POLS22 Final Paper: Filene’s Redevelopment

This was my final paper for POLS0220: City Politics.  Our assignment was to pick a city issue, follow newspaper articles about it over the semester, and then analyze it with our developing understanding of city politics.  I chose to look at the stalled redevelopment of the site of the old Filene’s in Downtown Crossing.

Blight at the Bargain Bin: The Fight to Redevelop Boston’s Filene’s Department Store

The mayor finally put his foot down.  In an open letter, he blasted the billionaire real estate developer for his comments earlier that week: “I am directing the Boston Redevelopment Authority to examine eminent domain options for the One Franklin Street site. . . This development is too important to Downtown Crossing and to the entire City of Boston to be used as a bargaining chip to improve your bottom line.”  Having just been sworn in for an unprecedented fifth term as Mayor of Boston, Thomas Michael Menino came out swinging.

On March 4, 2010, the New York Observer reported on a lecture given by real estate developer Steven Roth at Columbia University. (Brown 2010)  The usually reclusive Roth lectured for two hours with a surprisingly candid and often profane tone of voice.  His most brazen remark came when discussing his slow redevelopment of a vacant lot in the mid-1990s.

“Why did I do nothing?  Because I was thinking in my own awkward way, the more the building was a blight, the more the governments would want this to be redeveloped; the more help they would give us when the time came.  And they did.”

The crowd laughed.  However, the humor was lost on the city of Boston, and especially Mayor Menino.  The reconstruction of the historic Filene’s Department Store in the heart of Boston’s retail district by Roth’s firm had stalled, purportedly due to financing issues.  For two and a half years, the skeletal façade of the historic Filene’s building eerily loomed over a crater-like hole in Downtown crossing, not to mention over Menino’s shoulder.  A year earlier, the mayor had to personally plead Roth to cover the building’s shell with a tarp to protect it from the elements.  On the mayoral campaign trail that fall, Menino’s opponent quipped “One, looking at this, would think that we were in Fallujah and that this is the direct result of a surface-to-air missile.” (Levenson 2009)  To Menino, the blighted lot was more than just a political issue—it was personal.

The scathing open letter he wrote to Roth won over the hearts and minds of the city of Boston.  In an editorial, the Boston Globe said “The Mayor deserves the support of most Bostonians in doing what’s necessary to get this vulture out of town.” (Globe Editorial 2010)  Even so, calling out the Chairman of the Board on an embarrassing comment (likely made under the influence) adds an unstable element to an already delicate situation and hampers the possibility of reconciliation.  No concrete evidence existed that Roth had ever petitioned any public official for financial support.  Nevertheless, the possibility, however remote, that he was intentionally stalling redevelopment of the site engendered a profound sense of distrust in Bostonians, who took the comments as personally insulting.  For Menino, enough was enough.

The struggle to redevelop the old Filene’s site typifies the political and historical narrative of Boston and many older American cities: A homegrown business closes its doors after over a century of support from generations of dedicated patrons.  A proud city resists being pushed around by a far-away corporation.  A fifth-term mayor fights to maintain a vibrant downtown using whatever methods he can.  These intersecting stories highlight the pride and sense of community in old-style American cities and sheds light onto the regime-style inducements and salesmanship mayors use to get things done.  They also exemplify E.E. Schattschneider’s analogy of politics as a fight: he who is able to win over the hearts and minds of the audience and convince them to join in will win on the battlefield of city politics.  In this battle, Menino won.

William Filene founded W. Filene & Co., Tailors and Drapers in Boston in 1851.  Over the next forty years, Filene expanded his retail establishment from a smattering of small shops to an entire five-story building in downtown Boston.  The sale of high-quality merchandise at relative low prices earned him many customers.  The Boston Daily Globe reported, “Their business methods, always marked by sterling integrity, drew customers and won and kept them as friends.” (The Boston Daily Globe, 1900)  This honest retail strategy would remain a hallmark of the brand.

Filene had an unusual management style.  In the time before the Progressive Era, Filene earnestly sought feedback from his employees, going so far as to invite his workers to his home to collaborate on improvements to the store.  He ensured that his workers had comfortable space to rest and eat while on breaks—accommodations still considered generous today.

