'Bail Out' For Developers? Framingham Council Considers New TIF

FRAMINGHAM, MA — The developers behind the Bancroft Building project appeared before a City Council committee Thursday night to ask for a tax break — but they got pushback from Councilors concerned about a host of issues, from the timing of the request to safety at the construction site.

Developer Washington Square Ventures (WSV) wants a tax-increment financing (TIF) agreement worth $1.6 million for its redevelopment of the building at 59 Fountain St. The developers approached Mayor Yvonne Spicer earlier this year with the request after encountering higher-than-expected renovation and environmental cleanup costs.

Under the TIF proposal, WSV would pay reduced property taxes over a seven-year period. That savings would allow the developers to recoup the higher renovation costs. Spicer told the Councilors on Thursday that the project would fix a blight on the city, and would be a fair deal for developers who have faced "exorbitant" costs renovating the building.

Here's the structure of the Bancroft Building TIF. WSV estimates it will pay $894,000 in taxes the year after the TIF expires (2028).

WSV plans to spend about $82 million to redevelop the Bancroft Building site. In the end, the building will have 160 loft-style apartments. A new building at the site will have another 98 units. The developers say studio apartments will start at $1,500 per month, with three-bedroom units asking up to $2,700. About 10 percent of the units will be designated affordable housing.

According to Justin Krebs, a managing partner with WSV, the developers discovered structural issues with the circa-1905 Bancroft Building at the end of 2018. The building is starting to separate from the main concrete support at the center, a fix that will cost between $800,000 and $1 million. The developers have had to spend about that much on environmental cleanup.

In early 2019, WSV approached the mayor's office about the TIF. But the Councilors questioned that timing.

"It just seems like you're coming to the city after the fact to bail you out," District 1 Councilor Charlie Sisitsky told the developers.

Krebs began explaining the "unforeseen" conditions inside the Bancroft Building when Sisitsky interrupted.

"That's a business risk you took," Sisitsky said. "Everybody who's contacted me feels this is a giveaway to you because you didn't do your due diligence ... I hear what you're saying, but it doesn't pass the smell test."

District 8 Councilor Judith Grove and Finance Committee Chair George King peppered the developers with questions about an accident that happened recently at the construction site. A worker hired by a subcontractor fell off the building and had to be air-lifted to a hospital in Boston. The worker has since recovered.

Krebs confirmed that the project is not using union labor — Framingham is "not a market that justifies that," the developers said — but said that the project contractor has agreed to some worker protections, like providing workers' compensation.

King said that the city "financially and morally" has a responsibility to know how WSV conducts its business.

TIFs were one of the strategies identified by Framingham in 2014 to redevelop the downtown area around transit. Two other downtown apartment buildings have been granted TIFs: Alta Union House at 75 Concord St. and Mill Creek Modera at 266 Waverly St.

Krebs pointed out several times that the Bancroft Building sits in the Urban Center Housing Tax Increment Financing zone in the downtown area. The city intended for TIFs to be used for projects like his, he said.

"To say that we're coming in after the fact [for the TIF] is baffling," he said.

The Thursday Council meeting was a precursor to the full Council vote to approve the TIF, which may happen as soon as Oct. 23.