The Boston Planning and Development Authority (BPDA) recently served a default notice to Ashkenazy Acquisition Corp. (AAC), the leaseholder of Faneuil Hall Marketplace, alleging that the New York-based company owed the City of Boston $2.1 million in PILOT (payment in lieu of taxes) payments. AAC will have to remedy the situation quickly, or the management of the marketplace could be in jeopardy. It’s not yet clear exactly what that will mean for all of the restaurants and other retail tenants.
Dating back to the 1740s, the historic marketplace, which now draws an estimated 20 million visitors per year, consists of multiple buildings packed with stores and retail kiosks. The Quincy Market building includes a long stretch of counter-service restaurants, some of which have been open for decades, and a large centralized dining area. There are also a few full-service restaurants at Quincy Market and other parts of Faneuil Hall Marketplace.
AAC has been the leaseholder of Faneuil Hall Marketplace since 1975 when it signed a 99-year lease with the city. The lease states that the holder is only required to pay $10 annually to rent the property but that it must submit PILOT payments to the city each year based on the prior year’s revenue. According to the BPDA, AAC has missed two such payments this year (one on August 3, another on November 2), while it has also permitted a lien on the property, something that is prohibited under the terms of the lease.
In a statement released last week, BPDA director Brian Golden acknowledged the challenges the COVID-19 pandemic has created for small businesses and said that AAC “has been unable to provide the necessary financial relief to support the Faneuil Hall merchants.”
“At the same time, AAC has failed to meet its own obligations under their lease with the BPDA,” continued Golden. “Based on their failure to stay up to date on the required PILOT to the City of Boston, we have determined it is necessary to move forward with a notice of default. As the landowner of the historic property, we will continue to take all the actions within our power to support the small businesses that make Faneuil Hall Marketplace the successful and beloved destination that it is.”
The terms of the lease between the BPDA and AAC dictate that the city has very little leverage to help individual vendors inside Faneuil Hall Marketplace — who have subleases with AAC, not directly through the BPDA — during the current economic crisis, according to an official with the BPDA. In an email to Eater, a spokesperson for AAC disputed the city’s position that AAC has not provided its tenants with sufficient financial support during the pandemic.
“The narrative put forward by some regarding the management of Faneuil Hall Marketplace since the start of the pandemic is deeply flawed and disappointing,” said the AAC spokesperson. “The fact is marketplace management has not been collecting rents nor pursuing collections from the local merchants since April, while at the same time securing, cleaning, maintaining and otherwise funding the property in its entirety. As a result of this continued stewardship, the merchants have been able to open for business. We have been negotiating with the City in good faith to further assist tenants and were taken by surprise by the City’s latest position. We are working with the City to resolve this matter expeditiously.”
Per an official with the BPDA, AAC has “10 calendar days from last Wednesday, November 11” to make the past due PILOT payments and “30 calendar days from Wednesday, November 11 to resolve the lien.” Failure to remedy both issues would result in a default of the lease and throw the future management of the historic marketplace into question.
Update, November 18, 2020: AAC said in a statement on November 17 that it has paid its outstanding PILOT payments to the city, and has resolved the lien on the property.
“To help provide further relief to merchants, a component of our discussions with the City related to making adjustments to the timing of when our PILOT payment was due,” said an Ashkenazy spokesperson in a statement. “Throughout the negotiations, whether or not we would make the PILOT payment was never in question. For these reasons, we were taken by surprise by the City’s latest position.”
An official with the BPDA told Eater that it held discussions with AAC on how to best support its vendors inside Faneuil Hall Marketplace during the pandemic, but never indicated that AAC should discontinue its quarterly PILOT payments.
In a statement, BPDA director Brian Golden said, “While we appreciate that Ashkenazy Acquisition Corporation (AAC) today informed us that the outstanding PILOT obligations were being wired to the City and the liens were being addressed, we continue to be concerned about the small, locally-owned Faneuil Hall Marketplace tenants, and will to work with AAC to support them during this challenging time.”