The older I get, the less I give credence to future-tense verbs: I’m going to X, I will Y.  I place much more reliance on past-tense verbs and durations – for the last decade I’ve Z’d.  So as I read the following Boston Globe article on a praiseworthy idea, and my eye caught the future-tense verbs (in blue bold italic) I found my initially upbeat assessment steadily turning ever more glum:

You got a problem with my gloom?

The city of Boston plans to purchase foreclosed apartment buildings still occupied by tenants in an effort to stem evictions under a pilot program officials say is the first of its kind in the nation.

Mayor Thomas M. Menino today [October 28, 2009, five days before the Boston mayoral election – Ed.] is expected to unveil the buyback program, which will initially involve 12 apartments in five properties owned by Bank of America Corp. that are located in neighborhoods devastated by foreclosures in recent years.

Twelve apartments in five properties is a drop in the bucket – yet every program starts somewhere.

Menino said that over the next six months he wants to expand the program to include other lenders and buy as many as 100 occupied apartments.

“Here we go, Boston, here we go”

This one could serve a genuine need, because, as I posted two years ago in zombie landlords, foreclosure is a destabilizing event:

We had a handshake deal on the rent

But even having a lease is no protection against a post-foreclosure eviction. Under Massachusetts law, foreclosing owners are not required to honor leases signed by the former owner.

That’s remarkable — not that landlords would want it, but that the legislators deferred to their desires.

The mortgage industry says its members are not equipped to act as landlords.

Hire one. 

There are plenty of management companies.

“Why, yes, we’ll happily evict your tenants for you!”

Buying foreclosed apartments and simultaneously executing a new lease with the sitting resident turns the home into long-term rental … and what’s the harm in that?

“The tenants are the victims. It is not their fault they were foreclosed upon,’’ Menino said. “Not only is this good for the tenants it is also good for the neighborhoods.’’

One of the foreclosures that might be candidates

Is there harm in trumpeting something one has not done?

The city has not yet negotiated a price with Bank of America, but the money to buy the five buildings will come from $8.2 million in federal funds set aside to buy and renovate foreclosed homes.

Here we have an advanced form of political vaporware: a pledge to do something in the future, in exchange for your votes – your political equity – today.  That’s outstanding political calculus, of a type I’ve encountered before, most memorably in Egypt, when as a subcontractor to a USAID prime contractor, I designed and built financial projections for a 500,000-home affordable housing production program that President Hosni Mubarak announced one Pharaonic day on the campaign trail, seeking to keep his winning plurality above 90%.  I designed the program; I wrote the financial model; I highlighted the key decision variables; I sent the proposal forward.  Mubarak got elected overwhelmingly, and I never heard further if the program ever advanced beyond that initial conception.

“What did his models say it would cost?”

The properties will then be resold to homeowners, nonprofit groups, or private developers.

Otherwise known as “people we haven’t located yet.”

City officials said they have also applied for [A deflective version of 'maybe we will get' – Ed.] another $39 million under the federal Neighborhood Stabilization Program.

Otherwise known as “money we haven’t got yet.”

Can we apply for money too?

Renters are increasingly being forced to vacate homes reclaimed by lenders through foreclosure auctions. In Boston, more than 75% of those displaced through foreclosure are tenants with no direct involvement in the owner’s mortgage problems, city officials estimate.

While granting the statistic, it doesn’t prove the hypothesis.  Boston has had very few homeownership foreclosures; they’ve concentrated in investor-owned absentee-landlord properties.  If the rate of eviction is increasing, that’s not because of the high percentage of rental foreclosures, but rather because the lenders have finally got their procedures in place to deal with their foreclosure backlog.

Traditionally, lenders have been reluctant to sell foreclosed apartment buildings that remain occupied because of liability and other issues.

It’s an issue of touch and risk.  Making the decision to keep a resident in an apartment requires ‘touch’ – some granular knowledge that’s specific to the market, property, and resident.  It also requires some risk tolerance because (x) the tenant may have counterclaims (warrant of habitability) against the owner, and (y) many buyers of foreclosed homes would rather use them for ownership or renovation rather than having to deal with the tenant themselves. 

It’s easier to secure if you’re out of it

Tom Lin, a senior vice president at Bank of America, said the program is an innovative way to stabilize neighborhoods as well as to allow lenders to unload properties.

Generally, foreclosed homes “sell much quicker vacant than occupied,’’ he said, but lenders are beginning to consider alternatives.

Compared to the touch costs of making the rental-continuation decision and the risks of keeping the tenant in place, the interim rent isn’t worth it.

Often, [foreclosing lenders] resort to evictions or strike deals known as “cash for keys’’ in which tenants are given money to move out.

You can post all the notices you want, but it’s often easier just to pay a few bucks for the resident to go away

Voluntarily, that is. If there is an oversupply of foreclosed homes, which there may be, the tenants can readily find new housing.  So cash-for-keys may prove a good deal for them.  Nevertheless, there’s a human-interest story in protecting these renters, which means there’s both political capital to be accumulated and a policy case to be made.

Lisa Alberghini, cochairwoman of Coalition for Occupied Homes in Foreclosure, a local housing group, said she is pleased the city has taken the initiative in assisting renters living in foreclosed properties.

A while back I had the singular honor and personal pleasure of being paired with Lisa as the 2009 Vision Award winners from the National Housing & Rehabilitation Association (NH&RA).

A good picture of Lisa, animated as usual

She’s on the side of the angels, and smart to boot.

