Somerville is going from renter to owner at its Assembly Square fire station with a sudden $7 million bond appropriation Thursday from a wary City Council.
The 10,000-square-foot station had a grand opening Oct. 18 at 122 Assembly Park Drive after an outfitting of the space that cost between $8 million and $10 million, said Tom Galligani, executive director of the city’s Office of Strategic Planning and Community Development. When locking down the space in 2021, the city was looking to lease or buy – but at the time, only a lease was available.
Since then, the life sciences developer BioMed Realty and the company TransMedics took a 498,000-square-foot lease at Assembly Square. The deal, announced Jan. 12, spurred the property owner to liquidate the parking garage, including its leased fire station. “So they’ve offered it up for sale,” Galligani said. Since BioMed raised the opportunity in late January, the city has been positioning itself to acquire the space.
“We went through a bidding process the last couple months, and we’re the successful highest bidder,” Galligani said.
Without a purchase, the city would wind up as tenants of an unknown landlord. Staff came to Monday’s meeting with an urgent request for the funds even as a sales agreement was being drafted. “Sight unseen,” councilor JT Scott mused, as he began to flip through the only documentation available around the deal: a 41-page master deed for the city’s nascent condo association. “Generally, I require more than ’Trust me, bro’ as source material.”
Other councilors shared the wish that there was more time and information before the appropriation, which included a closed-door session that put the public meeting on pause. The fire station appropriation, though spread out, is equal to 3 percent of the city’s annual budget, councilor Ben Wheeler noted, at a time “anybody watching at home might be saying, ‘Man, $7 million in a time when we’re short.’ That’s tricky.”
The city is amid a 30-year lease on the space; the remaining 28 years will be as an owner instead of as a renter. The lifespan of other Somerville fire stations has been longer than 28 years.
Valid “but irrelevant” money questions
The purchase, at roughly $700 square foot, will save the city about $1 million overall over the next 28 years, staff said, costing monthly a little less than what Somerville would pay in rent including a yearly condo fee of $6,444. That’s 5 percent of the structure’s condo fees, which perplexed Scott, raising the issue because the fire station “would only be occupying around 2.5 percent of the structure.”
“Those questions are completely valid, and unfortunately, they’re irrelevant,” Galligani said. “They have sold this unit based on their terms.”
Scott further asked about the $4.2 million in community benefits that BioMed committed to providing to the city that were given back as part of the lease agreement: “Is that money gone? Or is that baked into our acquisition?”
It depends how you look at it, said Galligani, who considered that maneuver a $4.2 million investment to buy down the cost of the lease – cutting its cost basically in half. “We were very aggressive in negotiating a lower rate and using that money in a smart way,” Galligani said. Now the acquisition price is based on those lease terms. “Another way to think about it is that we invested $4.2 million that has now grown to over $12 million in benefit. So actually, that $4.2 million was a gold mine.”
Terms for the 30-year lease were locked in before the near doubling in interest rates that followed the Russian invasion of Ukraine in February 2022. Galligani estimated that the city saved $2.5 million.
Where councilors wanted to be
Being owners of the fire station now puts the city “where we should have been all along,” Scott said. Councillor Ben Ewen-Campen agreed: “It’s not a good situation to rent a fire station. Now it’s being sold, and it would definitely not have been a good situation for us to be renting from some new, unknown, random landlord,” Ewen-Campen said, echoing Scott: “I wish we had owned it from the beginning.”
The council voted to approve the $7 million bond appropriation. If anything looked off as documents arrived for review, councilors had 48 hours to file for reconsideration of the Monday vote; staff would keep working on the deal over the next month to six weeks, mainly to ensure the condo association is formed in a way that serves the city, staff said.
“There’s a lot of data that we already have, because we permitted this project,” Galligani said. Essentially, the purchase is of “a concrete box” at the base of a parking garage that opened just month ago and has been barely used – and won’t be until there are tenants next door. “There’s not a lot of wear. It still has that new car smell,” he joked the garage.
“I think it would have a no car smell,” Scott said.
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