The Salem News
— Eight years, millions spent, and there is still an old McDonald's building on the Beverly waterfront?
The city of Beverly published a formal Request For Proposals (RFP) in early 2006 to seek a restaurant use for their long defunct McDonald’s waterfront site. Joe Leone, owner of Black Cow restaurants in Hamilton and Newburyport, submitted a detailed, 12-page response on April 26, 2006 with13 sheets of attached architectural drawings. This proposal required that Joe Leone spend at least $2.5 milion to demolish the existing McDonald’s building, complete all site work and utilities for the one-acre site, and build a 7,000 square-foot, two-and-a-half story restaurant building. There was a proposed schedule included that specified that the city would designate the chosen developer in May of 2006, issue all permits for construction within six months thereafter and anticipated that thus a restaurant could be constructed and opened on the site in 2007. This was the only response the city received and after several months of meetings with the mayor, planning director and city solicitor, Mr. Leone was designated as the chosen developer of the site.
However, it quickly became clear that the city sought a proposal for a property that lacked even the most basic fundamentals for development. What they really were seeking was a partner to work with them to seek the many approvals and permits needed to develop the site. The city needed Mr. Leone.
Then a long list of new limitations were revealed that were not included in the RFP: there was no survey of the site; no environmental soils information; limited parking; and the site still needed all local permits including site plan review from the Planning Board. More significantly, it needed a host of state permits and approvals. These state approvals included a Chapter 91 permit because the site was filled tidelands, a modification of the grant agreement since it had been purchased through a grant from the state Department of Conservation and Recreation for “park and recreation” uses, and the largest restriction was that the site was in a state Designated Port Area (DPA). The DPA designation restricted any use that was not an “Industrial Water Dependent” use, such as the restaurant which the city sought, to just 25 percent of the site area. This restriction was clear when Mr. Leone filed his proposal so it included the requirement that the city rescind or modify the boundaries of the DPA to allow unrestricted restaurant use of site.
Despite this long list of challenges, Joe Leone agreed, in the summer of 2006, to work with the city, as a development partner, to acquire the permits and approvals required. But in September of 2006 the city made the process much more challenging by requesting that he also attempt to satisfy the DPA requirements by restricting the restaurant uses to just 25 percent of the site. After much additional consideration, Joe also agreed to proceed on this new basis.
Through the two-and-a-half year period, from the fall of 2006 until June of 2009, Joe and his architects, engineers and lawyers worked continuously with the city. Through this period, D.F Trees, architects, submitted and revised architectural plans. Hayes Engineering, civil engineers, submitted and revised site and utility plans. Finally, in June of 2009 the Beverly Planning Board issued a site plan approval, but with a major new restriction that the restaurant have no more that 200 seats. . This was a reduction of 37 pecent from the original plans showing 320 seats, 160 inside and 160 outside. Again, after much consideration, Mr. Leone opted to continue with the project with this new limited size.
On the state permit front, the Department of Environmental Protection finally issued a draft Chapter 91 permit on March 1, 2010, just short of four years since Mr. Leone submitted his original proposal to develop the site. In his efforts to support the city of Beverly in its acquisition of local and state approvals to develop their site, Mr. Leone had at this time expended in excess of $150,000 in architectural, engineering and legal services between 2006 and early 2010. In addition, the city of Beverly had expended significant additional funds to have Vine Associates of Newburyport be their consultant in acquiring the filled tidelands permits (Chapter 91), compliance with the Designated Port Area restrictions and a modification of the grant agreement from the Department of Conservation and Recreation. The city of Beverly also restored the waterfront bulkhead and marina portion of the site and moved the former harbormaster's building, all of which needed to precede any restaurant construction. This was an undertaking costing several millions. After four years, Mr. Leone and his team thought the project was finally ready to move forward!
How wrong we were. The DEP project approval was appealed by Frank and Susan Kinzie, owners of neighboring Beverly Port Marina, and a long legal contest between them, the city of Beverly, and the state Department of Environmental Protection began. The Kinzie’s contended that the restaurant use of the property did not adequately comply with the Designated Port Area requirements as compared to the alternate proposal they filed with DEP to use the site as a boat repair facility. A judicial decision in June of 2011 upheld the DEP Chapter 91 permit, an appeals by the Kinzies to the state Superior Court also upheld the DEP permits, but their further appeal to the Supreme Judicial Court in a decision dated December 11 2013 upheld the Kinzies' contentions and ruled that DEP had not properly handled their competing boat yard proposal when they rejected it as “unfeasible.” In this legal contest between the Kinzies', the city, and the state, which lasted more than two-and-a-half years, from early 2010 until December 2013, the Kinzies' attorney, Adam Brodsky, and the city’s attorney, Richard Nylen, consumed many thousands in legal fees and expenses debating the use of this site. These efforts were in addition to the significant efforts by the Beverly city solicitor and the state attorney general. We have never seen a detailed accounting of the city’s payments, nor of course the Kinzie's, but both sides invested hundreds of legal hours in these appeals.
In the spring of 2013, while the appeal to the Supreme Judicial Court was still unresolved, the city contacted Mr. Leone and stated that they wanted to conclude a lease. They recognized the extreme effort and significant investment that Joe Leone had made over the past seven years and wanted to have a detailed lease completed and approved by Beverly City Council before the end of 2013. This of course was in anticipation of a final court decision allowing the project to go forward in the near future. Mr. Leone’s attorney, Lou Katz, and the city of Beverly’s attorney, Gerald Fong, produced a 39-page lease that was approved by the Beverly City Council and signed by Mayor Scanlon. This effort cost Mr. Leone in excess of $50,000 in legal and consultants' fees, pushing his overall investment to over $200,000, and I am sure it cost the city of Beverly a similar sum. Part of this lease process required Mr. Leone to have prepared new architectural and site engineering drawings submitted to the Beverly Planning Board for approval of the 200-seat restaurant.
Eight years and what I am sure has been about a half million dollars have been spent to date and has produced absolutely nothing constructive. The city has no approvals, no development and thus no income from the site. The city of Beverly cannot issue a construction permit for Mr. Leone’s proposal unless and until the restrictions of the Designated Port Area are lifted. The new city administration has vowed to lift or modify the Designated Port Area from the McDonald's site and from the Kinzies' property, which would allow the city of Beverly’s commitment to the signed lease with Joe Leone go forward and allow the Kinzies to seek permits to develop their property as well without the restrictions to “water dependent industrial” uses. This solution would be a win-win for all parties but instead there has been talk to throwing the Black Cow permits and signed lease, which was painstakingly crafted through mutual trust, financial joint effort and a vision for a better Beverly, in the trash and starting all over with a new RFP and all new permits. That approach would take many additional years after the time that the Designated Port Area might be lifted, well beyond the current administration’s term in office, only to come to the realization that what Mr. Leone has proposed is really a good development plan for the McDonald’s site. The City and Mr. Leone have made a substantial investment over the last eight years to make it feasible, it makes no sense to mire the city in a continued bureaucratic and legal process that will yield an unknown result.
I urge the city of Beverly to work diligently with the state to lift or modify the existing Designated Port Area from the entire Beverly waterfront and reissue their existing Chapter 91 permit for the city property and honor their commitment to Mr. Leone. The project is “shovel ready” and the restaurant could be open and paying rent to the city within a year thereafter.