'Access To Financing' Delays Key Worcester Canal District Apartment Project

WORCESTER, MA — The developer behind a large apartment building adjacent to Polar Park is seeking more time to secure zoning approvals because the project has been delayed by "access to financing and capital," according to documents filed in January with the Worcester Planning Board.

The planned 375-unit development at 139 Green St. is a key part of the city's plan to make annual debt payments on bonds it took out to build Polar Park, but a downward commercial real estate market is slowing progress, according to the developer.

In a Jan. 25 letter to the Worcester Planning Board, an attorney representing Boston Capital LLC asked the board to extend a preliminary site plan approval granted Feb. 1, 2023 until February 2026. The developer Quarterra Multifamily Communities initially received that preliminary approval, but Boston Capital is acting as the representative asking for the extension, according to the letter. Developers must get a definitive site plan approval following preliminary approval.

The project is facing "challenges with respect to access to financing and capital related to the rise of inflation and interest rates, instability of the banking system and an overall slowdown in the commercial real estate market," the letter to the planning board said.

The property at 139 Green St. is still owned by 139 Green Street LLC, the company headed by the owners of Smokestack Urban Barbecue, which closed in 2022 in anticipation of the redevelopment. The property was relisted for sale in December, according to the Worcester Business Journal. The $795,000 listing was still active as of this week.

If built, the 395,000 square-foot building would rise eight stories at the corner of Green and Ash streets. The mixed-use building would be one of three buildings on the site of the former Table Talk Pies factory. An 83-unit affordable apartment building is under construction now, and Boston Capital has received preliminary approval to turn a portion of the former Table Talk building at 153 Green St. into 58 loft apartments. The 153 and 139 Green Street developments would also include commercial space on the first floor.

The developments are inside a special zone in the Canal District that officials have said will allow Polar Park to "pay for itself" through future property tax revenue. The city borrowed about $146 million to build the park, and the special District Improving Financing (DIF) zone will collect property taxes from future developments to pay off that balance. The DIF encompasses an area roughly between Green Street, Polar Park and Lamartine Street. The DIF also collects meal taxes, Worcester Red Sox rent payments for use of Polar Park and parking fees.

When the Worcester Red Sox deal was initially announced in 2018, developer Madison Properties said it planned to build two hotels, a laboratory building and an office building, plus a residential development as part of the DIF. So far, only the Madison Properties residential building has materialized, with the other projects still on hold. Separately, the developer Gold Block Real Estate LLC proposed a 13-story, 300-unit building where The Cove music venue once stood. That project inside the DIF is well underway, but has been reduced to seven stories and 173 units.

Worcester has been making payments on the Polar Park debt since 2021, but has relied on revenue from the sale of a piece of land and ballpark rent. The city's payment on the debt in the current fiscal year will be about $6.2 million, and officials have projected the DIF fund will have enough to make that payment.

The request to extend the 139 Green St. development will likely be heard at the next planning board meeting on Feb. 28.