08.05.2022

The scoop that rocked the State House | House speaker’s faulty memory | Signs of intelligent life at our local tabloid | Life sciences boom meets reality | Quick Hits | About Contrarian Boston |

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Crash landing ahead? New lab projects confront growing obstacles amid an uncertain economy

Probably not. After a period of breakneck expansion, we are more likely seeing an inevitable slowdown in the pace of new life science projects in Greater Boston, not a boom going bust.

Still, the warning signs are starting to pile up. As much as 65 percent of the pipeline of future lab and life science projects – a staggering 26 million square feet of space proposed for inside the I-495 beltway – now faces an uncertain future due to trouble landing financing and other issues, a new report by Newmark, a respected commercial real estate firm, finds.

A prime example of that can be found in Sullivan Square, where RISE Together and Trax Development have dropped 246,000-square-foot life science building from the first phase of their 2.6 million square foot project planned for 100 Cambridge St.

“Maybe they don’t come out of the ground in the next five or ten years,” said Liz Berthelette, research director in Newmark’s Boston office, told Contrarian Boston. “Maybe some end up getting shelved.”

Banks – and for that matter developers – have been growing worried about the increasingly stressed bottom line of many biotech and life science firms as stock prices tank.

Biogen and other life science firms have laid off 1,100 employees in the Boston area in the first half of 2022, with the amount of newly empty lab space doubling over the spring to nearly 1 million square feet, according to Newmark.

Meanwhile, the Federal Reserve Bank of Boston’s Beige Book, which summarizes economic conditions, notes a slowdown on conversions of buildings to lab and life science space “amid concerns about tenants' creditworthiness and a looming glut of space.”

Stay tuned.

Small magazine, mighty punch: CommonWealth scoop upends Beacon Hill

That would be CommonWealth Magazine, which broke the story about a long-forgotten state law now poised to trigger a nearly $3 billion windfall for Massachusetts taxpayers.

In a piece that ran July 27, Bruce Mohl, CW’s editor, reported that record state tax revenues were poised to trigger a 1986 law that caps state revenue growth, sending the surplus back to taxpayers in the form of credits.

The scoop appeared to take House and Senate leaders by surprise, putting the kibosh on negotiations over a key economic development bill as the legislative session ended Sunday. Crucially, the bill already included $1 billion in tax breaks, which, for obvious reasons, suddenly became problematic.

Asked by Contrarian Boston how he got the story, Mohl, whose career in local journalism goes back more than three decades, said it was a result of a tip. (In the interest of disclosure, I am an infrequent contributor to CommonWealth, having written three articles over three years.)

 “It was a source who felt I was old enough to remember the tax cap issue,” Mohl, a reporter at the Globe for many years before taking the helm at CommonWealth, wrote over email.

Well, cheers to long memories and great reporting.

Bushwhacked: House boss flummoxed after tax cap revelation

Speaking of memories, House Speaker Ron Mariano just got a rather unpleasant reminder of the importance in Massachusetts politics of having a long one.

Faced with news that a 1986 law is poised to trigger a nearly $3 billion give back to state taxpayers, House and Senate leaders effectively pulled the plug on a centerpiece economic development bill.

The CommonWealth story broke with just a little over four days left in the legislative session, and the bill, which already included hefty tax breaks - see above - was apparently judged untenable.

Mariano was particularly incensed, flailing away in a rather desperate attempt to blame Gov. Charlie Baker for supposedly holding back information on how the tax cap was about to be triggered.

However, a more convincing case can be made for sheer legislative malpractice.

Let’s just think for a moment about Mariano’s political memory, and why it apparently proved so faulty when it came to that decades-old tax cap law, and its potential to wreak havoc with his legislative agenda.

If anybody should remember the 1986 tax law, it would be Mariano. The Quincy Democrat is one of the longest serving members of the Legislature, having been elected in 1991.

Nor was it some obscure, bean counting petition. Rather, the law was the result of a hotly contested and ultimately successful statewide ballot referendum by the late Barbara Anderson and her Citizens for Limited Taxation along with the Massachusetts High Technology Council.

Jim Stergios, executive director of the Pioneer Institute, questions the claims made by multiple lawmakers not to have known or been aware of the law.

The think tank played a key role in the CommonWealth story that broke the news about the looming tax cap - see above - providing a detailed estimate of the potential amount owed to taxpayers after being contacted by the magazine as it was putting together its scoop.

“The idea that somehow lawmakers didn’t know about the law is hard to believe,” Stergios said. “Over the years there have been numerous state auditor’s reports on the revenue cap.”

Down but not quite out: Herald sees success in building a digital subscriber base

By Mark Pickering

Since erecting a paywall for its website in April 2019, the Boston Herald has pulled in 31,935 customers for its online offerings – roughly 62 percent of its overall subscribers.

That’s according to the Alliance for Audited Media, which reported as well that digital subscribers for the Herald’s Sunday edition were nearly 31,000.

The turn to digital offerings is part of an industry trend that has newspapers charging for their online content.