Filene embodied the American dream sought by so many during this wave of immigration.  Like the characters in Horatio Alger’s novels, Filene pulled himself up by his own bootstraps and achieved success through hard work, determination, and adherence to virtue.  His exemplary labor practices and generous attitude towards employees’ rights were harbingers of the Progressive Movement.

By 1890, William Filene’s declining health forced the father of five to name two of his sons, Edward and Lincoln, as proprietors of the brand.  The brothers successfully expanded the business, and soon a larger retail space was needed.  They contracted preeminent American architect Daniel Burnham to design a customized retail space.  Burnham had designed landmarks like the Flatiron Building in New York City and Union Station in Washington, D.C. with a neoclassical flair known as Beaux-Arts.  Burnham’s design called for a strong outer steel frame covered by terra cotta.  This frame exuded luxury on the outside, while reducing the need for large support beams on the inner superstructure.  This allowed for more open space in the interior, which was laid out in “streets” reminiscent of European shopping arcades.  Off of each street were individual booths that specialized in a particular type and style of apparel.

Construction of the monumental structure finished in the fall of 1912.  On its opening day, the Boston Daily Globe estimated 235,000 shoppers visited the new store, “more than a third as great as the entire population of the city of Boston.” (The Boston Daily Globe, 1912)  Sadly, Burnham was not among the throngs after his death earlier that summer.  Filene’s became his last major commission, and his only project in Massachusetts.  The structure became a must-see attraction for visitors for its architectural significance in addition to the store inside.

The Filene’s brothers later pioneered the bargain basement.  Merchandise in the lower level of retail space systematically underwent price drops based on how long it had remained unsold.  After twelve days, an item was marked down 25 percent, after 18 days by 50 percent, and after 24 days by 75 percent.  If 30 days passed, the item was donated to charity.  This marketing strategy paid off.  Shoppers from across New England flocked to Filene’s Basement (as it became known), and apparel seldom remained unsold past the 24 day mark.  It was a win-win situation for bargain hunters and the store’s owners.

To the store’s loyal customers and all Bostonians, Filene’s represented a homegrown franchise run by honest and hardworking people.  The store drew tourists and locals alike.  The Filene’s brand became a quintessential thread in the historical and cultural fabric of Boston.

Fast-forward ninety years.  In 2005, Federated Department Stores, owner of the rival chain Macy’s, bought out May Department Stores, which owned Filene’s.  Over the next year, the Filene’s brand was phased out.  Some stores were converted to Macy’s, others were shuttered.  Mayor Thomas M. Menino hoped Macy’s would move into the old space so that Filene’s Basement, which had split off from Filene’s as a separate chain in 1988, could remain in the space downstairs. (Abelson and Palmer 2007)

Like many New Englanders, Menino had frequented Filene’s and Filene’s Basement for his clothing needs.  Well into his third term as mayor, he was well-liked by his constituents, despite his mumbling malapropisms and volatile attitude.  He understood the importance of fostering community in Boston, for the city had managed to maintain a dense urban core while others struggled to retain residents and contain sprawl.

The buyout of Filene’s came amidst a wave of mergers that absorbed homegrown Boston businesses.  The New York Times bought The Boston Globe; Proctor & Gamble bought The Gilette Company; Bank of America bought FleetBoston Financial; Manulife Financial bought John Hancock Financial.  Locals were stung by the indignity.  “Boston is disappearing” said one shopper.  “Macy’s has never felt like a Boston store.  There just seems to be an indifference there.  It’s too big, it’s cluttered, it’s almost brash.  It’s like New York.” (Abelson and Palmer 2007)  To add insult to injury, Macy’s declined to move into the old Filene’s building, and it was put on the market.  Bostonians knew they had to act to protect the legacy of Filene’s, even after the company had been dissolved.

