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Wednesday, 10 February 2010 04:00

CALPERs Uses Jingle Mail as a Risk Management Technique

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Hat tip BoomBustBlogger Bill. It appears that the only one's who are actually ever chastised for defaulting on debt obligations are people. To think, some are still bullish on the banks.

Down to its last chance

Developers’ delays and funding woes spur the state to serve notice on Columbus Center, the $800m complex planned to span the Pike

(Boston Globe) Massachusetts transportation officials have begun severing ties with the developers of Columbus Center, the latest, and perhaps last, chapter in one of the most ambitious and controversial projects in Boston’s development history.

The state Department of Transportation yesterday told the project’s developers they are in default of their 99-year lease, after stalling on plans to build an $800 million complex above the Massachusetts Turnpike that would have united the Back Bay and South End neighborhoods.

The developers face termination of the lease not only because they have failed to complete construction, but because they have not properly maintained the property, said a top agency official. He asked that his name not be used because the default notice is not yet public.

Because of funding problems, the developers - the WinnCompanies and the California state pension fund, known as Calpers - stopped construction in April 2008 on the six-building complex of condominiums, hotel, stores, and parks on a massive deck over the highway. Since then, they have neither cleaned up nor secured the building site to the level the state has demanded, according to the transportation official with knowl edge of the situation.

The default notice initiates a 30-day period during which Winn and Calpers can devise a plan to begin construction. If they don’t, or the new plan isn’t satisfactory to state officials, they will lose their lease.

WinnCompanies, which initially won the development designation in 1997, did not return a phone call seeking comment. A spokesman for Calpers said officials are still evaluating prospects for the development and could not comment further.

The transportation official said the default notice is intended to either force Winn and Calpers forward or bring closure to a fitful 13-year process in which the developers had numerous false starts, and their relationship with neighbors grew increasingly contentious as the site remained fallow and unkempt.

“We stopped getting cooperation from the developers, and there was only so much the transportation department could do,’’ said state Representative Aaron Michlewitz, a Boston Democrat whose district includes much of the Columbus Center site. “We need to go back to square one and see what other opportunities might be out there for this property.’’

State transportation officials told the Globe they decided to send the default notice after the developers started clearing debris and doing other work last fall, but then abruptly stopped, without explanation.

The impasse prompted state lawmakers who represent the area to press the Patrick administration to terminate the development arrangement. The lawmakers met with Patrick officials in October and again recently to press their case.

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