“The idea that the bank agrees to sell properties with tenants still in them and the city has the opportunity to dispose of them without displacing the tenants, it’s just remarkable,’’ said Alberghini, president of the Planning Office for Urban Affairs, a nonprofit housing development group affiliated with the Catholic Archdiocese of Boston. “I hope it prompts others to step forward and do the same.’’

Agreed.  If it can be worked out – the touch and the risk – it can add value.  For that the city can play a significant role, both in doing the work and in the abating the risk.

Bank of America’s portfolio includes about 330 foreclosed Massachusetts properties, Lin said.

Boston housing chief Evelyn Friedman –

Renovating them one at a time: Evelyn Friedman

We met Evelyn in the blog 4 ½ years ago, in our tour of the Hotel Dartmouth historic rehab, when she was executive director of Nuestra Comunidad CDC.  As so often happens in the housing roundelay, she’s now on the government side, interacting as a resource provider with people just like her former self.

– said tenants of the 12 apartments being bought are unaware of the plan, but that they will soon be contacted.

In fact, therefore, nobody’s actually done anything.  The intentions are praiseworthy, yet the properties are not purchased, nor are the rehab or transfer funds in place.

The program builds on an ongoing campaign to purchase abandoned foreclosed properties in hard-hit areas of Dorchester, Roxbury, and Mattapan, she said. Since last year, the city has bought 10 vacant buildings and is in the process of closing deals on 28 others.

Tenant organizers yesterday praised the fledgling buyback program.

“Praise us, we’re going to grow!”

The scale is small, and the delivery is slow.  By the time the program reaches any meaningful level of activity, most of those who were at risk will have solved their problem one way or another.  Still, it’s a start, and if the volume of foreclosed small rentals does spike, at least there will be a mechanism in place, and people who have an understanding of how to use it.

“This is a good thing for occupied tenant buildings,’’ said Steve Meacham, a community organizer with the Jamaica Plain housing organization City Life/Vida Urbana. “It is certainly a step forward.’’

One step forward?

Although the program is being made public six days before the mayoral election, Menino insisted the timing was not motivated by politics.

Insisted.  Residents have not been notified, properties have not been purchased, resale buyers have not been identified, and transfer funding has not been secured.  We were just so bursting with enthusiasm that we wanted to tell all the voters now, even though we couldn’t tell the twelve lucky households.

Just a happy coincidence.

“Luck favors me, doesn’t it?”

He said the intention is to demonstrate to federal officials that the city is at the forefront of anti-foreclosure initiatives as it seeks more funding.

Let us now praise famous Menino and his praiseworthy intentions.

PS  Like President Mubarak, Mayor Menino won re-election.

“Was it ever in doubt?”

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[Continued from yesterday's Part 1.]

In yesterday’s post, I expended several hundred words in a possibly-unnecessary exercise – intellectually demolishing the feasibility of architectural speculations, presented in the Boston Globe, that I believe even their proponents would concede are whimsical fantasies, never intended to exist beyond CAD/CAM screens and jpegs. 

They represent an effort to do something creative with a landscape marred by a prolonged slump in commercial building.

I tripped over that imprecision.  The landscape is marred, if indeed it is, because construction stiopped after it was started.  Had there in fact been a prolonged slump, then Filene’s will still be a department store.  Rather, Filene’s disappeared for a combination of two reasons: (1) a boom in property growth, with the resulting boom in real estate property values, and (2) the decline of the department store as a business model.  Filene’s became Macy’s, and Jordan’s became Macy’s, and Macy’s didn’t need two department stores across the street from one another. 

There is no telling when a building will rise again at the stalled Filene’s redevelopment, so the city’s architects are filling the void with a few ideas of their own:

In Part 1, taking the Globe at its word, I cherry-picked the most outlandish, the least practical.  But is architecture allowed to be completely impractical?  Only with the whimsical discretionary money of a plutocratic patron interested in creating new urban follies.  Yet, having disarmed us with an of-course-these-are-unserious disclaimer, the Globe in fact wants us to buy the product:

At stalled work sites, architects and planners are seeking to create forums for artistic expression and experimentation, transforming weed-strewn lots –

My hackles rise at cliches. 

Beware my hackles

Weeds are not strewn; they sprout.  Litter is strewn.  And when was the last time you went strewing, anyway?  Does ’strew’ have any conjuration other than a past passive?

In a word, “No.”

– into places where people could pause to enjoy intriguing urban scenery, or at least walk their dogs.

And not coincidentally, to create work for architects J.  Like this proposal, the first of several seeking respectability:

Filene’s design #8: Designer: Brad Koerner. Design firm: LAM Partners Inc. Koerner proposes draping the Filene’s site in enormous fabric that would serve as the canvas for supersize LED video screens. The screens could project any number of animations, such as a waterfall, or artists could be commissioned to produce animations that reflect the spirit of the Downtown Crossing area. Flood lights would accent the remaining portions of the structure.

“The idea is to breathe new life into these projects at a time when people would really appreciate it,’’ said Shauna Gillies-Smith, a landscape architect who proposed a medicinal garden for an empty site in the Longwood Medical Area.

Longwood design #2: Architect: Shauna Gillies-Smith. Design firm: Ground Inc. Gillies-Smith, a landscape architect, proposes to build a temporary medicinal garden at Longwood Center. Some of the plants Gilles-Smith proposes planting are: Echinacea, begonia, California poppy, chrysanthemum, honeysuckle, nasturtium, and valerian.

“It’s about signaling a present and future commitment to the public realm.’’

While I doubt there would be much health or economic benefit from this use, it would be visually pleasing. 

While some submissions are whimsical, others propose straightforward improvements such as basic lighting improvements or graphics to upgrade dull construction fencing.

