Regarding a proposed upzoning at the CambridgeSide mall: I previously wrote that the City Council needed to have the developer’s pro forma financials analyzed professionally to determine whether it’s really necessary to build 82 percent higher for the mall to survive. Implicit in this request is that the analysis would be of the original pro formas reflecting the existing height and the mall’s financial state back in February, when its request to become a giant “planned unit development” was filed.

In doing responsible financial due diligence, city councillors did wisely vote to have an analysis. But it is unclear – and absolutely crucial – which pro formas will be analyzed and how. Below is a list of essential elements of a valid, meaningful analysis:

In doing responsible financial due diligence, city councillors did wisely vote to have an analysis. But it is unclear – and absolutely crucial – which pro formas will be analyzed and how. Below is a list of essential elements of a valid, meaningful analysis:

Original pro formas done by the developer to determine whether the mall, as it was back in February, could survive without upzoning. (If instead the current pro formas corresponding to the revised petition of July 25 are used, that analysis would be of proposed buildings that are 155 feet high and include residential units. Use of these financials would not be valid, because they are not the financials on which the developer based its claim for needing to break zoning rules.)

No pro formas that include residential units. The point is to determine whether the existing mall could survive: If housing is included, we’re no longer discussing the existing mall.

An architect’s opinion and estimate as to what changes in the buildings would be required to convert to offices and labs, including the costs of turning the above-grade parking lot on First Street into offices and labs.

Assessment of assumptions as to fairness and accuracy. Once the proper pro formas are selected, the analysis must assess whether all of the developer’s assumptions constitute reasonable, supportable estimates of such items as costs of construction (materials, labor, etc.), rentable square feet, estimated rent revenues per square foot, debt, debt service, effective tax rate, etc. The city would ideally contact other cities that require pro forma analysis and see how they do it.

In conclusion, only pro formas reflecting a height falling within zoning limits and excluding residential units, but including necessary architectural changes as well as fair, reasonable estimates could truly test the developer’s original claim that breaking the zoning limit of 85 feet is necessary for the survival of the mall. Analysis of any other pro forma financials would not be valid and would be a questionable use of taxpayers’ money.

If analysis of the valid, relevant pro forma financials shows the developer can survive financially without an upzoning, then why should the city permit:

bullet-gray-small breaking the guidelines of an award-winning East Cambridge Urban Design Plan and spoiling the harmony of height and materials around Canal Park;

bullet-gray-small a worsening of already horrific traffic at Land Boulevard and Route 28 due to an enlarged CambridgeSide, not to mention development in Cambridge Crossing and redevelopment of the former Edward J. Sullivan Courthouse. In an op-ed about this traffic, Rafi Mohammed pointed out that the developer’s own study “pegs post-redevelopment traffic at an intersection in the CambridgeSide area at 1,815 cars per hour, which is 21 percent above the critical threshold of 1,500.”

The City Council should help provide housing, but also protect treasured cultural inheritances. Canal Park, with its low-lying buildings, its sparkling water, greenery, wildlife and family picnic areas, is a jewel of Cambridge, not just another commercial site. 

Marlene Lundberg, East Cambridge


Marlene Lundberg is a retired corporate credit analyst with 20 years of experience in financial analysis in New York City – three at Value Line Investment Survey and 17 years at the National Association of Insurance Commissioners, an organization for state government insurance regulators.

 

A BETTER
Cambridge Day
Please consider making a financial contribution to maintain, expand and improve Cambridge Day.

Facebooktwittermail


Previous story

CambridgeSide developer takes small step, but more is needed: Analysis of its financials
A BETTER
Cambridge Day
Please consider making a financial contribution to maintain, expand and improve Cambridge Day.
A BETTER
Cambridge Day
Please consider making a financial contribution to maintain, expand and improve Cambridge Day.
Facebooktwittermail