While a pair of prominent city businessmen solidify plans to bring commerce, jobs and tax revenue to the long-dormant South Worcester Industrial Park, a former potential suitor for its largest parcel said the city’s asking price was too high and now he is considering a sublease agreement there with a new tenant.
“I’ve looked at a lot of places in Worcester, and the prices they were asking even for a little hole in the wall were ridiculous,” said Rafael Mayor, owner of Universal Wind Power, in a phone interview May 23.
“We’re in discussions with someone there to sublease, or even buy, a part of it, so we can still have a place for operations and a yard for trucks,” Mayor said. The startup, now based on Southbridge Street in Auburn, plans to manufacture wind turbines for the electric power and water pump industries, according to its website.
“While it would have been nice if Universal Wind Power would have executed their original plans for locating their business operations in SWIP… the competition to acquire land and develop in SWIP is robust and it continues to rise,” city Chief Development Officer Michael E. Traynor said.
That competition is nearing an end with the announcement that Worcester-based Chacharone Properties LLC has agreed to purchase three properties in the 11-acre former brownfields site at 25 Southgate St. — the once-potential home of Universal Wind Power — 17 Southgate Place and 65 Armory St. One city-owned parcel is left unsold.
The price, according to the city, was $417,600 for the more than 5 acres, which include the two largest parcels at SWIP: 25 Southgate St., 2.5 acres; and 65 Armory St., 1.7.
Jim Chacharone, founder and a principal owner of Chacharone Properties, said he was unable to comment on the purchase and wouldn’t be able to comment until later this month because he “wasn’t at liberty to release the project details.”
The agreement was to be announced and offered for consideration at the Tuesday, May 24, City Council meeting, per the city manager’s office.
“That’s fine. Let them announce it,” Chacharone said. “They don’t know what I’m going to do with that land yet.”
According to a communication from City Manager Edward M. Augustus Jr. in the council’s meeting agenda, Chacharone plans to build two buildings on the three parcels (25 Southgate is split by Southgate Street, with about 70 percent on the northeast side of the road), “totaling no less than 65,000 square feet of light industrial space.”
Chacharone Properties, doing business as Grove Street Properties LLC, bought the former Pullman Modular property, a 120,000-square-foot warehouse on Pullman Street in North Worcester April 25 for $950,000, according to Worcester Business Journal.
“Jim Chacharone is a really astute investor and developer who has committed himself to this city,” said Steven Rothschild, who recently acquired the SWIP parcel at 49 Canterbury St. that will be home to the Armory Business Center. “You can see that with the numerous projects he’s developed in Worcester.”
More in today’s Sun: Rothschild talks about SWIP, WRA and investing in Worcester
Chacharone Properties has several commercial properties listed including the former neighboring homes of Boston Billiards, Pizza Works and Chadwick Court on the corner of Grove and West Boylston streets.
“I’m thrilled to see that he’s moving in there,” Rothschild said. “On one hand, would I have loved to someday have the opportunity to look at the space? Of course. On the other hand, his involvement in the SWIP is validation of the value and the opportunity in the city of Worcester.
“I’m ecstatic to see him going in there because he’s a quintessential real estate professional.”
Traynor, for his part, is not surprised by the seemingly sudden uptick in progress.
“I think the interest in SWIP has been there all along, but the market wasn’t ready,” Traynor said in an email. “The city has fielded numerous inquiries over the years but those potential suitors weren’t ready or couldn’t assemble the financing.
“But our adherence to the master plan for SWIP and the SWIP Task Force’s patience is now paying off. I also believe that a big part of moving these sales forward has to do with adopting an economic development plan for SWIP that afforded us new ways to market the properties and negotiate the sales.”
The agreements with Rothschild and Chacharone come relatively quickly on the heels of expansion plans by Absolute Machinery, 92 Gardner St., which acquired 28,000 square feet of abutting land behind 33 Southgate Place to construct a 13,000-square-foot building. The lone city-owned SWIP address remaining is 26 Southgate Place, about 32,000 square feet of land.
“[The Chacharone sale] is extremely important,” Traynor said. “It would leave one unsold property in SWIP. We said all along that all we needed was that first sale/development to get the ball rolling. That happened when Absolute Machinery invested in SWIP and expanded its operations.
Each of the parcels is tied to a pre-approved Tax Increment Financing [TIF] plan that saves SWIP landowners tax money on any increase in property value. Once sold, the properties, which were untaxed under city ownership, rejoin the tax rolls.
For example, Absolute Machinery’s expansion project is expected to increase the total assessed value of the properties from $1,016,500 to $1,375,000, according to the city.
A mandate approved by City Council in April 2013 which accounts for facility size and the number of jobs to be created, calls for a tax relief plan for 10 years with an incremental annual 50 percent property tax exemption.
Over that decade, the city is expected to receive $425,000 in tax revenue from Absolute Machinery’s parcel. After 10 years, the city says it is projected to receive about $55,000 annually in property taxes.
These incentives were not enough to entice Mayor and Universal Wind Power. At least, not yet.
The firm decided to partner with Columbia Tech, a manufacturing and engineering contracting company and subsidiary of Coghlin Companies Inc., which will begin construction of Universal Wind Power’s large vertical axis turbines at Columbia Tech’s Devens warehouse.
“[Columbia Tech] gave us an offer that was almost impossible to refuse,” Mayor said. “For the time being, that stopped us looking at building something in the [SWIP].
“There’s still a very strong chance we end up in the SWIP. We’re still building the smaller [wind turbine] units ourselves. We’re still contemplating it and discussing it with our investors,” Mayor said.
Traynor said the city has received “some interest” in the remaining parcel and is in ongoing discussions to sell it.
“The announcement of Steve Rothschild’s plans to purchase the 49 Canterbury St. parcel and develop the Armory Business Center in SWIP, and this potential purchase by Chacharone Properties reflects the confidence that investors have in Worcester and SWIP, in particular,” Traynor said.
Rothschild said he would be inclined to consider the final parcel, but “couldn’t imagine that property will be available for too long.”
“I’m certainly hopeful that this will lead to further investment in SWIP and the surrounding area. There are still properties to be reclaimed and redeveloped,” Traynor said. “What you’re seeing is a rebirth of the neighborhood with these SWIP projects.”