What these more modest designs have in common is appearance – covering up the urban surgery with an optical band-aid.  They also have in common acknowledgment of their transitory nature:

In Miami, officials are renting idled sites from developers for $1 a year and making temporary parks of them.

In Seattle, one developer of a stalled 15-story office building volunteered to build a fountain, benches, and landscaping, while another allowed local food vendors to set up at the proposed site of a hotel he hasn’t been able to build.

Filene’s design #7: Designer: Dave Waller. Design firm: Brickyard VFX. Waller proposes to use the empty Filene’s site to post vintage neon signs from New England’s history, featuring signs from old drive-ins, Howard Johnson’s, and Dunkin’ Donuts.

At Columbus Center, principals of Schweppie Lighting Design Inc. proposed covering a fence with panels that change color as people pass by. At Harvard, John Powell suggested covering the fence in a video screen with images of Allston’s past and renderings of how development could change it in the future.

There’s only one problem: money.

The fixes range in cost from $300,000 to $1.2 million.

Who will pay for it?  The architects are unanimous – someone else.

At the least, said Tim Love, a principal of design firm Utile Inc., developers have an obligation to see that stalled projects don’t become eyesores.

“Any landowner has a civic responsibility to make their property look attractive,’’ Love said.

Really?  Says who?

“If a homeowner has a weed-filled front yard or leaves trash out, they would face penalties in most municipalities.’’

Garbage is a health hazard.  Weeds aren’t.  Mr. Love’s hypothesis is wishful thinking.  Less wishful-thinking is to imagine the city might fund the beautification.

Boston officials are now mulling whether to install temporary dressings at several sites. The Boston Redevelopment Authority asked developer John B. Hynes III to cover the two half-demolished buildings on his Filene’s site with large screens.

Which they should – helps protect the remaining shell, costs little, improves appearance.

Hynes and city officials are considering whether to print graphics or other designs on the screens.

Talk is cheap. 

Talk, in fact, costs nothing.

The BRA is also consulting with the Massachusetts Turnpike Authority about restoring the land at the Columbus Center site.

Columbus Center design #3: Architect: Simon Hare. Design firm: Placetailor Inc. Hare proposes to cast a nylon canopy over Columbus Center, to reconnect the community with the construction site and its possibilities. The canopy, to be spread across the Massachusetts Turnpike work site, would be supported by metal poles and braces that would lift it 30 feet over the highway.

“There’s not a lack of ideas being batted around,’’ said Kairos Shen, the BRA’s chief planner.

Ideas are cheap too.

Slightly more than four (!!) years ago, I posted about the Fan Pier’s empty site in the Curse Of Too Much Value; my point being that a well-located site that has already had substantial investment will not be redeveloped into a lower-value use.  Being cursed with so much value and sunk cost – financial and emotional – to be recouped, it

 “The problem is, how do you implement them? The reason these installations seldom get off the ground is there is no money to pay for them.’’

Ay, there’s the rub.

In most cases, the burden of paying for temporary installations falls on the developer. Builders already don’t have the money restart construction, so they are reluctant to find and spend as much as $1 million for aesthetic improvements.

You think not?

Change this planet as we know it!

“I’m not averse to landscaping and creating something unique, but by the time you take down the fencing and mobilize to do the work, we hopefully will be ready to proceed with our development,’’ said Tom Alperin, chief executive of National Development, which stopped construction last fall on the Longwood biotech lab.

That’s the second practicality: time.  Developers with stalled properties want to get them moving.  Anything established on the site merely means something to be dismantled later, at a cost of time.

Alperin said it would be too much work to accommodate [the Globe's] proposals in the time frame he’s working with. He said he hopes to resume construction within 18 months.

However, if somebody paid him to put in the public amenities, that would be a different story.

Some architects and designers urged the city to consider new regulations to help pay for art installations. Josh Barandon, chief executive of Squared Design LLC of Los Angeles, said the city should consider levying a penalty on developers who leave their sites dormant for prolonged periods.

Trust an Angeleno to recommend something for a Bostonian to do!

You, Kev, we’ve got a good idea for you

“In our opinion, such a penalty is both logical and feasible, especially in light of the current situation at Downtown Crossing,’’ said Barandon –

How thoughtful of him to offer his opinion that one third party (the city) should tax another third party (the developer) to pay for something his firm would be paid to create.

– whose firm collaborated with Howeler + Yoon of Boston to create a vertical garden at Filene’s to grow algae for the production of alternative fuel.

Oh, that’s sensible!

Love, the principal of Utile, said the city could require developers to buy insurance that would pay for aesthetic improvements in case financial problems forced them to stop construction.

I doubt such insurance exists now.  Still, if there were a market, somebody would write the coverage.  But why would a developer want to buy that insurance? 

“If developers want to play in this city and take risks, one of the risks they have to mitigate is the chance that the economy might collapse between permitting and construction,’’ he said.

Yes, that’ll certainly revive the economy and make Boston more business-friendly.

 “To financially penalize developers trying to hold onto their projects is ludicrous at a time like this,’’ said David Begelfer, chief executive of NAIOP Massachusetts, a commercial real estate trade group. “We have a unique circumstance in the financial markets. If you try to put in place regulations because of that, it could have unintended consequences for future growth.’’

That’s ludicrous!

Hynes, the Filene’s developer, doesn’t know when he’ll be able to resume construction. In the meantime, as he prepares screens to protect the two buildings on the site this winter, Hynes said he is willing to consider incorporating art but is more focused on the functional than the fanciful.

“Priority one is to protect the structure of the buildings, and priority two is the aesthetics,’’ he said.

Remarkably rational.