The Boston Landmarks Commission designated the Filene’s building a landmark in 2006.  Acting on a petition originally filed in 1986, the designation requires the exterior envelope of the 1912 building be preserved, including all original masonry, wood, ironwork, windows and doors.  The designation also requires that the new owner collaborate with the commission during the redevelopment process.  The Commission cited the façade’s exquisite stonework and the rarity of Burnham’s works in New England in their report.  The adjacent structures, which were built in 1951 and 1973, were not designated landmarks.

Real estate developers Vornado Realty Trust and Gale International, both based in New York City, bought the property a few months later.  The acquisition was spearheaded by Vornado CEO Steven Roth, and Gale president John B. Hynes III (grandson of the two-time Boston mayor during the 1950s).  They planned a $620 million mixed-used skyscraper with retail space, a hotel, luxury condominiums and space for offices, while preserving the historic Filene’s façade.

Mayor Menino praised the proposal, saying it would “begin a new chapter in the life of Downtown Crossing.” (Palmer 2006)  The mayor was especially glad since the mixed-use nature of the space would create “a truly active 24-hour neighborhood,” (Shumaker 2007)  whose round-the-clock pedestrian traffic would deter crime.  Regarding the project’s timeline, Menino said “I’ve met with Vornado, and they’re ready to go.  They want to go out and start construction next year.”

Despite Menino’s optimism, local businesses were hurting.   The Filene’s Basement, which was not bought out by Macy’s, was forced to close its doors with the hope of returning to Downtown Crossing after construction finished in a few years.  Without automatic markdowns drawing customers to the area, foot traffic decreased substantially.  As the holiday seasons got underway, one business owner commented “People need a reason to come down here, and without Filene’s we can’t compete with other shopping centers like Natick.” (Abelson 2007)

In an effort to help struggling local businesses, the city pitched in over $100,000 to market Downtown Crossing and bring shoppers to the area. (Abelson 2007)  Menino pulled out all the stops: free candy canes, hot cocoa, a Christmas tree market, a petting zoo, and, of course, Santa.  This effort embodies a distinctly liberal political and socioeconomic perspective on how to cope with such transitions.  While Menino couldn’t prevent the causes of temporarily decreased patronage, he could help the people who were left behind.

By 2008, the two non-landmark buildings on the Filene’s block had been demolished.  As construction of the skyscraper’s foundation was to begin, the credit markets froze.  The financing for Vornado and Gale evaporated, and construction halted.  The site was now dominated by an immense hole lined with dirt and gravel.  The façade of the gutted Filene’s building teetered eerily over the lot, which looked like the victim of a catastrophic fire or a bomb blast.

Vornado and Gale worked to find new financing—a task that proved difficult in the worsening economy.  At best, they came up $100 million short of what they needed to finance the original plan.  A Menino spokeswoman said “The mayor understands the market conditions, and we don’t want this to be another hole in the city.  He wants this project completed, and if they can produce a plan to do that, then we’re on board.” (Ross 2008)  As a cost cutting measure, the project’s architects considered downsizing or eliminating the twelve floors of condominiums that were originally planned.

However, any change would have to be approved by the Boston Redevelopment Authority and the Boston Landmarks Commission.  Although these agencies were genuinely interested in collaborating with Vornado and Gale, the additional red tape through which the developers would have to traverse had a chilling effect on the planning process.  This is a classic side-effect of fragmented agencies in a pluralist political system.  Despite their best intentions, these agencies likely hampered progress in redeveloping the lot.

The next spring, a figurative bombshell dropped on the warzone-like lot: “A Globe review of city files shows that officials forged ahead furiously…even allowing the developers to demolish a key city block before filing necessary forms with the Boston Redevelopment Authority, including a required statement of financial interests.” (Slack 2009b)  Menino’s denied accusations that he fast-tracked the Filene’s project, saying, “I didn’t have any role in pushing this forward.”  Whether or not Menino himself was personally involved in accelerating the permitting process is beside the point.  The city planners and the real estate developers had worked together in private, a manifestation of regime-style politics through positive inducements.  If it weren’t for the collapse of the credit markets, they probably would not have gotten caught.  Unfortunately, the economic bubble burst, and the city planners were caught cutting corners.

