March 1, 2009 - South Weymouth Naval Base - LNR Property Company, Weymouth MA

Still waiting for takeoff

Economy is latest challenge for LNR in quest to develop former air base in Weymouth. While progress has been slow, LNR is well positioned to tackle such complicated, long-range projects.

Naval Air Station South Weymouth was established through the efforts of Captain Charles E. Rosendahl, Chief of the Navy's Lighter-Than-Air (LTA) Program. Rosendahl was looking for an LTA base from which to conduct submarine surveillance operations over the North Atlantic. Public Act No. 635 of the 76th Congress, passed in June of 1940 and referred to as President Franklin D. Roosevelt's "10,000 Plane Program," was the initial act that led to the construction of Naval Air Station South Weymouth.

Early stone wall and landscaping features at SouthField Highlands.

SouthField Golf Homes - single-family homes that integrate wonderful views of SouthField Links, an 18-hole, championship-quality golf course set amidst pristine natural surroundings.

Still waiting for takeoff

Transforming an old military base into a thriving new community would be a daunting task at the best of times. However, these are anything but the best of times.

At the former South Weymouth Naval Air Station, LNR Property Corp. is laying the groundwork for SouthField, a cluster of villages set to include a golf course, movie studio, businesses, and thousands of homes. The site is one of six mothballed military bases LNR has added to its portfolio in the past 12 years.

The company is now juggling these mammoth projects in the midst of a serious economic downturn.

"All of them are a challenge," said Curt Stephenson, national president of LNR's land group. "That is why there's only a handful of companies that do this. I don't mean to be flip here, but it's not like opening a Starbucks on the corner. These are not the same. They are all very complex and require a lot of up-front capital. Some have tremendous clean-up responsibilities."

Redeveloping military bases is, indeed, no easy task. Paved runways built three feet deep into the ground can't be torn up overnight. Areas where fuel, weapons, and other hazardous materials were stored must be cleaned up. Some military bases have areas that are so contaminated that the EPA classifies them as Superfund sites. Timelines on these projects can stretch over 10 years or more. And the state of today's economy and slumping housing market is a nightmare for many real estate developers.

Progress has been slow at Weymouth and most of the other LNR sites, but Stephenson said LNR is well positioned to tackle such complicated, long-range projects.

The privately held company, based in Miami Beach, Fla., has roots that go back to 1969. It originally started as the commercial arm of Lennar Corp., one of the biggest home builders in the country, and was spun off as a separate company in 1997. Since then, LNR and Lennar have collaborated as partners on several base projects in California.

LNR recently pulled out of a joint effort with Lennar to redevelop Hunters Point Naval Shipyard in San Francisco. As the site and plans grew, LNR opted out. Stephenson said the plan had "doubled in size and changed in scope" and wasn't what they envisioned. LNR had been involved in the project since 1999 and transferred its stake in August.

Nothing has been built yet at the El Toro Marine Corps Air Station, near Irvine, Calif., which closed in 1999. LNR and its partners acquired the 3,700-acre property for approximately $650 million in a federal auction in 2005. As part of the deal, LNR and its partners agreed to pay $401 million in development fees and the city of Irvine took 1,347 acres for a public park. The rest of the property is slated to become the Great Park Neighborhoods, a community of housing, retail, educational, and research institutions.

The Los Angeles Times originally reported that home construction was to begin as early as 2007, with the first houses ready by 2008. Runways and taxiways have been torn up, and site prep work is underway, but there has been no construction.

"The project has slowed down due to the economy," said Stephenson, who estimated the site preparation work will take another a year and a half to complete.

Nothing has been developed so far at Fort Gillem, either. LNR Property Corp. and Weeks Robinson Properties LLC were selected in December 2007 as the master development team for this military base in suburban Atlanta. "We're in the early planning stages right now," said Stephenson.

In redeveloping the Mare Island Naval Shipyard in California, closed since 1996, LNR ran into some serious environmental and economic obstacles.

"It was a very, very contaminated site," Stephenson said of the former shipyard, 25 miles northeast of San Francisco.

In 1997, the city of Vallejo selected Lennar Mare Island LLC - a joint venture that included LNR Property Corp. and Lennar Corp. - to lead the project as the master developer.

LMI acquired the land in 2002, and construction on new residential neighborhoods started in 2004. The original plan called for 1,400 homes. Approximately 500 homes were built and sold between 2004 and 2006, according to Stephenson. There are 7 million square feet of buildings, and approximately 3 million square feet has been leased to businesses, he said.

"It's slowed down because of the overall economy," said Stephenson. "The biggest issue with that base isn't the development itself, it's that the city [of Vallejo] is in bankruptcy."