“We’re not predisposed to anything, but the hope for us is that whatever we end up doing, the emphasis is on temporary.’’

There’s the third obstacle: risk of losing development rights.  Install anything, anywhere, and someone will decide it should be preserved as a permanent use – then all your value is lost.  If the site is ugly, everyone will want you to get on with the business of developing it.

Beauty, to a developer, is a clear path to building.  And for that, an ugly lot is better.

It’s all in the eye of the beholder

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By: David A. Smith

“So this unemployed architect walks into a bar and says, ‘our erections can last for years’.” 

Okay, maybe not precisely that cheesily, but something similarly whimsical had to have been in the minds of Boston Globe editors when they sent out an offer to under-employed architects, What would you do to beautify under-developed property? 

We asked designers to suggest ways to spruce up stalled building projects around the city.

Given this, what’s a CAS-CAM designer to do but crank up the fantasies?  As the Globe’s introduction said:

The ideas are not restrained by considerations of practicality or cost, and they are not meant to be.

Some are reality-based, some float in the Empyrean realms unfettered by the necessity for practicality, like these two:

Filene’s design #1: Design firms: Howeler + Yoon Architecture and Squared Design. The team proposes to build a vertical algae-powered bioreactor on the Filene’s site.  The structure would be composed of prefabricated modules, or “eco-pods,” containing materials to manufacture biofuels. The eco-pods would allow scientists to test algae species and methods of fuel extraction. The fuel produced by the algae would power robotic arms that could reconfigure the pods to enhance growing conditions.

Reason staggers at the impracticalities of this one. 

Why put eco-pods, whatever they are, in stacks that are on the one hand physically inaccessible – so that anything good derived has to be lifted out by antiseptic arachnid arms – and on the other hand in a high-people-traffic area, so that anything bad can infect the maximum number of zombies right away?

Rule Number 2: Double Tap

Why take really valuable downtown land – it may be idle but it’s not valueless – and use it for something that could be placed anywhere?  Shades of Charles V and the Mezquita of Cordoba.

Operator!  Give me the number for 9-1-1!

A stalled construction property is unquestionably an eyesore:

Stalled site: Filene’s redevelopment, Location: Downtown Crossing, Estimated cost: $700 million, Status: Construction halted in November 2008 (Wendy Maeda / Globe Staff Photo)

However, as we saw in temporary permanence, city dwellers rapidly become used to work-in-progress or chiuso per restauro signs, so the eye elides them from our memory – which makes the windblown and trash-accumulating site not an affront to our daily living but merely a civic embarrassment:

And I know about embarrassing institutions

Only a smidgen less absurd is this one:

Filene’s design #11: Designer: William Frese. Frese, who is a sculptor, proposes to turn the Filene’s site into an abstract apothecary chest, evoking the neighborhood’s history in the jewelry trade. The “jewels” and a jeweler’s hand tool would be placed throughout the site.

Seeing aside the charming-because-transparent self-interest of a sculptor proposing to turn a construction shell into a rack for macro-sculpture – and where would be get these sculptures, O wise one? – one has the sense that this contributor knows full well this is a fantasy.

Or to be more precise, an architectural folly, for which there is a long and rich tradition.  A folly is a small building with no practical purpose at all, placed into a landscape to provide physical piquancy.  Some are purely visual, placed to create a natural vista or strolling point in a large garden:

Stowe Rotunda

Others stand like monument to childhood:

Broadway Tower, Moreton-in-Marsh, Cotswolds

Many follies are consciously self-deprecating, like this monument to architecture from Auckland, New Zealand:

Former headquarters, Bank of Ozymandias

Most follies result from personal wealth and architectural penury, but some are products of personal obsession, like the Watts Towers of Sam Rodia:

Watts Towers

Rodia called his creation Nuestro Pueblo (’our town’) and as the Watts Tower Web site puts it, “when he was asked why he made the towers, he answered, ‘I wanted to do something big and I did it.’” 

Even follies require maintenance, though, which is why this one is beyond folly:

Filene’s design #2: Architect: Christopher Golden. Design firm: Carol R. Johnson Associates. Golden, a landscape architect, proposes to fill the void in Downtown Crossing with a waterfall and urban oasis. The waterfall would drop from the side of the Filene’s building and cascade into a swimming pool, which would be surrounded by a sandy beach. At night, lights and music would emanate from the core of the Filene’s building.

Any property owner knows that a swimming pool is a hole in the ground into which one pours money.  They cost money to build; cost money to operate; have ongoing maintenance problems; create liability risk; and more than likely, reduce your property’s value upon sale. 

Add to that the impossibility of keeping clean a public-use swimming pool in the middle of a bustling city, with all its attendant risks:

And a beach?  We can safely consign this one to the world of fantasy – a wonderful place to imagine or experience vicariously (the lure of travel writing), but not to visit on one’s own.

Then there’s this wishful exercise:

Filene’s design #6: Architect: Travis Ewen. Design firm: Carol R. Johnson Associates.  Ewen, a landscape architect, proposes to create an urban garden on the Filene’s site with wind turbines and solar panels to be supported by the existing buildings.

Setting aside the implausibility of cows wandering Washington Street, if we can’t place wind turbines in the relative isolation of Martha’s Vineyard, what makes one think that the NIMBYism will be any less potent in the middle of downtown Boston?

Moving from the realm of the infeasible to the charmingly useless, we have this:

Filene’s design #5: Architect: Cynthia Bubb. Bubb proposes a bike park on the Filene’s site, along with a large projection screen to show movies at night. Along the bike path, Bubb suggests wrapping the Filene’s construction site with a fence made of perforated aluminum, painted or imposed with a scene from a forest. The construction site itself would become an urban parking lot for bicycle commuters, with a large movie screen in front of the Burnham building for people to watch films at night. A grass berm at right would accommodate viewers and picnickers.

