Photo: Chris Starr before the Planning Board.

A day after the developer of the troubled Cushing Village project came before a skeptical and non-committal Belmont Planning Board requesting yet another multi-month extension to close on an important town-owned parking lot, the chair of the Belmont Board of Selectmen said a sudden change in the developer’s financial team will now “certainly necessitate a new review by the Board of Selectmen of how viable his financing and financial arrangement is.”

Speaking before the Warrant Committee on Wednesday, Feb. 3, Selectmen Chair Sami Baghdady said developer Chris Starr’s acknowledgment that industry leader Cornerstone Real Estate Advisers is no longer involved with the project to provide a significant portion of financing “is troubling that it happened so late in process,” Baghdady told the Belmontonian after the meeting.

The board will next meet on Monday, Feb. 22 when they will convene with Liz Allison, chair of the Planning Board, to discuss the on-going issues concerning Cushing Village. 

Despite Starr initial attempt to purchase the municipal parking lot six months ago, “the selectmen have take the position that we will not tender the deed (to the lot) selling him the parking lot unless the closing takes place at the same time contemporaneously with his loan financing is approved,” said Baghdady, referring to construction financing from its lead lender, Wells Fargo. 

Only when Starr has the approximately $50 million construction loan in his hands, “that is when we will feel secure … and then we will record a land development agreement,” said Baghdady, who was Planning Board Chair when it approved the special permit allowing Starr to begin construction and purchase the parking lot adjacent to Trapelo Road.

In addition to a possible new round of financial reviews from the selectmen, the project faces a looming selectmen-imposed expiration date of March 27 for the option on the purchase and sale of the parking lot. 

“Remember, they were given two years to complete the P&S and that deadline is less than two months from now,” said Baghdady of Smith Legacy, which was selected 32 months ago to create a 164,000 sq.-ft. three building multi-use development in the heart of Cushing Square.

Baghdady’s comments came after Starr, the head of Smith Legacy Partners, requested a four-month extension from the Planning Board to purchase a municipal parking lot that he in the past said is the project’s lynchpin. 

Telling the Planning Board he believes he now has a clearer path to obtaining construction financing, Starr said his firm should be signing an agreement within 60 days, four months at the latest. 

Starr’s request was set aside on Tuesday, Feb. 2 by Allison who noted that her board could not grant the extension – which would move the deadline to the first week of June – until the Selectmen approved extending the purchase and sale agreement in which the developer would purchase the lot for $850,000.

For the past year, the developer has been paying the town a monthly penalty of $30,000 fine to allow him to keep his option on the P&S. Baghdady said Smith Legacy has turned more than $600,000 in penalties. Once a P&S is signed, the town will return half of the penalty to Smith Legacy.

The concern emulating from the two town boards was when they learned that a major source of mid-level financing left the development.

When asked by the Planning Board member Raffi Manjikian the status of Cornerstone, Starr said the project’s “mezzanine” lender had left the team since it was “not playing nicely in the sandbox” with lead lender Well Fargo. Cornerstone – an industry leader in secondary commercial financing – was prepared to provide $14 million in financing to the project.  

In real estate finance, developers use mezzanine loans to secure secondary financing for their projects where the primary mortgage or construction loan equity requirements are larger than 10 percent.

In its place, Starr said the Marlton, NJ-based Micheals Development Company will bring eight percent equity financing to the project. Starr said the company will “drop in a considerable investment into Cushing Village” as well as bringing strong banking relationships that will allow the project to move “towards a closing.” 

Starr also admitted that Micheals will offer its “executional [sic] capabilities on the financial front, construction management, and lease” operations that the current team and he don’t have.

We want someone who has been there, done that and has done it around the country very successfully,” said Starr.

Micheals is well-known in real estate circles as one of the nation’s top developers and owners of affordable housing. It has developed more than 50,000 units since 1973 and is the top private-sector affordable housing owner in the country, with more than 340 properties in 33 states, the District of Columbia, and the U.S. Virgin Islands.

It is likely Micheals was brought onto the team from previous work it had with Cambridge-based Urban Spaces, which partnered with Starr nearly a year ago to jump-start the long-stalled project.

In 2014, Urban Spaces and Michaels were involved in a 50/50 partnership to build a five-story, 160,000 sq.-ft. apartment complex at 159 First St. in Kendall Square. It included 115-unit apartments with commercial space on the first floor along with underground parking, “the same program we’d be executing at Cushing Village,” said Starr. 

But any arrangement remains stalled as Starr finds himself facing ever increasing demands from all sides, highlighted by the requirement from his lenders that he secures at minimum three leases to occupy the project’s 38,000 sq.-ft retail space. 

So far, the project has two firm leases with one national company and a “bar.” Critical for Starr is that the team’s “close to finalizing” the lease for an anchor tenant. But Starr is not longer saying the anchor will be a food market as he has expressed in the past.

Starr remains confident in his project and the town’s continued support for his effort. 

“They see what we are committed to bringing to the community, and that is a great commercial center,” he said.