This article was updated to clarify the jury’s ruling on the lower value of the former School Department building.
A JURY HAS RULED that Lawrence Mayor Daniel Rivera breached the city’s lease with the former landlord of the School Department and is on the hook for more than $2 million in repairs to the building, according to the plaintiff in the case.
The decision, handed down last week in Essex Superior Court in Salem, means Rivera could be paying out more than $2 million to repair a building the city is no longer leasing even as he is spending $8 million on a new headquarters for the School Department.
But the jury also ruled that the value of the former School Department building has declined by only $800,000, suggesting the landlord is owed only that amount. The confusing outcome may have to be settled by the judge.
William DiAdamo, who with his father, Carmine, filed the lawsuit against the city of Lawrence and the School Department, provided the highlights of the jury’s verdict based on what he said was stated in court. He said there was no written decision and the jury verdict slip was not immediately available. The online court docket offers few details. Rivera could not be reached for comment.
DiAdamo said he interpreted the jury verdict as a victory for him and his father, who run a law practice in Lawrence. “What we want is what we got, which is the ability to restore the building and the value of the property,” he said.
DiAdamo cautioned that the fight with the city is not over and said he hoped the parties could sit down and come to some sort of resolution.
Rivera squeaked into office in January 2014 with a narrow margin of 81 votes, but he was not timid about pushing for change. He dismissed a number of employees, many of whom had ties to his predecessor, William Lantigua, and he moved the School Department out of DiAdamo’s building as the end of the lease. Just as DiAdamo sued the city for failing to maintain the building properly, a number of the dismissed employees also challenged Rivera’s decisions. Some of them won, and had their jobs reinstated.
In September, in response to efforts to recall him, Rivera issued a defiant statement saying that pushing for change creates enemies. “When you focus on this type of change, those interests negatively affected by these actions (bad employees, bad cops, tax cheats, landowners looking to take advantage of the city) will fight back against the city,” he said.
Although Rivera’s statement seemed to characterize DiAdamo as a landlord trying to take advantage of the city, the jury verdict would suggest that was not the case. Indeed, the facts suggest Rivera tried to deal with an unattractive lease that long predated his arrival at City Hall in a way that only made the situation worse.
Eight days after his inauguration in January 2014, Rivera called Carmine DiAdamo to his office to discuss the city’s School Department lease. The 10-year lease, signed in 2003 with an effective date of January 1, 2005, required the city to pay rent of $380,000 a year for two attached buildings behind City Hall and also pay all maintenance and upkeep on the buildings. On top of that, the School Department, which is under state receivership, had cut its central office staff by 38 percent, so the city was paying a lot for a building that was only partially being used.
“We really just looked at the number we were paying on the lease on top of what we were paying for maintenance and utilities and taxes and water – all the things that property owners usually pay in leases – and we were paying all of it,” Rivera told CommonWealth last year. “It was just too expensive for us.”
According to court documents, Rivera told DiAdamo that his building had $3 million in code violations and structural problems and it would take $6 million to fix it up so it could be used. He urged DiAdamo to donate the building to the city and take a tax writeoff. Rivera later said in a court deposition that he couldn’t remember where he got his estimate on the code violations. Other city officials said they didn’t know, either.
The DiAdamos have insisted the lease was structured the way it was partly as a favor to the city. Carmine DiAdamo has said he was considering selling the buildings in 2002, but city officials urged him to continue leasing the building to them until they could buy it. He agreed to do that, but required the city to take responsibility for maintaining the building, although he deducted from the rent $72,000 a year for utilities and building maintenance.
“Our general intent was to grant a tenancy to the School Department at no additional cost, but not expose me to future, unpredictable increases in the future,” DiAdamo wrote to city officials at the time.
But the city never exercised its option to purchase the building and also failed to maintain it. Rivera, when he came into office, was faced with a lease that he considered too expensive for a building that was rapidly deteriorating.
When his request that DiAdamo donate the building to the city was rebuffed, Rivera responding by moving the School Department out of the building into temporary quarters when the lease expired at the end of 2014. The DiAdamo building has been largely vacant ever since. Rivera also won city approval to borrow $8 million to buy and fix up a rundown building down the street to serve as the School Department’s new headquarters.
City officials made minor repairs to the DiAdamo building before leaving, but the DiAdamos say the improvements were not sufficient to bring the structure into compliance with the terms of the lease. They sued the city for failing to maintain the building properly, and the trial centered heavily on the lease terms and the city’s responsibilities under the lease.
When the School Department moved into the DiAdamo building in 2004, it was appraised at $3.1 million. According to William DiAdamo, the jury in its verdict held that the building is now worth about $2.3 million, about $800,000 less than it was in 2004.