Worcester Chamber of Commerce chief seeks answers from state on $ for WPI bid for hotels

WORCESTER — Worcester Regional Chamber of Commerce President and CEO Timothy P. Murray sent a letter to MassDevelopment and the state secretary of the Executive Office of Economic Development questioning MassDevelopment's funding of Worcester Polytechnic Institute's controversial purchase of two Worcester hotels in Gateway Park.

"What is concerning to many, locally, is both the process and policy that would allow MassDevelopment to finance such a controversial acquisition with no proactive due diligence with local municipal leaders as well as business and community partners," Murray wrote in a letter dated Wednesday.

The letter is only the latest development in the city political and economic leadership's response to WPI's planned purchase of the two hotels — the Hampton Inn & Suites at 65 Prescott St. and the Courtyard by Marriott at 72 Grove St.

The college would use $26 million in state-issued bonds to buy and transform the Hampton Inn & Suites, according to a notice of a public hearing issued last month by the Massachusetts Development Finance Agency. The hearing was scheduled Aug. 6.

Requests for comment to MassDevelopment and the Executive Office of Economic Development were not returned by deadline.

City government and economic leaders have harshly criticized WPI. They say the purchase would substantially hurt the city’s tax base, would fail to mesh with the intended goals of the multimillion-dollar Gateway Park Project and would hurt the tourism industry in the city.

WPI has confirmed their intention to purchase the hotels and convert them to student housing, saying the housing is necessary to address a shortage of housing within the city that leaves many students in a precarious situation after their first year.

The plan is to transition the Hampton Inn to student housing in 2026, while the Courtyard by Marriott will continue to operate as a hotel through at least 2030.

On Aug. 27, City Manager Eric D. Batista confirmed that the city was in talks with WPI while councilors blasted WPI for leaving the city in the dark and not acting as a partner with the city in its economic development goals. Councilors requested the city administration look into legal avenues to pressure WPI into halting the purchase.

During the Tuesday City Council meeting, Assistant City Manager Hung Nguyen said the city administration was optimistic about the progress it was making with WPI in talks following several questions from city councilors.

"I am hopeful that we are moving in the right direction with the school, they're at the table. We've met a couple times now. We've gone back and forth," Nguyen said. "It's still really preliminary right now in terms of the specifics of the deal ... in fairness to both parties I wouldn't want to state any of that in public."

Murray, who has been a leading critic of WPI's purchase, wrote in a March 11 letter that he did not believe MassDevelopment sending a template public notice July 30 was proactive since MassDevelopment has staff in the city and WPI's application for funding was likely months in advance of the Aug. 6 hearing.

A request for the minutes of the hearing is pending, Murray wrote. He said it would be important to note whether WPI leadership told the MassDevelopment board that they consulted with city leaders or if any MassDevelopment board members asked them about speaking with the city.

Murray wrote "very few" in Worcester believe MassDevelopment's funding of the acquisition meets the agency's stated goals of stimulating business, driving economic growth and helping communities thrive.

Lastly, Murray wrote that his understanding is WPI will operate the Courtyard by Marriott for four years and believed the college, with a $630 million endowment, would put other hotel operators at a competitive disadvantage. He wrote that his understanding is MassDevelopment has offered a 12- to 18-month grace period for similar conversions.

"Four years seems like an unusual precedent," Murray wrote.

Last week, most of the City Council signed onto a request to know more about the legal options available to the city through an executive session that would be closed to the public. District 2 City Councilor Candy Mero-Carlson formally requested an executive session for this topic Tuesday.

However, Mero-Carlson was told before the Tuesday meeting that the council could not legally go into a closed session to discuss this.

City Solicitor Michael Traynor explained Tuesday that 10 exceptions in the state Open Meeting Law allow municipal boards to go into executive session, with the closest to this situation being discussing litigation strategy, but that exception is only for active or imminent litigation from a third party. Traynor said he confirmed with the state attorney general's office that a public body's discussion with legal counsel does not automatically fall into executive session.

"To have just a general discussion with counsel as to what options are for moving forward, if it doesn't include filing a lawsuit, that's not grounds to go into executive session," Traynor said. "I have nothing before me that says I can put together a complaint and say OK this is what we're going to sue them on let's meet and talk about it ... there's nothing to tell me that there's anything that is actionable in terms of litigation at this time."

District 3 City Councilor George Russell asked if there could be individual meetings with councilors or with groups of councilors. Traynor said that would not be a problem. Russell recommended such a set up to provide "some communication" with councilors.

Mero-Carlson said the council has a right to be kept aware of negotiations with WPI and tax increment financing.

"This body was elected to serve the taxpayers here in the City of Worcester. This isn't about the City of Worcester suing WPI, this is about what is it that we have for tools in our toolbox," Mero-Carlson said. "As an elected body we have a right to know what those tools are."

Mero-Carlson asked what relief remains on the tax increment financing agreement that the original owner of the Hampton Inn, SXC Prescott Street Hotel LLC, signed in 2014.

Chief Development Officer Peter Dunn said the benefits of the TIF were for a seven-year term and the property is no longer receiving any benefits. However, a clause in the agreement requires SXC to ensure that regardless of the property's ownership, that it remains taxable for 14 years from the start of the plan. The duration runs through June 30, 2029.

Councilor-at-Large and City Council Vice Chair Khrystian King asked Nguyen to provide the council with an update on negotiations. In response to Nguyen’s comments, King pushed for further information, saying Nguyen did not say “very much.”

Nguyen declined to say much more.

Councilor-at-Large Morris Bergman asked whether there has been any discussion with the city’s delegation in the state Legislature about possible advocacy, the delegation meeting with WPI or about pending legislation that would require nonprofits with properties valued at or above $15 million to make payments equivalent to 25% of the property tax they would owe.

Mayor Joseph M. Petty said the city is scheduling its regular meeting with the delegation.

Bergman said a part of his and possibly others’ frustration about the WPI issue is that he learned about it through the newspaper and not through a prior notification.

This article originally appeared on Telegram & Gazette: Worcester Chamber of Commerce Tim Murray MassDevelopment WPI hotels