In June 2008, Lennar Mare Island LLC filed for bankruptcy. A restructuring plan is being hammered out in court to determine how and when the project will proceed, Stephenson said.

A bright spot for LNR is the former March Air Force Base. The Riverside, Calif., facility has been successfully transformed into a business park called Meridian.

LNR got involved in that project in 2001, and unlike the other base projects in California and Georgia, LNR had no partners to deal with - it is the sole developer. So far, 800 of its 2,000 acres have been redeveloped, according to Stephenson, who says: "It has done fabulously well."

As in the Meridian project, LNR is the sole developer of South Weymouth's SouthField project, and is in charge of "horizontal development" of the master-planned community. In essence, that means creating infrastructure (i.e., roads, street lights, sewers) and dividing the base into buildable lots that can be sold to developers.

LNR is waiting on the South Shore TriTown Development Corp. - the quasi-public agency that acts as the municipality of the base - to float bonds to cover costs of infrastructure work, and also to gain full control over the property. LNR currently owns 540 acres; if all goes according to plan, the US Navy will transfer the remaining portion of the 1,400-acre base to LNR next month.

Despite the gloomy economic forecasts, developers still have their eyes on SouthField, according to LNR officials.

"The macroeconomic climate is a disaster. . . . Boston is a bright spot," said Kevin Chase, vice president of LNR's northeast region. "We're 100 percent committed to see this thing through."

LNR was selected as the master developer for the Weymouth base in October 2002. Plans include 2,855 homes, 2 million square feet of commercial space, a recreation complex, and an 18-hole golf course by 2017. Home construction was originally scheduled to begin last year, with the first residents moving in this spring. To date, only the marketing center is up and running.

The plan to build movie studios at SouthField is moving forward, according to Chase, and the first sound stages could be built as early as this year.

Four local home builders have expressed interest in SouthField, and LNR is in the process of hammering out purchase-and-sale agreements with them, according to Chase. The firms include a developer of senior housing, a Boston-based apartment developer, and two South Shore builders who got financing from local banks, Chase said.

John R. Ward, a board member of the South Shore Tri-Town Development Corp., said the SouthField project is moving forward, slowly but surely.

"People want to know what's going on, especially the tradespeople who are out of work," said Ward. "This is going to create thousands of jobs."

He added that the Tri-Town board has full confidence in LNR's ability to make SouthField a reality. "They've got a lot invested in this project," said Ward.

Weymouth Town Councilor Kenneth J. DiFazio, though, has concerns about the SouthField project, especially since the base is not connected to the Massachusetts Water Resources Authority yet and the promised waste-water treatment plant has not been built. He worries that those could end up being the town's problems.

DiFazio said he believes the scope of the project - and the viability of an 18-hole golf course that will need to be watered regularly - should be reviewed carefully.

"We're in a different environment than we were in 2003 and 2005," said DiFazio. "I think they should reevaluate the project monthly, or quarterly. Time doesn't stand still. I don't think the project should stand still, either."

Original Story - Boston Globe

Update April 2, 2009

Developer of Mass. air base wants money back

The company developing the former South Weymouth Naval Air Station is threatening to complete just part of the project unless the agency overseeing the property can begin paying it back.

The Patriot Ledger of Quincy reports that LNR Property Corp. has spent $72 million on SouthField. Of that, $35 million has been loaned to South Shore Tri-Town Development Corp. for infrastructure and operating costs.

Tri-Town planned to repay the loan with money from the credit market, but has found that avenue frozen amid the recession.

Kevin Chase, a regional vice president for LNR, says he wants Tri-Town to show it is making progress toward paying the money.

Tri-Town chief executive Kevin Donovan says the agency is working "aggressively" on the situation.

Update Story - Boston Globe

Construction zone: Delays ahead

Large development projects stall as tight credit and weak demand cause builders and investors to become wary

The welcome center is open. A road into the complex is complete. And utilities have been installed on part of the property. But construction has yet to start on the nearly 3,000 homes at SouthField, the mixed-use development planned for the former military base straddling the borders of Weymouth, Rockland and Abington.

"SouthField is ready for business," said Jeremy Crockford, spokesman for the developer, LNR Property Corp. of Miami. "What we are waiting for is for business to be ready for SouthField."

Like most other big development projects south of Boston, SouthField is in a holding pattern. Tight credit markets and a plunge in demand for housing have idled the builders that LNR is trying to find to start the project. In addition, a funding dispute between LNR and the public agency that controls the base also has held up transfer of the property from the Navy, drawing fire last week from a Navy official about the agency's handling of the project.

