Re: [DSNC] 13-story and other alternatives for Copper Mill project

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jlau...@comcast.net

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Mar 10, 2026, 2:57:27 PM (6 days ago) Mar 10
to Jeff Byrnes, Beth Kevles, Davis Square Neighborhood Council
Jeff,
 
I note that on this thread you and others have cited the Pew study as proof that expansion of luxury apartments disproportionately benefits lower income renters.  Having now read the link you kindly provided, I find the relevance of this study to the Copper Mill project to be mainly in its dependence on factors that are absent in Somerville.
 
It is always wise to be cautious about applying aggregated data to individual cases even when — one might say especially when-- those cases are part of the aggregate.  To state the obvious: the rise in the past few years of life expectancy for the American male from 77 to 79 years does not mean that you and I have two more years to live than we did in 2022; a boom in stock prices for AI firms does not mean that this or that AI company will not go bankrupt.   
 
In the Pew study, which has been portrayed on this site as if it were a law of physics, the finding is that over a large metropolitan area the rate of increase for low income apartment rentals is measurably slower than that for other market segments when luxury rentals are injected into the housing mix.  The underlying mechanism is said to be one-way "moving chains" in which upper income renters who move into new luxury suites in Class A apartment houses vacate Class B properties for occupancy by those less affluent who in turn are replaced by those still less affluent and so on until the least affluent segment is faced with a net outflow that slows the rate of rental increase so that it moves up less rapidly than that in other segments.  The Pew analysis is done in quartiles, so to be more precise we should say that, in a rising market, investment in apartment houses serving the upper quartile, as measured by level of personal income, slows the rate of increase in the lowest quartile below the average for the market as a whole.  
 
This is a plausible if undramatic "trickle down" theory that works for some cities better than others.  It is noteworthy that the eleven US cities where the Pew findings are strongest are in upward trending urban markets of the South (four in Texas, two in Florida, two in North Carolina, one in Tennessee) and inland West (Salt Lake City, Denver) which tend to be more uniform and market-oriented in their approach to residential real estate than Massachusetts.
 
Here in Massachusetts, with its strong New England tradition of municipal self- government, the conditions for smooth "chaining" are qualified by all sorts of cross-cutting local and state regulations designed to incentivize, reshape, correct, liberate or disrupt market forces.  Somerville has more than its fair share of such regulation.

I conclude-- and there is a lot more that could be said-- that the relevance of the Pew study to the proposed 40B high-rise in Davis Square lies in its irrelevance-- that is, in its dependence on factors that are absent in the Somerville situation-- such as a uniform metropolitan-wide zoning code, a relatively open as opposed to a Balkanized market.

Of course, if we go back a few decades before the period of the Pew study, we can find really dramatic effects of "moving chains" in American cities experiencing White Flight, with consequences in such cities as Philadelphia, Chicago, Baltimore, and Rochester that dwarf the measurable trickle down effects on the rate of rent increases on individuals in the Pew Quartile IV.
 
A further comment is below.

Lee
 
/2026 6:05 PM EST Jeff Byrnes <je...@somervilleyimby.org> wrote:
 
 
Thanks Beth. I’ve got a small pile of similar stories & studies that show the same thing, I’ve shared them before & am happy to share again.
 
Lee, one thing to note, you state:
“To date, the City has not sponsored a single public meeting either on the pre-Covid draft of the Davis Sq Commercial Plan or on the Copper Mill project…”
This is technically true. However, the Davis Sq Neighborhood Plan that preceded the Commercial Area Plan had multiple rounds of public engagement. Some were traditional meetings, others were “open house” or “science fair” style. The outcomes of that fed into the 2019 zoning overhaul, but the Plan itself was never ratified & then Covid hit.
 
As for Copper Mill, they’ve not actually applied to the City to have this project permitted, so no meetings have been required, and thus the City has not held any. If they did proceed, that would trigger the required meetings.
 
On the other hand, Copper Mill has held multiple meetings voluntarily, and is having another one in the near future at Crystal Ballroom. None of those were or are required.
Yes, Jeff,  OSPCD leadership has left Andrew Flynn/Copper Mill hanging out to dry to make a case that they know to be supported only by a vocal minority that backed the loser in the mayoral election on this very issue.  Ward 6, precinct 2, as it happens, was one of two precincts city-wide to give Mayor Wilson an outright majority in the primary election.  Compare the nearly 2000 signers of a petition opposing the residential tower with 2351 and 2341 votes for the uncontested Ward 6 Councilor and School Committee candidates, respectively, in the November 4, 2025, election.

The attempt to use 40B to bypass what you rightly observe are the City's well-established and well-balanced planning practices has foundered now that we all know that Somerville has the legal power to claim exemption ("safe harbor") from it.  It is worth noting that timely notice of the (now withdrawn) 40B preliminary filing was not given to the Mayor's blue ribbon transition committee-- a group unusually well-qualified to evaluate both the appropriateness and the feasibility of the Copper Mill proposal.   

Lee
-- 
Jeff Byrnes
he/him
On Feb 24, 2026 at 3:45 PM -0500, Beth Kevles <bethk...@gmail.com>, wrote:
This article may be of interest.  It shows how new, high end residences open up space for lowest income tenants.
 