The problem here is not infeasible but inutility and scale – as in, there isn’t any.  The Filene’s site is maybe fifty yards across, making a bike path scarcely long enough even to start you rolling.  You could walk across the site faster than you could mount a bike, ride it, and dismount. 

Nor is shackling bicycles a good use.  I work within three hundred yards of the Filene’s shell, and while I see the occasional bicycle, there’s no indication anywhere that bike-racking is a pressing need. 

As for ‘large movie screen for people to watch films,’ when was the last time you or anybody you know gathered in a plaza, the Esplanade, the Boston Common, or another picnic grounds to watch a movie outdoors?  Drive-in movies are dead, and for good reasons.  If there’s a metaphor for the twenty-first century’s home entertainment options, it’s the home theater.

High-tech entertainment … circa 1955

The architect, in other words, has taken an empty site and overlaid on it a currently-fashionable idea (urban bikes) with a conveniently visual illusion (an outdoor movie screen).  It’s harmless but it’s pointless.

Shifting from downtown – prime retail, office, or residential land – to a clearly underused spot, we swing now to the Columbus Center area.  Back in the 1950’s, America and most of the developed world embarked on the Great Urban Highway Mistake, putting concrete ribbons over, around, and through most of our cities – and in traffic, pollution, and urban dysfunctionality we’ve been paying ever since. 

Stalled site: Columbus Center. Location: Between Arlington and Clarendon streets over the Massachusetts Turnpike. Estimated cost: $800 million. Status: Construction was stopped more than a year ago as developers search for funds to resume the development. Meanwhile, the state has said it will pay to undo construction work at the site, which has been the subject of many neighborhood complaints. (Wendy Maeda / Globe Staff Photo)

Count me among those who would love to see established ugly necessities like the Massachusetts Turnpike covered over, Big-Dig-style, both to hideaway the arterials and to create valuable walkable new-urbanist land.  Such land costs money – the curse of too much value – and hence construction starts only in the boomiest of booms, and stalls in the breathiest of downturns.  It would be nice to have the site developed, but in the meantime, can we really imagine something like this?

Columbus Center design #1: Architect: Chris Reed. Design firm: Stoss Landscape Urbanism. Reed proposes suspending an energy-producing public garden from latticework over the Massachusetts Turnpike at Columbus Center. The latticework supports a field of microturbines that harness wind created by passing vehicles; it also supports walkways connecting the Back Bay and South End neighborhoods.

With this conception, we find ourselves back in the land of gravity-defying phantasms.  It’s a lovely visual – one can imagine the Disney bluebirds chirping – but ‘energy producing public garden’?  In downtown Boston?  ‘Wind created by passing vehicles’?  As if that would flow in a harnessable direction instead of simply swirling, as it now does.  (If one wanted to harness vehicular wind effects, the place for turbines would be at tunnel entrances and exits, but in fact fans are placed into those tunnels precisely because vehicles merely displace air, they create no steady breeze.)

Then there’s this mixture of the inexpensive and the unhygienic:

Filene’s design #3: Design firm: Utile Inc. Utile Inc., an urban planning firm, proposes to install crisscrossing boardwalks across the Filene’s site that would provide new shortcuts through Downtown Crossing. Below the boardwalk would be a manicured pasture fit for sheep and other livestock that used to roam the nearby Boston Common.

Nothing wrong with crisscrossing boardwalks except the legal risks.  I cannot imagine that the site’s insurers would be comfortable with pedestrians walking in proximity to an unreinforced building shell.  But sheep grazing underneath?  Why?  For their manure?

They’ll work in downtown Boston!

By now readers may be wondering why I’ve double-pumped so many shotgun shells into these helpless barrel-bound fish.  The reason is simple – these designs were offered, if not by their architects then by the Globe, as physically doable.  Somebody thought they could in fact be built, and inviting a referendum on them:

Boston’s stalled construction sites — from the site of the former Filene’s building to Harvard’s stalled science center in Allston — have become eyesores dotting the city’s landscape. The Globe’s Casey Ross asked some local artists and architects to reimagine these stalled projects and come up with ideas to make them part of the city’s culture again. Click through for a variety of renderings and ideas, and vote on which Filene’s site design and which design among the other stalled projects you like the most.

Then, submit your own rendering of your designs for one of Boston’s stalled sites.

There is, of course, a serious point to all this folly.

No, really, we’re about to become serious

[Continued tomorrow in Part 2.]

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Itself) of three bidders for the money-flushing newspaper:

An investment firm that recently purchased a San Diego newspaper has emerged as a third bidder for The Boston Globe, according to people briefed on offers submitted to the paper’s owner, The New York Times Co.

The suitors have arrived, dowries in hand, despite the parent company’s newly professed indifference to the sale process it had started:

In an interview with the Globe this week, Times Co. publisher and chairman Arthur O. Sulzberger Jr. said the company was “exploring’’ a sale of the Globe, but doing so “does not mean that will absolutely be the case.’’

President Thomas ‘Tug’ Benson: Every time I give an order, it gets screwed up!

Appoint an ambassador, he leaves the country.

Alert blog readers [Nothing but the best readers here! – Ed.] will recall that three months back, in Better dead than read, I speculated that not only the Globe’s sale inevitable, so too is a dramatic change in use, because the land on which the newspaper sits is worth vastly more if used for something else.

Ramada Rodham Hayman: I had to come. It was a sequel.

