Deep Bench MassDevelopment Becomes a Key Role Player in the State and Region

December 23, 2008 : Business West, by George O’Brien

Created in 1998 by a state Legislature-orchestrated merger of the Government Land Bank with the Mass. Industrial Finance Agency, MassDevelopment has emerged over the past decade as an increasingly powerful and visible force in economic development, job creation, and housing growth. It has been actively involved in a number of initiatives locally, especially the redevelopment of the Northampton State Hospital site, and is now a lead player with several projects in Springfield, including its latest assignment — the federal building in the heart of downtown.

Bob Culver likes to say that Springfield has what he calls “good bones.”

By that, he means that, while the city has some rather obvious fiscal challenges and image problems at present, like an older home with a solid frame, it has all or most of the essential building blocks.

“It’s got a great past, many great companies, a number of assets, wonderful houses, a great downtown spine — Springfield has a lot going for it,” said Culver, president and CEO of MassDevelopment, the state's so-called ‘finance and development authority,’ which is assuming a seemingly ever-expanding role in helping Springfield take its good bones and build a strong body of progress upon them.

Actually, the agency’s footprint is getting larger and deeper across Western Mass., with projects ranging from industrial bond financing for a Greenfield-based company called Argotec Inc., a manufacturer of custom-engineered polyurethane film, to the ongoing development of the former Northampton State Hospital site, an undertaking now known as Village Hill.

But it is in Springfield where MassDevelopment — perhaps best-known for what it has accomplished with its work-in-progress at the sprawling former Fort Devens site in Ayer and neighboring communities — is making its presence, and its broad range of expertise, felt.

The agency has taken a lead role in work to bring companies and jobs to what is now being called the Springfield Smith & Wesson Industrial Park; MassDevelopment coordinated the move of Performance Food Group (PFG) onto the property, thus saving and adding jobs when it appeared the company was buying a ticket out of Springfield (more on that later). It has also lent expertise in what is rapidly becoming one of its more-defined specialties (demolition) to two important projects — redevelopment of the former York Street Jail site on the riverfront and re-use of the former Chapman Valve property, a torpedo-shaped tract that slices through the middle of Indian Orchard.

The latest example of the agency’s growing involvement in Springfield is the federal building in the heart of downtown — what some at MassDevelopment call the ‘GSA Building,’ because it is controlled by the General Services Administration, a federal agency. Gaining control of that property will be the first step in re-tenanting the building following the departure of federal court personnel, U.S. Rep Richard Neal and his staff, and other occupants.

One model for redevelopment of that landmark could be the former Saltonstall state office building in Boston, said Richard Henderson, executive vice president of Real Estate for MassDevelopment, who handled many aspects of that imaginative, ambitious project. The 22-story building has been reworked into an office facility with 75 units of residential housing essentially wrapped around it, said Henderson.

MassDevelopment has employed similar determination and creativity in a host of other communities, including many of the so-called ‘gateway cities,’ identified as important, but challenged, former manufacturing hubs that in many ways need to re-invent themselves. Springfield and Holyoke are on that list, as are Lowell, Lawrence, Fall River, New Bedford, and others.

Henderson said his agency, created in 1998 when the state Legislature merged the Government Land Bank with the Mass. Industrial Finance Agency, has played a role in bringing progress to each of those communities, acting as both a catalyst and a facilitator when called upon by municipal and state leaders. Such abilities prompted David Panagore, Springfield’s now-former Economic Development director, to refer to MassDevelopment as a “deep bench,” said Henderson, adding that this phrase accurately describes the agency's role as a support player that can produce winning results.

And this support goes well beyond real-estate development, said Sean Calnan, vice president of Community Development at the agency’s Springfield office. He told BusinessWest that involvement takes forms ranging from charter-school financing to that aforementioned low-cost industrial-development bond financing for area manufacturers to disbursement of monies from the so-called Cultural Facilities Fund for projects such as the new Museum of Springfield History now under construction, and renovations to Symphony Hall.

“We work as a part of a team,” he explained, adding that this unit includes everything from planning and community-development agencies to area banks, with which it partners to close gaps in financing. “We try to stay in tune with what's going on with comprehensive economic-development strategies in various communities, and we work with officials in those communities to help them achieve the goals that they've identified.”

In this issue, BusinessWest looks at how the agency goes about doing all that, and also at how it has come to play such a vital role in area economic development efforts.

Developing Story

As he talked about his agency, what it does, and how it does it, Culver started with the basic marketing-brochure language — because it works, sort of.

“We’re a lender and a developer,” he explained, “that works with private- and public-sector clients to stimulate economic growth by eliminating blight, preparing key sites for development, creating jobs, and increasing the state's housing supply.” Often, the agency’s work involves putting surplus and under-utilized state land and property (such as Northampton State Hospital) to new uses involving job creation and housing.

Some numbers speak to the agency’s success with those pillars of its mission, Culver continued. Over the past five years, MassDevelopment has financed or managed more than 900 projects in 190 communities, he explained, representing an investment of more than $9.4 billion in the Bay State. These projects are supporting the creation of 10,045 housing units and more than 45,000 permanent and construction jobs.

All this work is coordinated out of 11 locations: a main office based in Boston; project sites in Devens, Gloucester, and Northampton (at the former state hospital); regional offices in Fall River, Lawrence, Springfield, and Worcester; and satellite facilities in Brockton, Pittsfield, and Westborough. The agency is organized around a set of core business functions: real estate and planning, finance programs, Devens, and ‘military initiatives.’

While the numbers and the boilerplate language provide a basic explanation of what the agency does and why it was created, said Culver, a detailed look at the portfolio does a better job of explaining the role MassDevelopment is playing with regard to economic development in Massachusetts.