On Tue, Feb 24, 2026, 3:22 PM 'jlau...@comcast.net' via Davis Square Neighborhood Council <daviss...@googlegroups.com> wrote:
Chris,
 
It seems I never sent this response to your email of 2/11.
 
1. Yes, Chris, there are, as you point out, many factors that an accountant specializing in real estate would analyze including, among others,  the comparative tax consequences of a) the "double taxation" of  maximizing profit, taxed at the corporate rate,  and paying out the remaining proceeds as  dividends taxed to recipient at the appropriate state and federal rates, versus b) stating internal costs so as to lower taxable profit and dividends and maximize the retirement of principal for future cross-collateralization or sale of the property.   The legal structure of the company  and relative weight of equity versus loan financing  will have a bearing on the choices made.  As a practical matter, the 10% cap on dividend payments in the 49B legislation is window dressing.  The pro forma budget submitted by Copper Mill stretches every variable to the maximum-- $8M hard cost reserve, $5M soft cost reserve, $13M management fee.
 
2.  The approach to Copper Mill cannot be treated in isolation. As noted elsewhere in our discussions, on the even-numbered side of Elm Street we have a comparable stretch of frontage of 248.74 feet controlled by Asana Partners, with an additional 76.73 feet for which Asana has expressed an interest. Both Copper Mill and Asana were once happy with four-story zoning with an extra ten-foot allowance for lab space (= 65') plus up to twenty feet for a lab utility penthouse, plus parking.  Recast as a residential project,  this sort of height (up to 85 feet = 6 stories)  is demonstrably viable for development, as evidenced in the unsubsidized Brabo proposal that won the DSNC Board's approval, or the Star Market 40B project with its 45% affordability mix, or indeed Copper Mill's previous lab proposal, or Scape's dorm proposal.
 
3.  PJ Santos has argued that even a generous midrise base would not justify the $42 million purchase price contingent on the City's acceptance of the 26-story Copper Mill 40B proposal.  As I vaguely recall-- don't quote me on the exact number-- the current landlord was once willing to accept ~$10 million from Scape US (Andrew Flynn, CEO) contingent upon permitting for an unsubsidized dormitory residential project.  So some figure between that and $42 million would probably have to be negotiated with the Dana family should Copper Mill (Andrew Flynn, CEO) explore a midrise 40B solution.  
 
4. It remains to be seen what vision of Davis Square will emerge from a return to the neighborhood planning process.   The DSNC voted in late January that the City should assure that an agreed neighborhood plan precede any triggering of the 40B timetable.  This is in harmony with stated commitments of Mayor Wilson and Councilor Davis to a transparent and participatory process.    To date, the City has not sponsored a single public meeting either on the pre-Covid draft of the Davis Sq Commercial Plan or on the Copper Mill project, nor do the public comment timetables in the 40B provide for one.  This is in stark contrast with due diligence on the full agenda of infrastructure, market, traffic, environmental, parking, legal, historical, architectural, health and safety conditions that have been part of high-rise planning in other parts of the City. 
   
Lee
 
 
  
 
_________________
Josiah Lee Auspitz
17 Chapel Street 
Somerville, MA 02144 
Landline phone: 617-628-6228 fax: 617-628-9441
Phones do not receive text messages

 
 
From: 'Christopher Beland' via Davis Square Neighborhood Council <daviss...@googlegroups.com>
Sent: Wednesday, February 11, 2026 2:45 PM
To: JOSIAH AUSPITZ <jlau...@comcast.net>; Davis Square Neighborhood Council <daviss...@googlegroups.com>
Subject: Re: [DSNC] 13-story and other alternatives for Copper Mill project
 

On Wed, 2026-02-11 at 11:43 -0500, JOSIAH AUSPITZ wrote:

In running real estate numbers, it is important to distinguish return on investment (ROI) from profit.  A zero profit outcome  can be quite acceptable, if the costs include retirement of loan principal and a generous management fee.

I'm not an accountant, so feel free to correct me or explain in more detail, but from what I can tell the financial projection in the 40B application assumes that Copper Mill will never retire the loan and will pay interest in perpetuity. That might not be what they actually plan to do if they are just making this pro forma to show the project is viable, but if they do pay down the loan they would need to temporarily give up some of the $8 million per year in cash the project would generate. A 25% slow-down in their ability to pay off their loan would also be a major hit, and create problems retrieving their equity later.

I BELIEVE THE PROPOSED LOAN IS FOR $169m @4.25% FOR 10 YEARS.

There is a one-time "Developer Fee" of $13 million listed under construction costs. (That's just under the cap of $13.275 million set by something referred to as the "DHCD Qualified Allocation Plan".) But obviously if the building can generate $8 million/year in revenue, most of the value the developer is looking for comes from that and not the one-time profit from the construction process (which is still nothing to sneeze at).

Burdening the building with lots of deed restrictions on the amount of rent that can be charged makes it more difficult to sell the building and retreive equity. In order to sell, it has to have enough positive cash flow to recoup the purchase price in a reasonable amount of time, cover any mortgage the buyer needs to take out, and provide a profit large enough compared to the risk and other potential investments to make the venture worthwhile.

-B.

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