A fight brewing in Lawrence

Lawrence Mayor Daniel Rivera wants to cut costs for leased space, but he may run into trouble with the terms of an existing school department lease with lawyer Carmine DiAdamo.

Lawrence Mayor Daniel Rivera wants to move agencies currently scattered around the city into cheaper office space downtown, but his drive to consolidate departments is likely to trigger a multimillion-dollar lawsuit from the attorney who owns the building that currently houses the school department.

On March 5, Lawrence issued a request for proposals for the lease of office space for five city agencies. The request also said the city was interested in leases that provided the option to own. The five agencies are the school department’s central office, the Family Resource Center, the city’s community development and planning departments, the Merrimack Valley Work Investment Board, and the Lawrence Career Center. Three of the offices are already downtown on Essex Street, while the other two are close to the Andover line on South Union Street.

Rivera said the purpose of the RFP is two-fold. “We’re going to have significant savings from the consolidation as well as much needed downtown development,” he said in a phone interview.

Rivera first hinted he wanted to save money on leasing office space at a February question-and-answer session with MassINC , the publisher of CommonWealth. “The city has been historically duped in land agreements,” Rivera said at the meeting. “We’re seeing a lot of that stuff where people have these contracts that are just crazy for leases.”

He specifically mentioned the lease for the central office of the school department, noting the lease requires the city to pay $380,000 a year for nearly all of the space inside two attached buildings on Essex Street behind City Hall. He estimated the city had paid a total of $5.6 million in rent for the buildings over the years. The current lease also calls for the city to pay the agency’s utilities and handle all maintenance for the buildings. During a later telephone interview, Rivera called a $380,000 lease with zero liability for the landlord “a pretty decent deal.”

Rivera called in Carmine DiAdamo, the owner of the buildings leased by the school department, for a meeting at City Hall at the end of January. DiAdamo said Rivera told him at the meeting that his buildings had numerous code violations and system deficiencies that would cost $3 million to fix. DiAdamo said the mayor called the buildings “valueless” and urged him to donate the buildings to the city in return for a tax write-off.

In a February letter to Rivera, DiAdamo warned the mayor that the city is responsible financially for the condition of the buildings. The lease states that the city must maintain the interior and exterior of the buildings in “reasonable condition” and is responsible for the “maintenance, repair, or replacement” of all systems, including the heating, air conditioning, air exchange, electrical, alarm, sprinkler, and elevator systems. An assessment of DiAdamo’s buildings conducted for the city in 2004, shortly after the start of the current lease, estimated they were in good condition at that time with a value of $3.1 million.

Rivera said he didn’t mean DiAdamo’s buildings had no value but that they were valueless to the city because they are too big and too expensive to retrofit for future usage. He bristled at the suggestion DiAdamo might file a lawsuit, suggesting City Hall has changed with his 83-vote victory over former mayor William Lantigua last November. “He should not expect we’re old Lawrence and roll over just because he threatens to file a lawsuit,” Rivera said.

DiAdamo, 71, lives in Andover but has worked as an attorney in Lawrence for 47 years. He said he is not political and doesn’t make political contributions. He did some workers’ compensation legal work for the city in the 1990s. His son and partner, William, has been retained periodically to do outside legal work for the city since 2008 under former mayors Michael Sullivan and Lantigua, and now under Rivera.

DiAdamo said he bought the building at 237 Essex Street in 1984 at the request of city officials. He said the building was in terrible shape at the time and federal officials were threatening to withhold historic preservation money for the area unless the outside of the building was restored. He paid for the restoration and moved his law offices into the building. In 1988, DiAdamo said city officials urged him to buy the building next door at 255 Essex Street and lease space to the city for the school department.

Over the next decade, DiAdamo said he invested considerable funds in connecting the two buildings, retrofitting the inside, and updating all the systems. The school department, particularly under former superintendent Wilfredo Laboy, who was subsequently sent to jail on corruption charges, expanded to occupy nearly all of the space in the two buildings. Laboy even had a printing press installed in the basement that played a role in his corruption conviction.

In 2002, DiAdamo said the real estate market was improving and he was considering selling the buildings. But school department officials pressed him to continue leasing to them and indicated they would eventually buy the building. DiAdamo agreed to a new lease with the school department under terms designed to pave the way for a sale. “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,” he wrote in a letter to school officials.

The current lease, signed in November 2003 by Laboy and former mayor Sullivan, called for the school department to pay an initial annual rent of $344,300 minus $72,000 in estimated costs for utilities and building maintenance for which the city was now responsible. The rent was scheduled to rise with inflationary adjustments and any increase in the tax assessment on the buildings.

The city never exercised the option to purchase the buildings and DiAdamo alleges the city failed to maintain the buildings and their systems in good repair. On a tour of the buildings, the interior seems in relatively good shape but a lot of the office space is going unused, in part because the state receiver in charge of the city’s schools has pared back central office staff by 30 percent. The printing press that once occupied the basement has been moved to the high school. Three of the four elevators in the buildings don’t work and DiAdamo says the city has jury-rigged a system to replace the original air conditioning system.

Chris Markuns, a spokesman for the school department, said the agency has no major complaints about the building itself. “It’s more space than we need and this is an opportunity to save money,” he said.

Told Rivera thinks the building is valueless to the city, Markus said he would defer to the mayor on the condition of the building.

Meet the Author

Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

At the current lease rate of $380,000 per year, the cost per square foot is about $9.50 per square foot. The Merrimack Valley Workforce Investment Board is paying $15 per square foot at 439 South Union Street and the planning and development departments are paying $14 per square foot at 225 Essex Street.

Pressed on his plans, Rivera said he intends to return the building to DiAdamo at the end of the year in the same shape it was when the city signed the least 10 years ago. Asked whether that meant the city would repair the nonworking elevators, Rivera said, “I’m not a real estate attorney. Are you a real estate attorney?”