council’s vote on the lease was subject to a referendum. The courts didn’t rule on the issue quickly enough to get it on the November ballot, but instead dragged on through the winter and into the spring. In May 1984, the state Supreme Judicial Court surprised both sides when it decided to hear the case directly, bypassing the Appeals Court.

Meanwhile, the new waterfront park — officially known as Market Landing Park — opened in June.

Also in June, the SJC ruled that the City Council’s vote to lease the firehouse to Borden and Kenney had to be rescinded or put on the ballot as a referendum question. The council promptly canceled the lease, leaving the waterfront developers still looking for financing.

In August, the Redevelopment Authority gave Borden and Kenney a 60-day deadline to find financing or face dismissal. Despite an optimistic interim report from Kenney in September, it didn’t happen. On Oct. 11, the board voted 4-1 to withdraw its designation of Borden and Kenney as waterfront developers after Kenney told the NRA he had located “a deep pocket” for financing the project, but would need an additional three to five months to conclude the deal.

Borden and Kenney continued trying to find financing even after their ouster. In March 1985, they brought in a company called Connecticut Innkeepers Inc. to operate a hotel. The following month, Connecticut Innkeepers announced an agreement with the Sheraton hotel chain to franchise a 110-room that would be financed by the Lawrence-based Arlington Trust Co., one of the Merrimack Valley’s largest banks.

In June 1985, Sullivan announced that he would not run for a fifth term as mayor. In his announcement, Sullivan said he expected to see ground broken for a new Sheraton inn and conference center on the waterfront

But ironclad financing commitments remained tantalizingly out of reach. The Arlington Trust Co. deal fell apart, but Borden and Kenney kept trying. They continued to revise plans and, improbably, in September 1985, they regained their status as “tentative developer,” but only for 30 days. They were required to bring in that elusive firm financing commitment by Oct. 22, along with design drawings and a construction timetable..

Borden and Kenney didn’t appear at the Oct. 22 NRA meeting, angering members of the NRA.

On Oct. 28, Sullivan told the City Council that Connecticut Innkeepers had dropped out of the project. The hotel would not be built. NRA Chairman James Farley said the board didn’t need a formal vote to dismiss Borden and Kenney because they had missed the Oct. 22 deadline. They were out.

After four years, the waterfront development was dead. No hotel. No condos. No shops.

Back to square one.

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