In other words, a newspaper plant on that site is a negative-value use, for two reasons:

1. In modern cities, well-located urban land is best used for high-density high-end residential, not manufacturing.

2. Newspapers are increasingly intangible and Web-based, not physical.

In other words, we have a rising use (residential) crossing with a falling use (manufacturing), and the gap (reuse value minus current value) is widening.  The Globe’s eviction from its current site is inevitable, and it’s astonishing to me that so few people see it, but then, often we see only what we expect to see.

A Man from Mars could see it instantly:

Look at that location: close to down, on the waterfront, right on the Expressway

Boston and the Federal government have completed the Big Dig, the world’s most expensive single construction project, greatly improving transportation into downtown and to the South Shore.  One of my little mental experiments is this: Pretend the contrary, would you do it?  If you were a Man from Mars, would you look at that location and think, Of course, this is the site for a newspaper plant?

Zooming a bit closer, what do we see?  Underused land area.

Low-rise, not mid-rise

Looks like a campus, doesn’t it? 

Throughout the developing world, we face the challenge of slow market eviction, where slum dwellers who occupy well-located land are suffered to squat there so long as the land is legally impaired or environmentally questionable.  When the land or property is improved, market forces move them out: voluntarily, and with transfer or relocation payments, but movement nevertheless.  

[Dexter is being rescued]
Dexter: You don’t understand. I can’t walk… they’ve tied my shoelaces together.
Topper Harley: A knot. Bastards!

That is now happening to the Globe, which is better dead than read?

The combined assessed value of that property and the 20 acres of real estate at its printing plant in Billerica is $65 million, according to assessor records in Boston and Billerica. The New York Times Company also could parcel out Boston.com for an estimated $20 million according to estimates from analysts.

If the logo has value, why do we need a physical presence?

Compared with the newspaper as a business, the real estate also has multiple other huge advantages as a corporate asset:

1. The real estate has minimal holding costs.

Shuttering the paper would preserve liquidity at the Times, which faces a debt refinancing crunch in a few years.

2. More people are likely to be interested in buying the real estate than in running the newspaper.

In an outright sale of the Globe, Barclays Capital analyst Craig Huber estimates the paper would fetch only $113.3 million. But that’s only if the paper can find a buyer. He uses a multiple of 0.3 on an estimated 2009 Globe revenue of $377.8 million. In years past it was not uncommon to see major newspaper companies sell for 2 to 3.5 times revenue.

Note that the multiple-of-gross-revenue model presupposes profitability is more or less constant regardless of sales. The tenfold drop in pricing (from 3.5x sales to 0.3x sales) reflects the imploding business model.

Undone by economic obsolescence and over-reliance on physical structures

3. Cash flow immediately improves, yielding capital for more critical businesses … like the Times

“While closing down the Globe won’t be a popular decision from a local perspective, improving (cash flow) by $50 million-plus annually could help NYT stock,” said John Janedis, a newspaper analyst at Wachovia Capital Markets LLC.

Is shuttering or relocating the Globe what the buyers have in mind? 

Topper Harley: I’m not saying I don’t trust you, and I’m not saying I do. But I don’t.

Let’s meet the suitors:

[1] Platinum Equity, of Beverly Hills, Calif., which bought the San Diego Union-Tribune newspaper in May, made an offer to the Times Co. last week, the sources said.

[2] One of the local groups is led by Stephen Pagliuca, co-owner of the Boston Celtics and a private equity executive at Bain Capital, and former advertising executive Jack Connors.

[3] The other is led by Stephen E. Taylor, a member of the family that sold the Globe to the Times Co. in 1993 for $1.1 billion.

Two private-equity buyers – whose strategy is never buy-and-hold, always buy-transform-and-sell – and one family that’s playing with house money, and may have sentimental reasons for submitting a bid, even  if it’s undecided.

Harbinger: War …it’s fan-tastic!

Platinum’s offer is $35 million, plus the assumption of $59 million in pension liabilities, something the Times Co. asked all potential buyers to include in their bids, the people said.

When a property is encumbered by long-term liabilities, the buyer takes it subject to those liabilities.  Thus Platinum’s price is effectively $94 million, which is suspiciously close to our better dead than read $65 million minimum liquidation value of the property:

Taylor’s bid is believed to be in a similar range, according to the sources.

 Topper Harley: You’re joking.
Ramada Rodham Hayman: I’m not.

Topper Harley: You’ve got to be.
Ramada Rodham Hayman: If I was joking I would say: “A horse walks into a bar. The bartender says, ‘Why the long face?’”

Pagliuca and Connors, who are proposing a model with a nonprofit component, are believed to have offered significantly less.

Doubtless they expect the non-profit structure to give them financing or real estate taxation advantages.

Topper Harley: These men have taken a supreme vow of celibacy, like their fathers, and their fathers before them…

Meanwhile, the original business model is extinct – it just doesn’t know that yet.

The SEC filing also said the Globe and the T&G have been hurt by the forces pummeling traditional media companies, including the migration of readers and advertisers to the Internet and a deep recession.

Thank you, Topper. I can kill again! You’ve given me a reason to live.

But the papers have also put in place strategic financial turnaround plans. The Globe, for instance, has:

[1] Shuttered its Billerica printing plant

[2] Raised subscription prices

[3] Reduced costs, including getting $20 million in union concessions.

For the Globe, here’s the self-evident end state: it becomes a regional outlet of the New York Times.  Once upon a time, we had a First National Bank of Boston, which became Bank of Boston, which became Fleet Boston, which became Bank of America. 

Founded in 1784, consolidated 2004

As value goes intangible, operating platforms consolidate and businesses distribute their functions across electronic networks.

