THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING
For 2 entities with needs, deal was a match
By Ralph Ranalli, Globe Staff, 4/21/2004
The Archdiocese of Boston's agreement to sell slightly more than 46 acres of its Brighton property to Boston College for $107.4 million was described as a win-win for both institutions, but real estate specialists said yesterday it will be difficult to ultimately determine which institution got the better of the deal.
The Rev. William P. Leahy, president of BC, said the two-stage agreement, with 43 acres purchased by the end of June followed by another 3.25 acres in 2006, was made at a fair market price and represented neither a "bailout" by the college of the financially battered archdiocese nor a "clergy discount" for the Catholic university, which is in need of more land.
"There was no sweetheart deal," Leahy said.
For the college, the deal represents an extremely rare opportunity for a major expansion of its cramped urban campus. For the archdiocese, it brings in enough cash to settle the crushing debt stemming from settlements with victims of clergy sexual abuse.
However, some observers cautioned yesterday that the cash windfall could also result in some unintended consequences, such as the emboldening of opponents to the archdiocese's parish consolidation plan.
Which institution got the better of the land deal is nearly impossible to say, real estate specialists said, because of the unique situation each party was in. BC needed to seize the chance to expand, almost regardless of the cost. The archdiocese was looking for a large infusion of cash, fast.
Principals involved in the negotiations, who asked not to be identified by name, said BC faced serious competition from only one other proposal.
That plan, proposed by a group that included the commercial real estate firm Trammel Crow, called for the archdiocese to retain ownership of the Brighton property, but to lease it to a nonprofit development firm that would use tax-free loans to build as many as 1,200 units of affordable and student housing, with the profits from the venture going to the archdiocese.
Proponents of the plan said they got positive feedback from the Boston Redevelopment Authority and would have allowed the archdiocese to ultimately keep the property, but they said the proposal did not provide the same amount of up-front cash as the outright sale to BC, which has agreed to write a $99.4 million check to the archdiocese in less than three months.
The archdiocese "wanted the money fast, and, in the end, the offer from BC was too good," said Chris Chandor, a senior development manager at Trammell Crow who worked on the deal. "That is ultimately what happened."
Archbishop Sean P. O'Malley said at a press conference yesterday that church officials had hoped to close the deal before the expected announcement next month of a large number of parish closings, so that there could be no misunderstanding about whether churches were being closed to pay for the clergy sexual abuse scandal.
The ultimate effect of the alternate proposal, specialists said, was to drive up the price that BC paid for the coveted Brighton property. Yet whether the school paid too much is almost impossible to determine, specialists said.
Since the school plans to use the land for at least the next century or two, specialists said, BC had a prohibitive advantage in a cost-benefit calculation over virtually any commercial real estate developer, who would probably be looking for a return on its investment over a mere 10 years or so.
The only way to determine whether BC overpaid for the land would be to compare it with other recent purchases by large institutions, such as Harvard's recent purchases of land for its campus expansion into Allston. By that measure, yesterday's purchase price appeared to be in a similar neighborhood to what Harvard has paid in its last two major Allston acquisitions.
Under the terms of the agreement announced yesterday, BC will pay about $2.3 million per acre for the Brighton property. That is significantly more than the $824,000 per acre Harvard paid last year for the 91-acre Brighton rail yards property, but less than the $3.2 million per acre that Harvard paid for the 48-acre Allston Landing North parcel.
Since expansion opportunities for urban universities are so rare, commercial real estate specialists said the only way to measure a good deal is whether the school pays the lowest price possible while guaranteeing that it is the highest bidder, a mission that BC trustee Jack Connors said was accomplished.
"They [the archdiocese] wanted a lot more money than they got, a lot more," Connors said. "We are very comfortable that we paid a fair price. . . . There's nothing about this deal that said, `Now we'll throw in another $50 million bucks because we think you guys are neat,' not a nickel."
While both sides professed satisfaction with the deal yesterday, opponents of parish closings and lawyers representing alleged clergy sexual abuse victims warned that it could have unintended consequences for the archdiocese.
One opponent of church closings, Leslie MacWeeney of Dorchester, said the large cash windfall "takes one excuse away" from the church officials who say the consolidations are necessary.
Lawyers involved in the clergy abuse settlements also said that another potential consequence of the landmark sale might be to reduce the pressure on the church's insurers, Kemper and Travelers, to quickly settle the church's claims that the companies owe millions of dollars in reimbursement for money the archdiocese paid to victims of clergy sexual abuse.
The Rev. Christopher J. Coyne, a spokesman for the archdiocese, tried to dispel that notion yesterday, saying in the press conference that the church has "a very good law firm" that would pursue the claims against the insurers diligently.
For complete coverage of the priest abuse scandal, go to http://www.boston.com/globe/abuse