Other projects are similarly stalled. Construction start has been delayed at the $1.5 billion Westwood Station residential community and commercial center. The 450,000-square-foot Sharon Commons open-air lifestyle center also is delayed, although a 29-unit townhouse development that is part of the project is scheduled to break ground this spring.

Construction appears to be many months or even years away for two big projects planned in Quincy - downtown urban renewal and the redevelopment of the Fore River Shipyard.

"Many of the projects we anticipated would break ground in 2008 and 2009 and even 2010 are absolutely on hold," said James Elcock, executive vice president and head of the Boston suburban section of the real estate services firm Colliers Meredith & Grew. "Any construction that does take place now has to be pre-leased."

"Developers seem to be very, very cautious," said Steven Winter, senior project manager for the Metropolitan Area Planning Council. "No one is investing right now."

Construction slumped markedly in Massachusetts and across the country when the recession began in late 2007. Then, last September, the global financial crisis hit, and most new projects that were not already being built came to an abrupt halt.

For projects in the early planning or permitting stages, the economic crisis arrived at a convenient time.

Thorndike Development of Norton only recently completed its master plan for the 730-home 1021 Kingston's Place development next to the Kingston commuter rail station. The developer is content to let state and local officials take their time reviewing the project, which would be the biggest development ever in Kingston.

"Being in the permitting phase is a good thing in this economy," said Lindsay Wilson, associate partner for Thorndike.

Peter V. Forman, president of the South Shore Chamber of Commerce, said many developers have shifted their focus from construction to planning. "With the soft housing market, there is no rush to get started," he said.

Daniel Quirk, owner of the Quincy Shipyard, is still working on a master plan for a large-scale mixed-use development at the 111-acre property that straddles the Quincy-Braintree line. No construction timetable has been set. For now, he is using the property as a storage area for vehicles.

A $1 billion redevelopment of downtown Quincy also is in the early planning stages. While the city's designated developer, Street-Works of White Plains, N.Y., is working on a master plan, Quincy officials are moving forward with construction of a new connector road to the downtown.

For some projects that were already under construction or in final planning when the downturn hit, building has gone forward.

"It was cheaper to keep going than to stop for some of them," said Elcock.

The Legacy Place open-air shopping mall in Dedham, which broke ground a little over a year ago, is scheduled to start opening stores this summer, and most of the $100 million development, including a 15-screen movie theater, should be complete by fall.

David Fleming, spokesman for Legacy Place developer W/S Development, said a key to the project's success was signing up major tenants early. Legacy Place has not had entirely smooth sailing. A planned office building that was to be the corporate headquarters of National Amusements, co-developer of the project, has been put on hold.

The recession did not slow construction at Patriot Place, the 1.3 million-square-foot, $550 million commercial complex next to Gillette Stadium in Foxborough. Two shopping centers - one north of the stadium and the other to the south - as well as a medical center opened over the past year and a half. The last phase of Patriot Place, a 150-room hotel, opened on May 18.

Construction at Patriot Place began in mid-2007, before the recession began. Owner Robert Kraft was determined to see the project through, according to Stacey James, spokesman for the Kraft Group. "We were probably a year ahead in terms of planning," said James. "The Krafts said when they proposed Patriot Place that this was a project for the long-term."

In Hanover, construction of a new shopping center on Washington Street, or Route 53, is moving along, with the plaza's anchor store, Target, scheduled to open this fall.

The recession has slowed but not stopped construction at the planned 1.2 million-square-foot waterfront Hingham Shipyard residential and commercial complex. While a 235-unit apartment project went ahead and is now being occupied, two condominium developments have been put on hold. Construction also has continued on several stores and a six-screen movie theater, scheduled to open this summer.

AD Makepeace Co., which is planning thousands of homes, as well as stores and offices, in Plymouth, Wareham, and Carver, has pushed back the timetable on two of its early projects. Construction of the 1,175-home River Run project in Plymouth, originally scheduled for this spring, has been moved to the fall. Also on hold is Makepeace's Tihonet Technology Park, an office and research project planned for Wareham.

Construction has slowed slightly at the half-built 3,050-home Pinehills development in Plymouth, according to managing partner Tony Green. He said the company sold about 100 homes a year in 2007 and 2008 and is on a similar pace in 2009.

Construction does not start on a home until a buyer has committed, according to Green.

The delays hurt cash-strapped cities and towns, looking for tax revenue from the developments, and have meant fewer construction jobs and permanent positions.

Governor Deval Patrick has been trying to jump-start projects by steering federal stimulus money and state funds to roads and other infrastructure.

Forman said that when the economy does recover, the region will get a big boost as projects move forward.

"I'm very bullish on the South Shore because a lot of these projects are going to be phasing in at the same time," Forman said. "I think there is synergy in economic development."

Original Story - Boston Globe