The Curse Of Too Much Value, Part 1
The older I get, the more I value past-tense verbs (”Yesterday I did this”) over future tense (”Tomorrow I will that”). So it was with some amusement that I read in a recent Boston Globe story that:
”Today’s announcement ensures that Fan Pier will finally become a reality,” said
It always looks nice in architects’ aerial drawings ….
Even the normally cheerful Globe is skeptical:
But given the site’s history, that’s no sure thing.
Perhaps Fan Pier, which I blogged about before, suffers from The Curse Of Too Much Value.
Who will next have the curse of too much value?
We start with its unique site:
Fan Pier is the gateway across the Fort Point Channel from
Photograph of the Fan Pier circa 1920.
The hideous metal
But with the New Urbanist revival in the late Seventies, city planners and developers both looked across the Channel (itself undergoing a massive environmental cleanup) to the flats of industrial
Languishing for decades and mostly used as a parking lot, Fan Pier has been a symbol of disappointment on the waterfront. The hope has been that developing Fan Pier would help transform the South Boston Waterfront from an industrial port to the city’s next commercial and housing frontier.
I know the site well, having watched it not be developed for more than twenty years, in a tale worthy of day-time television. We start with the Patriarchal Immigrant:
Anthony Athanas, Albanian immigrant, restaurateur-entrepreneur, founder and patron of Anthony’s Pier Four, for a couple of decades the destination restaurant for out-of-towners.
Anthony Athanas was four years old when he left
At the time, the area was deteriorating, and was seeing very little investment. As he put it, “People said I was crazy. It was a dismal place, mud, broken-down pilings, an old ice house, but I was determined it would work.” His restaurant had humble beginnings – in order to make it appear that he had more employees, Athanas would holler his orders to the kitchen, then run back and cook them himself! Over time, he parlayed this small entrepreneurial venture into a restaurant franchise, and began to accumulate more land. By 1972, he had accumulated another 35 acres, including Piers One (the Fan Pier), Two, and Three.
Dine at Pier Four today and you are greeted by wall after wall of framed grip-and-grin photographs of Anthony with luminaries political, social, and athletic stretching back fifty years: Joe Moakley, Red Skelton, Ted Williams.
Anthony Athanas and Red Skelton
Anthony bought the land when it was worth almost nothing and as the city sprang up across the Fort Point Waterfront, he chortled like a culinary Rumpelstiltskin over his treasure.
During the Seventies developers slick and shining came to Anthony, offering to unlock his treasure by securing the necessary approvals. Development of the land was and is controlled by the interlocking government agencies that controlled its environmental quality (DEP), zoning, and use (BRA), and not only is zoning destiny, in this case, approvals were value — indeed, almost all of the value. So with great reluctance Anthony, like the homely heir to a Jacobean-tragedy fortune, finally selected one of his suitors, Carpenter and Company, run by John Hall, a volatile aggressive developer about as unlike Anthony as it was possible to be.
But then The Value Curse struck: after Hall and Anthony had negotiated their deal, and the transaction moved forward toward approval and financing, the real estate market heated up. The site’s value rose and rose. Anthony’s friends (more Jacobean tragedy) counseled him that he had been hoodwinked in the negotiations, and his treasure was being filched by that fast-talking smoothie.
So in 1987, just as groundbreaking was imminent, Anthony balked, refusing to close the deal unless it was renegotiated. Litigation ensued. Anthony lost (link updated):
In Anthony’s Pier Four, Inc., the Supreme Judicial Court affirmed a finding that Anthony Athanas violated both the express terms of the contract and the implied covenant of good faith and fair dealing by unreasonably withholding approval of the master plan for development of the Fan Pier in Boston in an attempt to pressure the developer, HBC Associates, “to sweeten the deal” HBC had previously entered into with Anthony’s. Anthony’s Pier Four, Inc. v. HBC Associates, 411
and lost badly (more Jacobean tragedy).
However, in 1987 he canceled the deal for the property, and the developers sued. Faced with a legal judgment that could have cost him $150 million or more, Mr. Athanas reached a settlement in 1992 that left him with the Pier 4 parcel, but gave title to the rest of the land to the Pritzker family of
And the resulting spillover publicity chilled Carpenter’s financing and there was only one way for the litigants to escape each other’s clutches: sell the property.
The Pritzker family won ownership of Fan Pier in a lawsuit in 1989 and, after a grueling four-year process, obtained permits that would allow for about three million square feet of development, including residential, office, hotel, and public space.
But the Curse Of Too Much Value struck the Pritzers, for in the four years the City of
As it did, the downtown retrenched, with skyrocketing office vacancy rates and falling office rents. Fan Pier’s numbers no longer worked. And, since land value is a residual, what Anthony might have had in 1985, no one could have in 1991. The development viability window had slammed shut.
