NEWBURYPORT — Local mega-landowner New England Development is negotiating with a nationally known real estate company to develop the Waterfront West property into hundreds of apartments, according to a statement released by NED on Wednesday.

“Newburyport Development is working with AvalonBay Communities, Inc., a nationally recognized leader in developing and managing distinctive apartment homes, on Waterfront West in Newburyport,” General Manager Chris Skiba said in an email. 

Newburyport Development is a local branch of New England Development, owned by Stephen Karp.

AvalonBay Communities is a publicly traded real estate investment trust that invests in apartments. The company, based in Arlington, Virginia, owns thousands of apartments in New England, New York, the Washington, D.C., area and on the West Coast.

The news comes as New England Development abandons plans to develop roughly five acres of prime waterfront real estate between Michael’s Harborside and the new Tuscan Sea Grill & Bar restaurant. 

The site also includes Brown’s Wharf, 58 McKay’s Wharf, 72 Merrimac St., 86-90 Merrimac St. and 92 Merrimac St. The most recent proposal included seven buildings with up to 215 residential units, 10,000 square feet of retail space, and 85 to 100 hotel rooms. Earlier plans included eight buildings and up to 230 residential units.

In an email to The Daily News, Newburyport Mayor Donna Holaday said it was her understanding that New England Development entered a partnership with AvalonBay to construct 230 rental units in two buildings at Waterfront West.

The project would include affordable housing units under the state’s Chapter 40B law, a maneuver that typically allows developers to skirt some zoning and planning regulations in return for reserving a percentage of rental units for lower-income tenants. 

But in the same statement, Holaday criticized the proposal’s size and scope. 

“Again it is too tall and too dense and they are not building the priority we asked for on this site, a hotel,” Holaday wrote. “I am aware of the real need for affordable housing in our city but a five-story building on Merrimac Street really negatively affects our skyline and continues to impact the residents living there. The positive news is Avalon is a very reputable national company that builds quality units and manages their properties.”

Holaday’s statement did not shut the door completely on the city’s wish for New England Development to build a hotel on waterfront property, saying the company has told her office it would resume negotiations with the owners of Oldies Marketplace to develop the land – owned by NED – where Oldies resides. 

“I am not convinced that this will be a priority given the years they have had to address the situation,” Holaday wrote in the same statement, adding that Oldies Marketplace and New England Development have been in a legal battle over the issue for considerable time. 

The Waterfront West plan has divided many in the city with proponents citing a potential tax revenue boost along with a greater influx of tourist dollars as incentives. Others have decried the proposals, claiming the proposed size of the complex – as many as 300 housing units and retail shops at one point – would adversely affect the waterfront area and change the city’s feel. 

In October 2019, then-Greater Newburyport Chamber of Commerce & Industry President Frank Cousins said Waterfront West would pump $1.2 million in annual gross revenue into the city, increase local room tax revenue by 70% if a hotel were built, boost the city’s tax base by 1.6%, raise property tax revenue by 1.7%, bring new jobs to the city and offer affordable housing units.

Despite those projected figures, the project never got past the drawing board after the city hosted several pubic hearings and Karp spoke at a Chamber of Commerce breakfast at the city’s community center.

Phone calls to AvalonBay officials for comment were not returned Wednesday.

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