It took nearly 20 years but the State Street Financial Center remains the largest skyscraper in America developed by minority investors
It’s never easy building a skyscraper in downtown Boston, and for these minority developers, it was particularly difficult.
In fact, it took 17 years — almost two decades of court fights, political battles, economic downturns and, of course, financial woes — before the $350 million project was finally completed in 2003: a bright and shining symbol of achievement built in steel and glass.
It was worth the wait. Less than a year after its completion, the 36-story building sold for an earth shattering $705 million. At the time, the sale was the largest real estate deal in Massachusetts and the third largest in the country.
More importantly, the developers and their corporate investors — the Gale Company, Morgan Stanley Real Estate Funds and State Teachers Retirement System of Ohio — earned a substantial profit and the minority developers fulfilled their original pledge to share the money with community-based groups.
Ken Guscott and Paul Chan, co-chairs of the Columbia Plaza Associates, were particularly pleased.
Before the sale, the project had generated $16 million in linkage and community development contributions to Chinatown and Roxbury.
The project started with the demolition of a city-owned, decrepit parking garage on the edge of Chinatown and the Financial District on One Lincoln Street.
It was one of the last remaining prized parcels of land in downtown Boston and Mayor Raymond Flynn was urged by then City Council President Bruce Bolling and Boston Redevelopment Authority (BRA) Director Steve Coyle to adopt a linkage-to-linkage program where downtown development was linked with development in residential areas.
The linkage program was also designed to encourage minority employment and business development. As such the city mandated a minimum 30 percent ownership stake be awarded to a minority group and that 30 percent of construction and technical contracts go to minority- owned companies.
After months of hearings, the BRA named Columbia Plaza Associates as the project’s equity principal.
The 37 investors — 12 from or associated with the Roxbury neighborhood and 25 with Chinatown — got together in 1986 with the idea of investing in a Boston project and sharing some of the profits with their home communities.
Columbia Plaza Associates raised $2.5 million to start the project and had an impressive list of investors: Ken and Cecil Guscott, John B. Cruz III, Fletcher “Flash” Wiley, Wayne Budd, Edward Dugger, Peter Bynoe and Bertram Lee. The largest investor was the Boston Bank of Commerce.
Now named One United, the black-owned bank put up about $230,000 to jump start work on Parcel 18 and then loaned Columbia Plaza $2.6 million to purchase development rights for One Lincoln. The Boston Bank of Commerce had an 11 percent stake in Columbia Plaza Associates (CPA).
They began by developing a site in Roxbury that the city had linked with the One Lincoln Street property. Called the Ruggles Center, CPA had envisioned a four-building complex, with office buildings and a 200-room hotel.
But that site, Parcel 18, was snake bitten from the start. Then Gov. Michael Dukakis had wanted the Massachusetts Water Resources Authority (MWRA) to move to one of the Ruggles buildings after its lease expired in Charlestown.
But South Shore legislators balked at the deal and successfully argued that the MWRA should move to the Quincy Shipyard — and not Roxbury. “The MWRA is not a social services agency,” said Paul Harold, the former Quincy state senator.
That left Columbia Plaza without a tenant — and its One Lincoln project on hold. Help of sorts came in the way of the state Registry of Motor Vehicles. In 1991 then Gov. Williams Weld signed a 15-year lease for 150,000 square feet for the state Registry of Motor Vehicles.
Once construction was completed, the Registry moved in but their stay was marked by charges of poor ventilation and noxious odors. They eventually moved to Chinatown.
With their tenants gone, Columbia Plaza was on the defensive again. This time help came from Northeastern University. The school purchased the registry building outright together with interests in three adjacent parcels for $17 million in 1997. Two years later, they broke ground on the Renaissance parking garage.
Meanwhile, the real estate boom in Boston went bust during the early 1990s and left plans for One Lincoln lying dormant on an architect’s table. To keep the project going, Columbia Plaza borrowed $6.5 million from its original joint venture partner, Met Structures, a subsidiary of insurance giant Met Life. The cost was high — 50 percent of its equity stake was used to borrow the money.
By 1997, Met Structures wanted out and tried to sell its stake to a New Hampshire based company.
Columbia Plaza came up with another idea. They bought out their former partners and then once again controlled 100 percent of the equity.
That equity position changed when they brought in a partner then named Gale and Wentworth Co., a New Jersey-based firm that had a managing partner with long-standing Boston roots. John B. Hynes III moved quickly after receiving the BRA approval as co-developer in 1999.
Hynes raised money, purchased abutting properties, acquired the necessary building and construction permits and was able to break ground in the spring of 2000. After all the years, the construction clock had finally begun.
Three months later, State Street Corp. signed a letter of intent to lease all of the building’s 1.04 million square feet for 20 years. It was then estimated that the lease would provide more than $1 billion in revenue.
Indeed, it was a new Boston, a place where a minority development team changed the city’s skyline — on time and on budget.
