ECONOMIC OPPORTUNITY AREA

TENANT BENEFITS


 

On December 30, 1996, the Massachusetts Economic Assistance Coordinating Council (EACC) officially designated Cummings Center as the Cummings Center Economic Opportunity Area (CCEOA). The purpose of the EACC is to administer the state's Economic Development Incentive Program so as to promote economic development in Beverly and other selected communities. Then-Governor Weld earlier described the potential of Cummings Center as a "huge economic engine" for Boston.

 
Cummings Center Economic Opportunity Area
 
 
Established by Massachusetts' Economic Assistance Coordinating Council on December 30, 1996, the Cummings Center Economic Opportunity Area (CCEOA) offered many benefits. The most significant direct benefits, however, were to the city of Beverly, to the owners of Cummings Center, and to the almost 400 client firms that leased space there. Indeed, the ability to set lower rental rates because of lower taxes was one of the major factors in attracting so many new businesses to relocate to Beverly and to historic Cummings Center.
 
The Cummings organization took over the former Beverly, MA headquarters of United Shoe Machinery Corp. on April 28, 1996. Vast stretches of that huge concrete factory and foundry were dilapidated, ghostly silent and cold. The heated portions, on the other hand, gulped enormous amounts of energy, while the owners tried to give the property at least the appearance of viability. Meanwhile, The Black & Decker Corporation continued to lose millions on the property each year.
 
 
Nothing was being accomplished to maintain the rapidly deteriorating property. The once largest concrete building in the world suffered active neglect for at least a decade and a half, and was the source of much consternation in the city it had nurtured so well for most of the century. FORTUNE Magazine described it as "massive and antique" in October 1972.
 
Cummings Properties' late president, James McKeown, and chairman, Bill Cummings, first saw the complex in November 1994. Almost immediately they offered to purchase the entire 80-acre complex for $500,000 through Boston broker Robert Cronin, now of Meredith & Grew. It was a full year later, however, before the offer was finally accepted. Then began an $84 million restoration and rebuilding of more than 2 million square feet of the Boston area's finest mixed use office, research, laboratory complex.
 
 
With that offer on the table, the owners reportedly looked for any other offer they could find, from any of the dozens of other prospective buyers who earlier looked at it when the asking price was down to $35 million. There were no other takers, however, even at a giveaway price, and the deal was closed with Cummings Properties. At that point, the property was assessed by the city at $6.2 million, and significant tax abatements would certainly have followed.
 

Rather than deal with tax reductions, however, Beverly officials instead pushed for a major rebuilding of the huge complex. They used a state TIF (Tax Increment Financing) agreement as the carrot, convincing Cummings Properties that a large private investment in the sprawling historic landmark really might make sense.

As a result, instead of spending $5 million or so in a "Band-Aid" approach, Cummings Properties committed to the city, and the state, to spend a minimum of $16 million. Although it agreed to do a great deal more than just correct code violations and repair the roofs of the 95-year-old complex. Cummings had no concept even of how far it would go to create the extraordinary ultra modern office, research and laboratory campus which resulted.

Clearly, the initial $500,000 investment was not the risk that concerned Cummings Properties (and all other prospective buyers). It was the risk of all the additional money that then started to flow.

 

Click to enlarge
 

The Wall Street Journal on October 2, 1997 wrote, "Because the risk-reward factor of this [USM] conversion was enormous, it was no undertaking for the fainthearted. Mr. Cummings has an appetite for challenges. A successful operator of renovated old properties, he has demonstrated a kind of vision and investment savvy conspicuously absent among the owners of similar structures, where serious problems of age, size and condition stand in the way of profitable reuse."

There were some environmental risks at United Shoe that have since been fully corrected, but more significantly, there were huge economic risks as well. No new tenants whatsoever were lined up to occupy the soon-to-be restored building, and many if not most of the small manufacturers, woodworkers, and machine shops that came with the purchase were sometimes more of a liability than an asset, if a restoration was to be completed.

If Cummings Properties did make a large speculative investment to clean up and rebuild the property as an office and research facility, how many new tenants would come?

 
 
As it turns out, hundreds of new tenants have come, following lots of good local and even national publicity, as well as extensive advertising. City officials worked very hard with the Cummings professional staff in resolving all outstanding code and safety issues, and things really started humming. More and more money was needed as more and more sophisticated efforts were undertaken to preserve and improve the historic complex.
 
Tenant buildouts were the largest factor, along with two brand new glass curtain wall additions on the south side. These were to signal to the world that things had, indeed, changed. On the north side, a mountain of granite ledge was blasted away to make new parking areas, while acres of new landscaping were created on all sides, including hundreds of new trees. The spectacular water view below is from an available suite on the fourth floor of 500 Cummings Center.
 
 
By January 1, 2002 the investment catapulted from the original commitment of $16 million to more than $60 million. About a third of this figure is attributable to all of the site and infrastructure improvements, while the balance is for actual construction work at the property. After a total investment of $90 million, to date, Cummings Center is now home to approximately 540 office, medical and research firms of all sorts.
 
The Commonwealth aggressively promoted the Beverly program to area businesses, with several on-site seminars by state officials. Many Cummings Center tenant firms availed themselves of the individual benefits, with abundant help from Beverly's economic development office (978-921-6000). Bill Cummings has often lauded both state economic development officials and all Beverly officials for their remarkably strong cooperation.
 
 
Then-Massachusetts Secretary of Economic Development, David A. Tibbetts, wrote warmly of Cummings Properties' conversion of the United Shoe complex on August 3, 1998. "The Shoe is one of the Economic Development Incentive Program's premier success stories. Your efforts will continue to make a tremendous and lasting difference for the North Shore and the Commonwealth." He concluded, "The Shoe is an extraordinary accomplishment, and I have every confidence there are many more to come."
 

 

On November 6, 1997 in a special editorial entitled "Breathing life into old factories," The Salem Evening News said: "There is no doubt in our minds that any public funds that might be invested in these projects... or the tax incentives that were granted Cummings, will be returned many times over."

The Cummings Center site itself is reportedly the oldest continuously used commercial business site in the United States. The town government of Salem approved a tidal grist mill on the property in 1642, which existed in full operation until the 1890's. Then other interests used the docks for about 10 years until United Shoe Machinery Company took it over in 1903.

On February 10, 1999 Bill Cummings spoke at a joint meeting of the Boston District Council of the Urban Land Institute and Greater Boston Chamber of Commerce. "Because of the designation as a Massachusetts Economic Opportunity Area, and the related TIF agreement," he said, "Cummings Properties made four times the investment in Beverly that it would otherwise have made... And today both we and the city have 10 times the building as a result."


 
 
 
Cummings Properties LLC, 200 West Cummings Park, Woburn, MA 781-935-8000