“The mayor is doing a deal with a city official” – The mayor’s Blue Suit
By JOSH RESNEK
The Blue Suit called me from the mayor’s bedroom closet where its hanging. He called Monday. The mayor wasn’t around.
“Have you heard about the local real estate deal he’s doing?” the Blue Suit said to me about the mayor.
“Which one are you talking about?” I asked the Blue Suit.
“There’s the one on Broadway and there’s the other one on Corey Street,” I answered the Blue Suit.
“How do you know these things?” he asked me. He was perplexed. “Who do you hear these things from?” he asked again.
“A lot of people talk to me about what’s going on. They all know I won’t print their names, so they tell me everything. The things they tell me make this a wonderful job for me. I love insider information. I love sharing it with the people of Everett, at least those folks who read this column,” I said.
“What can you tell me you heard the mayor saying about this deal? Is he in on it?” I asked the Blue Suit.
“Oh yes. You better believe it. You can take it to the bank that he’s involved,” he answered. He was animated, excited almost to tell me the details.
“How do you know?” I asked.
“I heard him talking with one of his partners,” said the Blue Suit. “It was right after he wore me all day and I was sweaty and tired when he hung me up inside his closet,” he said to me.
“Why do you seem so down?” I asked him.
“Can’t he buy another suit and give me a break? I can’t take the pressure of being worn every time he has to go to a service or something like that. It’s hell, really,” he said to me.
“Hang in there buddy. He won’t wear you forever,” I added.
“Back to the deal please,” I asked him.
“The deal is a Corey Street property bought by a city hall official in August 2019.”
“What did the city hall official pay?” I asked the mayor’s Blue Suit.
“$900,000,” the Blue Suit chortled. “That’s a pile of dough,” he added.
“The mayor said to someone he was talking with on his cell in his bedroom – I heard him – he said the city hall official only had to put up $60,000 but he needed more than this to secure a bank loan.”
“What did he do?”
“According to the mayor, he was set up with a real estate guy from Somerville who put up $240,000 of what the mayor called ‘hard money’, a hard money loan I guess is what it was,” the Blue Suit told me.
You mean the city hall official secured a second mortgage that was placed on the home in addition to the first mortgage the city official was able to secure,” I asked.
“Yes,” that’s what I heard the mayor say.
“I have his name if you want,” The Blue Suit offered. “That’s OK,” I answered. “I know who it is.”
“What’s all the interest in the property?” I asked the Blue Suit.
“The mayor was whispering but I heard him tell whomever he was speaking with that the idea is to get the property approved for 50 units at least as it stands in the Everett Square rehabilitation area. He said the Corey Street property could be taken by eminent domain,” the Blue Suit told me.
“What good would that do?” I asked. “If the partners paid a million how could they sell the property to the city for more than that?”
“Come on, Josh. You’re supposed to be smart. What they are going to do is get a plan to develop 50 units on the property – you know – have the obligatory meetings and neighborhood debate and end up with approvals from the Zoning Board and the Board of Appeals and from the Conservation Commission, get the designation and then it’s a bingo,” said the Blue Suit. The Blue suit laughed. “The boss is smarter than he acts sometime, isn’t he?”
“I begin to see what’s going on. The land is only worth what they paid for it with the two smaller buildings on it if thew city takes it by eminent domain from the city official and his investment group. No one makes any money. so that isn’t going to work, ” I said.
“Whatever they are planning, it must happen sooner rather than later as the owners of Corey Street – the city official and his gang – need to pay the juice on the notes that are owed to the lenders. That’s a problem unless you have a lot of dough. If the deal is going to produce a lot of dough, then paying the juice is short money compared with the final tally to the investors,” I said to the Blue Suit.
“Keep going, Josh. You’re getting there buddy,” The Blue Suit urged me on.
“If the city official and his crew, which includes the mayor, can get the necessary city approvals to build multiple units on the property, the value of the land soars. If they get an approval for 50 units and then the city wants to take the land by eminent domain, well, it will likely be worth closer to $10 million than the $1million purchase price,” I told him.
If the Blue Suit could have been standing next to me, he would have winked before stating the following.
“Do you think the mayor can get this project through the back door at city hall and get the property approved for 50 units?” the Blue Suit asked me.
“Oh yes,” I said. “He has expert status at doing such a thing.”
“You’ve got that right,” The Blue Suit said.
“Doing the addition and subtraction, Josh.”
OK. The purchase price of $1 million divided four ways is a liability of $250,000 each – the city official, the hard money lender, the mayor and the developer who will be submitting plans to the various departments shortly. If 50 units are approved and each unit has a value of say $200,000, you multiply that number times 50 and you come with a nice, neat, delicious $10 million valuation. Subtract the $1 million owed in return for the city taking the land and paying the investors $10 million, that means the four investors split up about $9 million.”
The Blue suit complimented my math abilities as well as my understanding about how the system works here for some developers and developments, including city official bound together by a real estate investment.
“The mayor isn’t much at math. But he’s done the math on this deal. He can’t wait for it to happen.”
“I want you to make sure you understand that you won’t find the mayor’s name anywhere on a piece of paper or at the Register of Deeds when this deal goes down,” the Blue Suit said to me.
“What a surprise!” I said.
“Do you really believe the mayor does deals like this? In other cities this would be considered a conflict of interest. The kind you go to jail for” I said to the Blue Suit.
“Oh yes indeed. This is the man who wears me inside and out,” he answered.