If it’s always darkest before the dawn, you have to wonder when the massive Union Point redevelopment on the South Shore will finally see the sunrise.
The Southfield Redevelopment Authority, the agency that oversees the former South Weymouth Naval Air Station, on Wednesday took the long-expected step of terminating LStar’s role as the master developer of the 1,450-acre site. With all the finger-pointing and dysfunction among LStar’s ranks, nearly everyone involved actually sees this decision as a step forward for the project. Someone else will need to drive this crazy train.
The fate of the partially developed base isn’t just important to the three towns that the property straddles — Weymouth, Abington, and Rockland. Its future is a point of a concern for state taxpayers, too: The state issued $28 million in bonds nine years ago to help pay for roadwork at the site, with the expectation that new taxes on development would cover the borrowing costs. (The balance has dropped below $24 million.) If the new taxes generated each year don’t equal or exceed the debt costs, the redevelopment authority is supposed to make up the difference.
Guess what? The authority hasn’t been able to pull it off. The local agency was given breathing room that allowed these deficiency payments to be deferred for many years, at least through the current fiscal year that ends in June. The way things are going, the authority may need more time. (It’s worth noting that the state has plowed more than $18 million worth of grant funds into roadwork at the site as well, according to the agency.)
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The roughly 1,100 homes built there already brought in some tax revenue to the state’s coffers: income taxes from people who worked on the projects, for example, or sales taxes on the building materials. But the minimal commercial development so far — just an elderly-care facility and a bank — has been a huge disappointment for all concerned.
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LStar once thought it landed a big fish: the US campus of Prodrive Technologies. But that deal fell through late last year. Meanwhile, LStar’s two principals fought each other in court over ownership issues. One lender, Washington Capital, foreclosed on a residential portion of the property earlier this year. Related Cos., a major lender on commercial property there, will likely be next.
LStar rang up tens of millions of dollars in debt on the site, posing a challenge to any would-be successor. Meanwhile, Weymouth Mayor Bob Hedlund has leverage over what happens next, by virtue of controlling water service to the base: He says he will not allow any significant development to proceed until he can be assured the future developer has the means to address the property’s remaining infrastructure challenges.
Eric Hart, the redevelopment authority’s treasurer, remains optimistic. Removing LStar, Hart says, could provide the rebirth that the property needs. Developers, he says, continue to show interest. The old base is next to a commuter rail stop and is only about 20 miles from Boston. In this hot real estate market, it’s not easy to find development opportunities of this size close to the region’s urban core.
But a would-be master developer will probably have to untangle the unusual debt structure and solve the property’s long-term dilemma with water and sewer capacity, not to mention getting beyond all the bad blood.
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Once extensive development finally can begin again, Hart says the project will be well on its way to generating more new taxes for the state, eventually enough to exceed those bond payments.
Getting to that magical tipping point, however, will likely take longer than anyone could have initially imagined.
Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.