Menino responded a week later by writing a letter to Vornado and Gale.  In it, he expressed “concern about the condition of the buildings’ shells, which have been exposed to the elements for nearly a year, and told them to begin securing them by May 1.” (Slack 2009a) He never addressed the controversy surrounding the lack of paperwork before demolition began.  Nevertheless, he soothed the nerves of local business owners and residents who had been taken aback by the lack of oversight.  This calculated response exemplified a mayor’s use of savvy media salesmanship in order to handle a delicate situation.  Construction crews covered the exposed interior of the building with a tarp that October, five months after the date requested by Menino.

Locals’ understanding about the delayed project delays decayed into frustration.  That fall, the Boston Globe showcased proposals to temporarily improve the aesthetics of the site before construction of the skyscraper began. (Ross 2009)  Over a dozen architects submitted ideas on how to beautify the site on a low budget.  Proposals ranged from Spartan to whimsical, with everything from art installations, to movie screens, to sheep pastures to an algae-powered bioreactor.  The Globe aimed to make the best of a bad situation for the city at large.  In this way, they fostered a sense of community for Downtown Crossing in a classic republic communitarian style.  They avoided pointing fingers or delving into arguments about who is to blame for the vacant lot.  Instead, they asked people to come together and do what’s best for the city.  Vornado and Gale once again declined to comment on the proposals, and no plans were followed through.

During the mayoral campaign trail in the fall of 2009, Menino took flak on the issue.  Challenger Michael Flaherty mocked Menino for the way he handled the stalled Filene’s development.  “One, looking at this, would think that we were in Fallujah and that this is the direct result of a surface-to-air missile.  It’s not.  It’s a direct result of Mayor Menino’s administration, and the failures of his administration to provide quality economic opportunities to this part of our city.” (Levenson 2009)

Menino struck back, saying “How did anybody in this world know the world markets would explode?  Nobody knew that.  So once again, they’re using issues to try to get headlines.” (Levenson 2009)  The next week, Menino would go on to win the election with 57% of the vote and earn an unprecedented fifth term in office.  During his inaugural remarks, he stressed moving forward with the redevelopment of the Filene’s lot even in ways that had not previously been on the table. (Ross and Abelson 2010)  Again, Menino utilized his down-to-earth salesmanship to appease his constituents.

For the third consecutive year, the blighted Filene’s block was empty during the holiday shopping season, with the (now covered) skeleton of the original building still looming over the crater below.  Locals’ frustration descended into anger: “It’s horrible.  Just horrible.  I don’t understand it, after all this time.  It’s hurting everything around it.” (Schworm 2009)  With the return of Filene’s Basement looking more distant than ever, business owners resented the neglect that the owners had shown.  “It’s grim.  Not festive at all.  Build something already.” (Schworm 2009)  The city had exhausted most of its diplomatic strategies to collaborate with Vornado and Gale.  Escalating the tone of the debate might slow progress in the long run.  Then, along came Steven Roth.

Steven Roth was a big cheese in the real estate industry.  With a net worth of over a billion dollars, he was named one of the World’s Thirty Most Respected CEO’s by Barron’s Magazine in 2005, 2006, and 2007.  He chaired the National Association of Real Estate Investment Trusts from 2002-2003, the lobbying group for large-scale real estate developers in the United States.  Despite his successes, Roth seldom accepts interviews and habitually stays out of the spotlight.  His March 3, 2010 lecture at Columbia was a rare chance to hear from one of the most influential real estate developers in the world. (Brown 2010)

During his rambling talk, he bluntly explained many of his management strategies.  His most brazen remark came when recounting the stalled redevelopment of the old Alexander’s department store site in midtown Manhattan in the mid-1990s:

“My mother called me and said [of the site], ‘It’s dirty. There are bums sleeping in the sidewalks of this now closed, decrepit building. They’re urinating in the corners. It’s terrible. You have to fix it.’  And what did I do?  Nothing.  Why did I do nothing? Because I was thinking in my own awkward way, that the more the building was a blight, the more the governments would want this to be redeveloped; the more help they would give us when the time came.  And they did.”