It is unclear how low a bid the Times Co. is willing to accept.

In a separate development in the news industry yesterday, Cox Media Group said it was taking the Austin American-Statesman off the market, after receiving bids it considered to be too low, according to published reports.

Warren Buffett has said that he would not buy any newspaper at any price; he thinks the business model is entirely broken, and permanently so.

Platinum, run by billionaire Tom Gores, is best known for buying distressed businesses, largely in technology.  Three days after buying the San Diego Union Tribune, Platinum laid off 18% of the staff, or 192 positions.

Nor does such a move preclude further layoffs.  Private equity does not like to throw good money after bad.

Michelle Huddleson: Now we have to go in to get the men who went in to get the men who went in to get the men.

“What’s important here is that the Globe be maintained as a viable business entity, whether it’s sold or we continue to operate it, and make sure that it has the financial stability to ensure its continuity,’’ said [Times Co. publisher and chairman Arthur O. Sulzberger]. “We’re committed to that.’’

“We’re committed to that.”

You may be, Mr. Sulzberger, but neither what you say nor what you believe will bind any buyer.  That’s just a lullaby for the employees.  Meanwhile, the Globe may be applying a neck tourniquet to itself: the Globe may start charging for its online content.

Loved you in Wall Street!

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Are you sure that’s spelled right?

As the unionized employees of the Boston Globe debate among themselves whether they will accede to the $20 million in annual wage cuts demanded by their owner, the New York Times Company, they might do well to ponder a grim real estate reality, as presented with clinical dispassion by the Boston Business Journal:

The Boston Globe might be worth more dead than alive to the New York Times Company.

A dismantling of the Globe’s assets could yield roughly $85 million.

Worth 85x that dead?

[By the way, Globe management is practicing the classic technique of bipedal-negotiation, about which I'm likely to post later as this drama unfolds. – Ed.]

We’re here to negotiate … or not

Aside from the self-referential local color – a newspaper printing excited stories about its own possible demise – there is, of course, a housing-finance-related point in the challenge of land use. Right now the Globe’s land is being valued based on continued operation ‘as improved’ – that is, as a newspaper – lurking in the background is always the latent possibility of conversion to another use. So the warning is this:

It’s demeaning to be worth more in your body parts than for your soul, but that’s a possibility here:

So say analysts, who believe that the Times may realize more value selling off the Globe’s real estate and other assets than holding out for a buyer for a newspaper that is estimated to lose $80 million in 2009.

Not only is the Globe’s possible demise rooted in real estate, so too is the collapse of its business model, for reasons that would have made Karl Marx smile.

The New York Times Company rattled the Globe to its core with an edict to slash $20 million in costs or shut down by May. [Temporarily extended – Ed.] But that only addresses one part of the equation. The Globe has a revenue problem, too, along with every other metro daily in the country.

The newspapers’ business model is built around a heavy capital investment – in plant and equipment – that in turn mandated geographic concentration (hence the rise of one-paper-town monopolies) and least-common-denominator programming as a means of maximizing aggregate readership, and hence ad rates.

For example, classified advertising – once the cash cow of all daily newspapers – has hit the skids.

Take a look at the classified-ad page displayed below. When was the last time you saw that in your local paper?

Not so long ago, newspapers had pages and pages of these

(Palm Beach Post, 2005)

The Web has killed the newspapers’ business model. It’s not just bloggers creating content, and being fact-checked by swarms instead of by journalism-graduate editors.

The guy in front has the publishing capacity of the edifice in back

It’s not just Google making anything accessible, you have only to type. It’s not just Craigslist and its ilk making advertising free. It’s the entirety of the internet – and why do you take prime real estate in Boston and devote it to a printing press?

Waterfront, access to highways … and you print a newspaper there?

Look at that location! Waterfront views, access to the major highway. Plunking a newspaper’s offices there can’t possibly be the highest and best use.

Once technology created the Web, the cost of publishing high-quality content dropped virtually to zero. So too did the cost of finding high-quality content drop virtually to zero. Although Nancy loves sitting at the kitchen table going through it sheet by sheet and clipping out articles suitable for blog posts, most of us now read the news online. And even she checks out the grocery store ads via the Web rather than via the print.

Newspaper readers happily go to Craigslist.com to advertise yard sales, appliances and lawn tractors for free.

As the cost of delivering ads to eyeballs drops, ad revenue likewise plummets.

Ad rev goes Web …

If the New York Times Company decide to pursue a Web-only version of the paper, it would have to reduce Globe expenses by 90%, Simonton said. He estimated online revenue is only about 10% of the newspaper’s total revenue, estimated between $379 million and $418 million.

The Globe, however, finds itself stuck with a massively expensive fixed cost of delivering the paper. From the physical plant, to the delivery model, to the unionized labor force (430 of whom, listed here, have lifetime-job guarantees), the Globe has invested heavily in fixed assets, meaning that as its revenue shrinks, its profitability drops even faster.

Union representation at the Globe is equivalent to about 70% of the paper’s work force, making it more of a challenge to cut costs.

Because the Globe cannot cost-cut its way to breakeven, it must raise revenue. Yet the technology of the Web is a paradigm-buster threatening to send the Globe the way of Smith-Corona, outflanked by a breakthrough innovation of a more powerful and multi-function tool (the Web). The result is that the whole business model is in jeopardy:

“The underlying real estate may be more valuable than a franchise whose earning power has diminished,” said Tom Corbett, a newspaper analyst at Morningstar Inc. Corbett said he found it near impossible to put a value on the Globe [as a newspaper] because of the absence of recent, comparable deals.

“We couldn’t find a reliable precedent. Nothing is changing hands,” Corbett said.

