Boston Redevelopment Authority Gets Millions from 'Resale Paymen - Boston News, Weather, Sports | FOX 25 | MyFoxBoston

Boston Redevelopment Authority Gets Millions from 'Resale Payments'

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In last year's mayoral election, Mayor Tom Menino's challengers zeroed in on the powerful Boston Redevelopment Authority, claiming the agency is out of control and should be abolished.

Both Menino and the BRA survived, but now after the election a little-known legal maneuver by the BRA has been uncovered.

It's being called the BRA's never-ending money machine.

It has an unassuming name -- it's called a "resale payment" -- but it's quietly generating millions of dollars for the BRA. Authority officials say it's just a fee, but others say it may actually be an illegal tax.

Bruce Mohl is the investigative reporter who uncovered it. We caught up with him at Flagship Wharf, a 200-unit luxury condominium building in the Charlestown Navy Yard.

"I estimate they (the BRA) have made $4.5 million in payments out of this building, and it just keeps accruing over time," said Mohl, a veteran Boston journalist who is now the editor of CommonWealth Magazine .

For the BRA, Flagship Wharf is a gift that keeps giving.

Mohl discovered the so-called resale payments while investigating activities at the BRA and found the agency is collecting money every time condo units are sold, not just at Flagship Wharf, but at about 25 buildings in the city.

"I've never seen anything quite like it," he says. "If you could write it into real estate that whenever that sells, you get a piece of the action, it just goes on and on and on. It becomes a never-ending money machine for the BRA."

Here's how the money machine works. The BRA agrees to sell city-owned property to a housing developer, but takes less money up front, making it easier for the developer to get its project started. In exchange, the developer agrees to the BRA's resale payment deal. The first time a unit is sold, the BRA takes a cut, a small percentage of the sale price.

But it doesn't end there. The BRA always gets a cut, into the future, as each unit is sold, re-sold, and re-sold again, indefinitely.

"That strikes many people as unfair, that someone 30 or 40 years from now could be paying the BRA for a deal that was made right now," Mohl says. "And a lot of people think it's like a tax, a transfer tax. So whenever the property is transferred, the BRA gets a fee. But the BRA can't impose a tax, so they call it a resale payment."

In a good year, the BRA says it makes about $1.3 million from the resale payments, according to Mohl.

Shirley Kressel, a co-founder of the Alliance of Boston Neighborhoods and an outspoken critic of the BRA, has problems with the resale payments.

"The BRA always says we're self-sustaining and I always say, yeah, like a tapeworm is self-sustaining," Kressel says. "This payment that they demand really is highly improper because it's not a fee, because there's no service. It's not a tax because the BRA has no taxing authority. So what exactly is it that gives them the right to keep taking money from every subsequent owner?"

BRA officials defend the resale payments, saying they are a way to encourage private development in areas where it might not otherwise occur.

In a written statement to Fox 25, a BRA spokeswoman did not answer the charge that the resale payments are an illegal tax, but did say in part: "The fee structure is done in a way to not overburden the project in the beginning, rather to recapture the value over time... These fees help sustain our $50 million agency that provides comprehensive planning, economic development and job training services for the city of Boston at no cost to taxpayers."

Flagship Wharf, meanwhile, has been home to many prominent Boston residents, including former Red Sox star Nomar Garciaparra.

"He lived here briefly and re-sold it," says Mohl. "He was in a unit that I think has sold five times since the original sales."

Garciaparra's old home has been good to the BRA.

Says Mohl: "They (the BRA) made four percent approximately off the initial sale price and then two percent every time thereafter."

You may wonder, if the BRA's resale payment deal is so suspect, why hasn't anyone challenged it in court?

Mohl says a legal challenge would be very expensive and individual sellers who have to pay part of their proceeds to the BRA are unlikely to take on that battle by themselves.

To read more about this story, go to www.commonwealthmagazine.org .

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