Especially at the Fort Devens site, or what is today simply called ‘Devens,’ short for the ‘Devens Regional Development Zone,’ which is a new community of sorts with everything from retail outlets to its own post office.

There, MassDevelopment’s real-estate department works with Devens operations staff to plan and facilitate development in that zone, and is responsible for marketing and managing real property within the 4,400-area site. Target industries include life sciences, biopharmaceuticals, medical devices, defense, and clean-energy technology, with shovel-ready sites available.

In fiscal year 2008 alone, MassDevelopment completed five real-estate transactions involving 37 acres of land and two existing building in Devens. The transactions generated $2.3 million in revenues, said Culver, will create 533,000 square feet of new or redeveloped commercial space, and will result in 745 permanent jobs and 320 full-time-equivalent construction-related jobs in Devens.

The most-prominent transaction was MassDevelopment’s long-term ground lease of 22 acres to Evergreen Solar for the construction of a nearly 500,000-square-foot solar panel manufacturing facility, but the real-estate department also played a key role in recruiting Bristol-Meyers Squibb to develop a new biologics manufacturing campus at Devens.

But while Devens is by far the most pronounced and visible of MassDevelopment’s success stories, there are many others, including:

Building Momentum

One story still being written is that of the Springfield Smith & Wesson Industrial Park, said Henderson, who noted that the story of how that facility's first tenant arrived there is laced with irony.

Indeed, Henderson told BusinessWest that he became aware of a Springfield-based company that was looking for a site on which to build a new facility in another of those aforementioned gateway cities — Worcester — or perhaps in Connecticut.

“We quickly connected the dots and understood that this was PFG, which in the past had looked around Springfield and not seen any place it could go,” he explained. “We sat down with the mayor and other city officials and said, ‘we think we can get this site ready for them within a very short time frame; let’s make a deal with them.’”

They did, and PFG now occupies a large portion of the park, a development that Henderson cited as an example of that ‘deep bench’ role Panagore described.

“We act in many ways as extra staff that communities like Springfield can rely on to get things done,” he explained, adding that its experience with projects like Devens and others has made it a valuable asset for communities across the state.

MassDevelopment has historically played a key role in Springfield economic-development efforts — it has handed out close to $40 million in loans for various initiatives over the past decade or so, said Culver. But its presence has expanded with the creation of the Finance Control Board four years ago and the completed Urban Land Institute (ULI) report on Springfield and its prospects for the future, undertaken just over a year ago.

The Control Board has called on the agency early and often to help facilitate projects, said Calnan, adding that much of its recent work has followed the blueprint drafted by the ULI report’s authors.

Stated priorities within that report include many downtown initiatives, including the federal building and 31 Elm St. (Court Square), but also revitalization of the South End neighborhood, continued development of the riverfront (the York Street Jail site), Chapman Valve, finding more tenants for the industrial park, and identifying development opportunities on the emerging State Street corridor.

“Springfield is perhaps the best example of how MassDevelopment works closely with a city,” he explained, “starting, in this case, with stepping back and saying, ‘what is the future of the city, and how do we get to where we want to go?’”

This is the mindset that is guiding each of the projects in Springfield, including the 150,000-square-foot federal building — the latest addition to the agency's portfolio.

The Salstonstall building project may serve as a model of sorts for that project, he said, meaning imaginative re-use that dovetails with a community’s growth plans, and not necessarily that structure’s mix of retail, office, and housing.

“We’re looking at a variety of options,” he explained, “all of which are designed to keep all the lights on.”

In Springfield, as in other communities, MassDevelopment brings a full menu of services to the table, said Leslie Ross Lawrence, vice president of Commercial Lending in the Springfield office. While often not as highly visible as some of the large real-estate developments, these services contribute in many ways to the agency's core goals — creating jobs, readying sites for development, and increasing the Bay State's housing supply.

In the financing realm, for example, there are a host of loan programs, she explained, including a brownfields redevelopment fund; an ‘emerging technology’ fund, which provides loans and guarantees for investments in manufacturing facilities and equipment; a ‘new markets loan fund,’ which supports small businesses and nonprofits seeking to grow and create jobs in federally designated census tracts; a program called ‘Techdollars,’ which provides cost-effective financing for technology equipment purchases and installation; and even a charter-school financing program.

“Because we can finance any phase of a project, we work together as a team when we go into a specific initiative,” she explained, adding that Calnan traditionally takes the lead, assesses how and when the agency can help a business, nonprofit, or community, and then works with other team members to develop what amounts to a strategic plan for a specific project.

As they talked about MassDevelopment and its work, both Calnan and Ross Lawrence used the example of a local company, Volz Clarke Inc., a maker of high-end furniture, as an example of the many ways in which the agency works.

The company sought and received assistance with plans to relocate — and eventually became the first commercial tenant at Village Hill, occupying Lot 12A on Earle St., now home to a 20,000-square-foot manufacturing facility. To make those plans reality, the company received industrial-development bond financing from the agency, one of five area manufacturers — including Hazen Paper and Universal Plastics in Holyoke, and Argotec — to do so.

There are countless other examples that show how the agency can provide money, expertise, and imagination to get things done.

The Bottom Line

Returning to his thoughts about the largest community in the Pioneer Valley and its prospects for the future, Culver said, “Springfield was a great city, and it can be a great city.”

And with that, he went on to list assets ranging from one of the state’s leading teaching hospitals (Baystate Medical Center) to a core of colleges and universities to a location at the crossroads of several major highways.

As he said … good bones.

Building on that basic framework will take time and teamwork, he said, adding that MassDevelopment can and will play a large role in developing and executing a winning strategy.

That’s what a deep bench can do.