Depressing though it may be to accept that one’s organs are more valuable than one’s self, that prospect is facing the Globe.

Some analysts, however, said they doubt the New York Times Company will find a buyer who wants the Globe in one piece.

The New York Times Company could cease print operations and sell the land underneath Globe operations at 135 Morrissey Boulevard to a redevelopment group.

In Larry Niven’s World of Ptaavs, he envisioned a future where bootlegging of human organs, organlegging as he dubbed it, was so profitable it was quasi-legal.

My dear, you have two kidneys and no passport

Wouldn’t you be better off with one kidney and one passport?

Less than thirty years after he wrote it, the movie Dirty Pretty Things highlighted the black market in healthy transplant kidneys. (We will not comment on ‘trophy-adoptees’ who seem to be valuable more as photo-op props than as children.)

See my tee-shirt?

The combined assessed value of that property and the 20 acres of real estate at its printing plant in Billerica is $65 million, according to assessor records in Boston and Billerica. The New York Times Company also could parcel out Boston.com for an estimated $20 million according to estimates from analysts.

If the logo has value, why do we need a physical presence?

Compared with the newspaper as a business, the real estate also has multiple other huge advantages as a corporate asset:

1. The real estate has minimal holding costs.

Simonton said the New York Times Company may be more interested in preserving its own liquidity than in propping up the Globe. While the parent company has taken a number of steps to buy time this year and next, it still has gaps in its financing plan.

I’ve reduced by carrying costs … pity about the occupants

Shuttering the paper would preserve liquidity at the Times, which faces a debt refinancing crunch in a few years.

2. More people are likely to be interested in buying the real estate than in running the newspaper.

Now, as you can see, the financial picture is exciting …

In an outright sale of the Globe, Barclays Capital analyst Craig Huber estimates the paper would fetch only $113.3 million. But that’s only if the paper can find a buyer. He uses a multiple of 0.3 on an estimated 2009 Globe revenue of $377.8 million. In years past it was not uncommon to see major newspaper companies sell for 2 to 3.5 times revenue.

Note that the multiple-of-gross-revenue model presupposes profitability is more or less constant regardless of sales. The tenfold drop in pricing (from 3.5x sales to 0.3x sales) reflects the imploding business model.

Undone by economic obsolescence and over-reliance on physical structures

3. Cash flow immediately improves, yielding capital for more critical businesses … like the Times

“While closing down the Globe won’t be a popular decision from a local perspective, improving (cash flow) by $50 million-plus annually could help NYT stock,” said John Janedis, a newspaper analyst at Wachovia Capital Markets LLC.

Les there be any doubt, the Times has taken some of the obvious precautions if one were planning to close a newspaper, starting with writing down the asset’s value:

The New York Times Company bought the Globe on October 1, 1993, for about $1.1 billion. [Snip] In 2006, though, the New York Times Company took a major earnings hit when it recorded an $814.4 million pre-tax charge for the impairment of goodwill and other intangible assets at the New England Media Group, which is dominated by the Globe.

That entity also owns the Times’s share of the Boston Red Sox. The amount allocated to the Globe is likely quite low.

The capital markets are convinced the Times parent is heading for imminent default:

The debt market agrees.

New York Times Company bonds maturing in 2015 are currently trading for 67 cents on the dollar, according to Bloomberg data. With annual yields on that debt now above 13%, buyers of New York Times Company notes are demanding a hefty price for what they see as abundant risk.

I may be desperate, but I’ve got options

Finally, the Times Company has an ace in the hole: since it’s committed to maintaining The New York Times as an old-school, capital-intensive, roll-the-presses newspaper, why keep the Globe as a separate printing factory?

This building is better located … and it’s heavily mortgaged

Why not keep it as a regional or sub-brand?

With New York as the exception, Simonton does not see any US city capable of supporting two daily print newspapers beyond 2010.

Won’t it be ironic if the scrappy and rabblerousing Boston Herald outlasts its haughty neighbor?

Within the Globe’s news operations, editors and reported face gloomy uncertainty with a hope that the newspaper’s intangibles – past Pulitzer Prize glory and the Globe name – will attract a white knight.

Pinch me, I must be dreaming?

To that end, allow me to quote from Larry the Liquidator, eighteen years ago, who though brutal and fictionalized, isn’t wrong:

Where I come from, you always say Amen after you hear a prayer. Because that’s what you just heard – a prayer. Where I come from, that particular prayer is called The Prayer for the Dead. You just heard The Prayer for the Dead, my fellow stockholders, and you didn’t say, Amen. This company is dead. I didn’t kill it. Don’t blame me. It was dead when I got here. It’s too late for prayers. For even if the prayers were answered, and a miracle occurred, and the yen did this, and the dollar did that, and the infrastructure did the other thing, we would still be dead. You know why? Fiber optics. New technologies. Obsolescence.

We’re dead all right. We’re just not broke. And you know the surest way to go broke? Keep getting an increasing share of a shrinking market. Down the tubes. Slow but sure.

Before the Heralds start celebrating, however, another cautionary note:

“And we’re skeptical about the number of markets that can support one daily print newspaper,” Simonton said.

Start the funeral without me?

The real estate moral is blindingly clear. Even when the income-producing value of improved property collapses because of a change in the business, one can change the property’s use. And underneath it all is that uniquely situated land, which always has a recovery value even when the whole business model has crumbled into loss.

And by the way, it pleases me that I am called Larry the Liquidator. You know why, fellow stockholders? Because at my funeral, you’ll leave with a smile on your face and a few bucks in your pocket. Now that’s a funeral worth having!

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