Privatization Nightmare: Sen. Dianne Feinstein's Husband Selling Post Offices to His Friends, Cheap
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In September 2012, AREA Property Partners paid the Postal Service $10.3 million for a parking lot where the company planned to construct the Channel Center parking garage. The Postal Service was represented by CBRE in the sale, even though CBRE is also the agent for the Channel Center developers, Commonwealth Ventures and AREA.
According to the Boston Assessor's property database, the parking lot was valued at $12.4 million in 1991. This key piece of real estate in the Channel Center project was sold by CBRE for 20 percent less than it had been valued more than two decades before the property was targeted for upscale redevelopment for corporate and residential tenants. Because CBRE is also a member of the development team, the sale raises questions as to whether the company stands to reap additional profits from the Channel Center project.
Remarkably, the invoice that CBRE submitted to the Facilities Division for the sale of the Channel Center parking lot to Commonwealth Ventures does not contain an address for the property sold, only the notation: "0 Square Feet." Under "value,” CBRE wrote, "?" Nowhere on the undated invoice does the purchase price appear. Nor does the invoice reference a contract number, nor any form of payment authorization. It demands a flat fee of $377,500 for negotiating the sale; the CBRE contract does not allow for flat fees. Nonetheless, the incomplete invoice was paid by Postal Service facilities executives.
The Goldman Sachs connection
A real estate partnership created by the Goldman Sachs Group called W2005 BWH Realty LLC purchased a parcel of Postal Service land for a residential development alongside the Channel Center in September 2011. The parcel was subdivided from a larger parcel, so it had no previously assessed value as a unit. CBRE sold the postal parcel for $1 million to the entity controlled by the Goldman Sachs Group, which itself owns 6.6 percent of CBRE: a stake that rivals Blum Capital Partner's stake of 6.9 percent. Goldman Sachs is also a long CBRE client and its co-investor in numerous ventures. Since CBRE took the entire commission of six percent, it appears to have represented both seller and buyer in a non-arm's length transaction that poses an conflict of interest.
The CBRE invoice for the sale to the Goldman Sachs partnership does not list a dollar amount for the sale, nor the name of the buyer (which was obtained from deeds on file with the Boston Assessor's office).
James Allen of the Postal Service Facilities Division said, via email, that after paying CBRE for both of the Boston Seaport deals, facilities managers requested that CBRE change the format of its invoices to include more information.
Toxic sludge is not good for you
Much of the Postal Service's land in the Seaport District has been soaking in a toxic stew of industrial chemicals for 200 years. As long ago as 2002, CBRE had prepared a site survey of the property for the Postal Service with an eye toward having it cleaned up at federal expense for sale to developers. In 2012, CBRE billed the Postal Service for creating the "Standard USPS Environmental Disposal Package" for its seaport property.
Sales have proceeded despite a dire warning issued by the Massachusetts Environmental Protection Agency that developing the polluted postal property, "may result in significant risk of harm to health [if] use[d] as a residence, school, nursery, daycare, or recreational area, and/or such use at which a child's regular presence is likely." Channel Center office dwellers need to be careful of breathing indoor air, lest it be contaminated by toxic dust, the regulators caution.