The New York Observer, which was covering the lecture, reported laughter following his explanation.  The play on words in the article’s title, “Steven Roth, Uncorked,” suggests that alcohol may have been a factor in his giving such candid remarks.

Mayor Menino was livid after reading the snippets of Roth’s lecture.  In his open letter, Menino called the comments “simply outrageous.”  He went on to say,

“The notion that you would purposefully cause this to occur—not due to financing difficulties or other problems beyond your control, but as an intentional cynical ploy to extract concessions from the public sector—is inexcusable….Vornado’s deliberate blight strategy in New York raises questions about its failure to make any progress in the redevelopment of the One Franklin Street project in Boston.  In the past, Vornado and its development partner, Gale International, have insisted that One Franklin Street remains dormant because financing is unavailable. However, your recent remarks undercut the credibility of your team’s explanation in Boston.

He threatened Roth, saying that he is investigating the use of eminent domain to seize the property by force.  Diplomacy had failed.  This negative inducement was the last card Menino had in his hand.  But eminent domain was his trump card, since such takings are constitutionally protected and seldom overruled.

Editorials flew off the presses in the week following Menino’s letter.  The Boston Globe editorial the following day suggested that, “If Roth and his partners don’t come to the table with an acceptable plan to improve the site, even an interim one, Menino should follow through on his threat.” (Globe Editorial 2010)  Another Globe columnist remarked, “Publicly shaming a notoriously volatile mayor is not the most frictionless means of obtaining tax-free financing for one’s stalled development project.” (McMorrow 2010)

From an objective perspective, Roth didn’t necessarily deserve this criticism.  No evidence existed that Roth or any representative of either developer attempted to procure favorable financial deals from the city.  There were no bums hanging around Filene’s like there were at the Alexander’s.  There was also no economic collapse in the mid-1990s.  From this angle, comparing the two sites is like comparing apples to oranges.  Nevertheless, the face-value similarity between the two sagas introduced an element of profound distrust.  For a proud city tired of its homegrown brands being bought up and consolidated, this insult was the last straw.  The unanimity with which Bostonians resented Roth’s scheming represent a community coming together to protect its own.  Menino’s valiant threats brought together his constituents in opposition of Roth and strengthened the communitarian resolve shared by locals.

Three weeks after his lecture at Columbia, Roth apologized to Menino in a private meeting. (Ross 2010) Menino held his ground and reiterated his threat to take the blighted lot by eminent domain or revoke the project’s building permits.  Roth hoped to resume construction soon, though he offered no specific deadlines or other relevant information to Menino.  No further progress has been made since.

It is unlikely that the city will exercise eminent domain and take the property by force.  Although the economy has partially recovered, municipal budgets are still reeling from the fallout of the recession.  In short, the city simply does not have the $100 million on hand to compensate Vornado and Gale in an eminent domain taking.  Furthermore, it would be a symbolically bad image if Menino had to hand an eight-figure check to the developers who had so heinously neglected the site.  The threat of eminent domain was exactly that—a threat.  By drawing so much attention to the issue, Menino politicized it in a very prominent way.  It is crucial to his long-term standing as mayor to ensure that he comes out on top.  While eminent domain would be a proud display of supremacy in the short-run, it would hurt the city financially and strain Menino’s reputation in the long run.  The two most likely outcomes are, sadly, the least exciting.  Vornado and Gale could finally get their financing together and follow through with their plans.  The other possibility is that the lot could be sold to another developer whose relationship with the city has not turned sour.

This episode would not have been as controversial if it had taken place in younger cities, like Phoenix and Las Vegas, or in edge cities that lacked a downtown and solid municipal government.  The difference is the pride Bostonians have in their hometown.  Attempts to exploit the generosity of a popular mayor are treated by Menino’s constituents as a personal insult.  The residents of young cities and edge cities do not feel the same connection to their hometown, and would not be as hurt.

