Walsh plays hardball at Quincy Market

Walsh plays hardball at Quincy Market

Mayor seeks to redo lease for higher return

BOSTON MAYOR MARTY WALSH is trying to play hardball with the company that owns the lease on Faneuil Hall Marketplace.

City officials and heavily redacted emails obtained under the Public Records Law confirm that the city, which owns the marketplace, is attempting to renegotiate the terms of the lease, which dates back to 1975 and still has 57 years to run.

To secure a better deal, the mayor’s office is leveraging its power to approve changes at the marketplace being sought by the leaseholder, the New York City-based Ashkenazy Acquisition Corporation. Ashkenazy is reportedly exploring the possibility of putting up a boutique hotel and adding more restaurants.

Negotiations have been going on for at least a year, and none of the parties—the city, the Boston Planning & Development Agency, and Ashkenazy—are talking. City records indicate the Boston Planning & Development Agency hired an outside consultant to conduct a financial analysis of Faneuil Hall Marketplace, and for a short time retained an outside law firm at $395 an hour to provide advice on how to deal with Ashkenazy.

The lease was originally negotiated when Faneuil Hall Marketplace was on the skids and some of the dilapidated buildings were tagged for demolition. Former mayor Kevin White brought in the visionary Maryland-based real estate developer, James Rouse, to revitalize the three-building Greek Revival-style complex comprising Faneuil Hall Marketplace— Quincy Market, the North Market to one side, and the South Market to the other side—and then run it for the city.  (Faneuil Hall sits next to the marketplace, but the city runs it on its own.)

Boston Mayor Marty Walsh

In return for letting Rouse pocket all the rent from the merchants, the lease called for the company to pay the city each year the equivalent of what would be the real estate taxes if the marketplace were in private hands. Rouse also had to pay the Boston Redevelopment Authority, the predecessor to the Boston Planning & Development Agency, $10 a year.

Today, the terms of the lease no longer look that good for the city, largely because the marketplace has become such a huge magnet for tourists, attracting more than 18 million visitors a year.

Ashkenazy will pay the city a little over $4 million this year, while keeping the rents paid by the 49 specialty shops, 18 restaurants and pubs, 29 food stalls, 47 pushcarts, assorted pop-up stores, and 40 office tenants that occupy the 360,000 square-foot marketplace. Ashkenazy also takes in money by renting out the market for special events.

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Ashkenazy doesn’t disclose its revenue from the marketplace, but one indication of the value of the lease is that the company purchased it from the previous leaseholder, a company called General Growth Corporation, for $140 million.

Sam Tyler, president of the Boston Municipal Research Bureau, a business-backed watchdog that monitors city finances, says the city is in a good position to get more money out of Ashkenazy. “Since the company wants to make some big changes, it presents an opportunity for the city to push to get a better financial deal for itself,” Tyler says. “The timing is just right.”

  • QuincyQuarry.com

    Er, ah – how tough would it be for the City to review the phantom property tax assessment calculations to set he lease payments? After all, part of the assessment determination of a commercial property is based on its rental income.

    Oh dopey me: the City wants to up its mordita.

  • Alfie Tennyson

    I can see this going sideways so badly Marty and Co. will have whiplash. A definite loss for Boston either way.