“In the newspaper industry, strategy No. 1 these days is to grow paid digital-only subscriptions,” said Rick Edmonds, media business analyst at the Poynter Institute. “Paid digital subscriptions are, of course, fundamentally an audience revenue strategy,” he added, in a Poynter article.

The cheapest subscription that the Herald offers on its website is for $3.50 per week. An ad-free subscription goes for $4.50 per week. Assuming that all digital subscribers are at the cheaper rate – but not the introductory rate of 99 cents – this would amount to $5.8 million in annual revenues.

Herald publisher Kevin Corrado and its parent company did not return requests for comment. Corrado took the reins of the Herald in March 2022 when the local tabloid was sold to MediaNewsGroup, an arm of Alden Global Capital. Corrado is also the publisher of other MediaNewsGroup daily papers, including the Fitchburg Sentinel & Enterprise and Lowell Sun in Massachusetts.

“I’m committed to producing content that our readers want, in both print and digital,” he said at the time. He added that the Herald would remain committed “to delivering quality news and information to our readers, advertisers and our communities.”

Not surprisingly ‑ given newspaper industry woes and Alden’s business style ‑‑ numerous layoffs hit the Incredible Ever-Shrinking Herald as the new owners took charge.

Since buying the Herald, Alden has continued to cut its staff. And it recently raised the cost of buying a newsstand copy of the Herald to $4.50.

Earlier this year, Alden was embroiled in a hostile takeover fight with Lee Enterprises. That chain owns more than 70 U.S. daily papers, including the St. Louis Post-Dispatch, Omaha World-Herald and the Buffalo News.

Lee’s board of directors rejected Alden’s offer. Chairman Mary Junck said Alden’s bid undervalued Lee, in particular its potential growth in digital subscriptions and digital ad revenue.

Lee, a publicly traded company, has just reported its third-quarter results, which showed digital subscription revenues were up 50 percent from the same period in 2021. The company said that revenues from digital advertising and marketing services were up substantially as well.

The Poynter Institute’s Edmonds said one of the news industry’s “selling points to digital advertisers has been a high-quality content environment (as opposed) to fake news and other undesirable material on big tech platform competitors.”

Alden’s many holdings include The Denver Post, the Chicago Tribune, The Baltimore Sun and The Mercury News in San Jose.

The Herald’s longtime rival, The Boston Globe, has seen enormous growth in digital subscribers. The New York Times reported that, over a two and one-half-year period, the Globe increased its digital subscriptions from about 100,000 to 226,000 by early 2022.

Mark Pickering is a veteran of the local news business, having worked on the business desk and the opinion pages of the Boston Herald.

No rent control this year - or for that matter ‘rent control lite - this year

Despite some heated debate and packed State House hearings, proposals that would effectively allow cities and towns to restructure the rental market in their communities didn’t make it over the legislative finish line this year.

Rent control always faced an uphill battle, with Gov. Charlie Baker sure to veto it even if had managed to make it through the Legislature.

But the Tenant Opportunity to Purchase Act, or TOPA, also fell short. Dubbed ‘rent control lite’ by one prominent housing advocate the measure, the aim of the proposal was to provide a counter to the cash-flush investors snapping up apartments and jacking up rents across the state.

While, yes, tenants would get a chance to buy their buildings when they hit the market, they would also be able to team up with nonprofit housing developers, which, arguably, is the real play here.

But opponents have labeled the proposed new law the ‘silent threat,’ with some landlords fearing the bill could tie up potential apartment building sales, drive off cash-rich buyers, and force them to sell to nonprofit groups and CDCs.

Both issues will be back in 2023. And barring an alien invasion or nuclear attack by North Korea, supporters will most likely be able to count on help from a newly elected Democratic governor named Maura Healey.

Quick Hits:

Will 30 days be enough to fix the Orange Line? Will the T be forced to close down additional lines? “Shutting down the Orange Line may just be the start” Shirley Leung/Boston Globe

Uh-oh, trouble ahead on the Green Line now: “MBTA Green Line to close for month north of Government Center as extension branch hits another delay” Boston Herald

Hey, did somebody call the recession off? “Employers added 528,000 jobs in July, shattering expectations” Washington Post

We remain heart-broken for the parents: “Alex Jones ordered to pay $45.2 million more in punitive damages to Sandy Hook parents” Washington Post

Wondering what bills actually made it through the State House meat grinder? “Here’s what passed in marathon all-night legislative session CommonWealth Magazine

What is Contrarian Boston?

I have fielded emails over the past couple of months asking what Contrarian Boston is about.

Here’s a link to our mission statement – you can find it in the “about” section.

For a more prosaic, nuts-and-bolts description, read on.

An online newsletter, Contrarian Boston publishes every Monday, Wednesday and Friday. In Contrarian Boston you’ll find analysis of the day’s news, and original reporting as well.

Our focus is:

·      Politics and all levels of governance, good and bad, with an emphasis on state and local, with some national mixed in;

·      Economic growth and business, especially real estate, housing and new development projects;

·      The media and why it does what it does;

·      Education, from school board spats to the doings of multibillion-dollar university endowments;

·      And whatever else catches our fancy.