Amidst the postponed plans, back-and-forth bickering and accusations of mismanagement, this story highlights the political forces at work in classic, dense American cities.  The community of residents and business owners looked out for one another in a republican communitarian way.  Menino and/or his administration engaged in regime-style political maneuverings, utilizing inducements and salesmanship to move things forward in a delicate situation.  Most of all, this story typified the battles between different forces in the political arena.  Since Menino was better positioned to engage the audience, he came out victorious—for now.

References

  • Abelson, Jenn. “No holiday twinkle here,” November 21, 2007. http://www.boston.com/business/globe/articles/2007/11/21/no_holiday_twinkle_here/?page=full.
  • Abelson, Jenn, and Thomas C. Jr. Palmer. “It’s official: Filene’s brand will be gone.” The Boston Globe, July 29, 2005. http://www.boston.com/business/globe/articles/2005/07/29/its_official_filenes_brand_will_be_gone/?page=full.
  • Brown, Eliot. “Steve Roth, Uncorked.” The New York Observer, March 4, 2010. http://www.observer.com/2010/real-estate/steve-roth-uncorked.
  • Globe Editorial. “It’s right to ask if Steven Roth is cheating Downtown Crossing.” The Boston Globe, March 10, 2010. http://www.boston.com/bostonglobe/editorial_opinion/editorials/articles/2010/03/10/its_right_to_ask_if_steven_roth_is_cheating_downtown_crossing/.
  • “Keeping apace with demand of trade Filene’s soon to occupy the remodelled and modernized Oliver Ditson Building.” The Boston Daily Globe, April 23, 1900.
  • Levenson, Michael. “Flaherty keeps punching as Menino stays low-key.” The Boston Globe, October 30, 2009. http://www.boston.com/news/local/massachusetts/articles/2009/10/30/flaherty_keeps_punching_as_menino_stays_low_key/?page=full.
  • “Made a Holiday: All Boston out to see new Filene store.  More than 235,000 persons inspect its every floor..” The Boston Daily Globe, September 4, 1912.
  • McMorrow, Paul. “Downtown Crossing’s money pit.” The Boston Globe, March 22, 2010. http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2010/03/22/downtown_crossings_money_pit/.
  • Menino, Thomas M. Letter. “Menino Letter to Roth,” n.d.
  • Palmer, Thomas C. Jr. “Filene’s project to feature a high-rise,” September 29, 2006. http://www.boston.com/business/articles/2006/09/29/filenes_project_to_feature_a_high_rise/.
  • Ross, Casey. “Building stalls at Filene’s old site.” The Boston Globe, November 7, 2008. http://www.boston.com/business/articles/2008/11/07/building_stalls_at_filenes_old_site/.
  • ———. “Filene’s developer says he’s sorry.” The Boston Globe, March 24, 2010. http://www.boston.com/business/articles/2010/03/24/filenes_developer_says_hes_sorry/.
  • ———. “Visions and revisions.” The Boston Globe, September 20, 2009. http://www.boston.com/business/articles/2009/09/20/designers_suggest_ways_to_spruce_up_stalled_building_projects_around_boston/?page=full.
  • Ross, Casey, and Jenn Abelson. “Fresh ideas sought for Filene’s block.” The Boston Globe, January 5, 2010. http://www.boston.com/business/articles/2010/01/05/menino_seeks_new_ideas_for_stalled_filenes_site/.
  • Schworm, Peter. “Christmas shopping a bit bleak downtown.” The Boston Globe, December 13, 2009. http://www.boston.com/news/local/massachusetts/articles/2009/12/13/christmas_shopping_a_bit_bleak_downtown_due_to_vacant_section/.
  • Shumaker, Jessica. “BRA Board Moves Several Projects Forward,” August 14, 2007. http://www.bostonredevelopmentauthority.org/press/PressDisplay.asp?pressID=387.
  • Slack, Donovan. “Menino prods Filene’s site developers.” The Boston Globe, April 3, 2009. http://www.boston.com/realestate/news/articles/2009/04/03/menino_prods_filenes_site_developers/.
  • ———. “Rushing to a standstill.” The Boston Globe, March 26, 2009. http://www.boston.com/news/local/massachusetts/articles/2009/03/26/rushing_to_a_standstill/?page=full.

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