EagleTribune.com, North Andover, MA

July 24, 2013

Parking problems: A nearly broke city and a struggling developer team up to rehab an aging garage

By Keith Eddings

---- — LAWRENCE — A dank and leaky city parking garage would get an upgrade costing more than $1 million in a deal that would link a nearly broke city with a struggling developer.

The offer by the owners of the Museum Square Apartments to help rehabilitate the adjoining garage also could provide a happy ending to an unresolved court battle over the 170 free parking spaces the city has provided the apartment house since the two buildings opened beside each other on Methuen Street in 1989.

The battle began in 2010 when Mayor William Lantigua demanded that the owners of Museum Square, a bulky white tower that presides over the downtown skyline from the full city block it occupies beside the garage, pay for the free spaces. A state judge temporarily blocked the demand last year and the city has not pursued it.

Yesterday, a lawyer representing Jackson Street Housing Associates, the owner of the apartment building, said the company offered to help rehab the garage because it expected the city could not afford the work on its own. He said there was no agreement that the developers would help with the rehab if the city dropped its effort to end the free parking deal.

“We’re well aware, because we read the papers like everyone else, that the city is strapped for resources and probably is not going to be in a position to put capital funds into fixing up this garage,” said lawyer Richard Bluestein. “Because it’s an important amenity for residents of the city and for Museum Square, we want to see if we can help with that. If its good for the neighborhood, it’s good for the apartment building.”

Bluestein said the plans for the upgrades at the garage are in the works and could not describe them. Lantigua did not return a phone call.

But during a quick walk through the five levels of the garage yesterday, the need for improvements was apparent: stormwater poured through the ceilings even hours after the afternoon’s heavy rain. The stairways stunk of mold and urine. And Museum Square tenants complained that elevators regularly break down and that the garage overflows in the day with traffic from the nearby courthouses and on weekends with out-of-towners headed for the nightclubs.

“If you’re here early, you can’t find a parking space, and yet you’re paying,” said Jackie Marmol, a former security guard and a Museum Square tenant since 2003. “During the weekend, all the club-goers, they come right in here.”

A few tenants also expressed surprise that Jackson Street Housing Associates doesn’t pay for the 170 spaces that it rents to its tenants for about $35 a month.

“It’s America,” said Karina Heredia as she walked from the garage after picking up her 5-year-old daughter, Anahri, from summer camp. “In America, you do what you can get away with. But I enjoy the benefit of not having to shovel my car out in the winter, feeling my vehicle is secure. So at the end of the day, I don’t ask questions.”

Bluestein said its appropriate for the owner to charge tenants for the spaces, even if the owner pays nothing for them.

“You run an apartment building. You have income and expenses. That’s part of the income,” Bluestein said.

Former Mayor Kevin Sullivan gave the 170 parking passes to Jackson Street Housing Associates in exchange for $1.2 million the company paid to cover the city’s share of the cost of building the garage. The payment triggered the state and federal aid that paid the balance of the construction costs.

The deal gives the company a free ride in the garage until Museum Square Apartments achieves its first annual operating surplus.

In the court papers filed after Lantigua threatened to cancel the deal last year, Jackson Street Housing Associates said it “has never had a fiscal year of operations when it did not operate at a negative cash flow” and expressed concern about the future of Museum Square. The company said the rent caps it agreed to in exchange for the government grants that subsidized the construction of the 11-story apartment building left it unable to pay all of its bills in 2009 and 2010, including some of the fees it owed to the Boston Land Co., which manages the building.

“This raises doubt as to whether the partnership will be able to continue as a going concern,” the company said in financial statements it cited in its complaint against the city.

Superior Court Judge Thomas Murtagh temporarily blocked Lantigua from canceling the free parking passes on Feb. 14, 2012, which is where the issue has rested.

Yesterday, Bluestein dismissed the concern for Museum Square’s future as only “an accountant’s conclusion.” He said Jackson Street Housing Associates has been willing to operate the building through 25 years of uninterrupted losses because supporting affordable housing in distressed cities “is the right thing to do.” He said the company has no other assets.

Developers of affordable housing projects sometimes build them for the tax write-offs they provide. The number of Museum Square’s 176 apartments whose rents are capped at affordable rates could not be learned yesterday.

The city’s attention refocused on the parking garage, also named Museum Square, earlier this summer, when an attendant who also is a political lieutenant in Lantigua’s campaign organization was charged with skimming thousands of dollars from collections at the garage.

Robert Nunes, the city’s state-appointed fiscal overseer, responded by reviewing all of the city’s parking contracts with private agencies.

Nunes did not express an opinion on the wisdom of the deal with Museum Square, but in a July 12 letter to Nunes that was characteristically blunt, Lantigua said the deal was “slipshod” and “grossly negligent.”

Sullivan could not be reached yesterday.

The parking passes now sell for $148.75 a month. At that rate, the city would collect $303,450 if Museum Square tenants paid full freight.