October 23, 2004

BIG DIG, MBTA CONSTRUCTION SAID TO PUT BUILDINGS AT RISK


The Boston Globe
© The Boston Globe Company

Thomas C. Palmer Jr., Globe Staff

Contractors working along the South Boston waterfront lowered the water table during Big Dig and MBTA Silver Line construction over the past 15 years and may have triggered rot in wood pilings that support dozens of old industrial buildings, two lawsuits allege.

The latest lawsuit comes at a time when buildings especially those ripe for conversion to residential lofts are selling at peak prices, and owners are looking to cash in.

Most of the buildings close to the harbor rest on wooden pilings pressed deep into the earth. The pilings are preserved by being submerged in water. When they are exposed to air they can begin to rot.

The lawsuits allege that when the Massachusetts Turnpike Authority's Big Dig contractors built the I-90 extension to the Ted Williams Tunnel they "dewatered" the area, lowering the water table and exposing the piles to rot or potential deterioration. None of the parties involved in the suits could say how long the pilings could have been exposed.

The concerns about rot and future damage to many old properties in the area may have interfered with at least two recent sales, including that of 51 Sleeper St., owned by Frank H. McCourt Jr.

And late last year Tishman Speyer of New York was considering buying four dozen industrial buildings from Boston Wharf Co. but pulled out of the $400 million deal, executives involved say, in part because they did not want to pay so much for the properties without assurance they could collect on damages from the public agencies or their contractors if evidence of rot was found.

"They did not demonstrate to our attorneys they had taken adequate steps to seek future claims," one executive involved in the deal said of Boston Wharf.

Robert N. Kenney, Boston Wharf's president, said the water issue was not the reason. "Obviously it was a discussion point," he said yesterday, "but it was not in my mind or in their mind a reason for not agreeing."

Meanwhile, the owners of Fort Point Place, a renovated office building near the Fort Point Channel in South Boston, are suing the Turnpike Authority and Big Dig contractors for alleged damage to wood pilings, which they say caused the structure to shift and crack.

In court documents, the MBTA, Turnpike Authority, and other defendants deny responsibility for any damages from their actions. Neither the Turnpike Authority nor the MBTA would comment yesterday.

Boston Wharf Co. also filed a suit, in 2002, and last year in court filings said it had spent $100,000 for consultants and engineering fees to determine how extensive any problem might be. The suit seeks repayment of those fees, as well as an undetermined payment for any future damage found.

In its legal filings, Fort Point Place estimated its costs at a minimum of $15 million for consulting and repairs but has not determined a final price tag for the damage. suit.

"We just don't know what the extent of the damages are" at Fort Point Place, said Diane Rubin of Holland & Knight LLP, who represents both Boston Wharf and Fort Point Place. "There are engineers and architects running all over the building right now."

Rubin said the Boston Wharf suit is precautionary, because no actual damage has been found.

"We're saying you guys didn't put enough monitoring equipment out there," Rubin said. "But we know the water table dropped, and there may be some problems going forward."

The Fort Point Place suit was filed in Suffolk Superior Court in August. It followed Boston Wharf's precautionary suit filed in the same court against the Massachusetts Bay Transportation Authority. Boston Wharf owned about 50 historic buildings in the Fort Point Channel area, recently sold some, and is still trying to sell others.

"As a result of the lowered ground water levels," Boston Wharf said in its complaint, the company "is at risk of future or latent damage to its buildings, which is indeterminate and unknown now but which is of immediate concern."

The owners are Fort Point Place-VEF V LLC and Lend Lease Real Estate Investments Inc., both of Atlanta. Fort Point Place is also suing two construction companies, a real estate company, and an engineering company that assisted the property owners in evaluating the building's condition.

Besides the Turnpike Authority and the MBTA, three construction companies are also named in the Boston Wharf suit.

Kenney said Boston Wharf's rights to recover losses concerning any possible damage to pilings are protected for the future. "We've covered ourselves," he said.

Boston Wharf is now reviewing between five and 10 offers for four buildings it is selling, at 253 Summer St. and 27 Melcher St.

Boston Wharf also has signed a purchase and sale agreement with Berkeley Investments Inc. for the sale of 13 buildings, two parking garages, and four parking lots a total of about 700,000 square feet of office space mostly along Congress Street.

Young K. Park, president of Berkeley, said he was "quite familiar" with the water-table issue. "Boston Wharf has done a good job of monitoring that situation," said Park, adding that he hopes to close the deal by the end of the year.

The water-table issue is a prominent one for owners of property resting on filled land, including much of South Boston.

The sale of a loan on the 51 Sleeper St. property fell through because of questions about whether the pilings are sound.

According to several people familiar with the property, the Bulfinch Cos. was set to buy a $22 million note on the 150,000-square-foot building, sitting on a half-acre of land near the Fort Point Channel.

But those involved say the condition of the pilings under the building dashed the deal. Bulfinch chief executive Eric D. Schlager could not be reached for comment.

The eight-story building, built about 1900 and located only about a foot from the MBTA's Silver Line tunnel, has suffered some settling and cracking damage. McCourt Co. notified the MBTA of the damage, though no lawsuit has been filed.

Developers say recent construction lowered the area's groundwater level, weakening their property's foundations.

Thomas C. Palmer Jr. can be reached at tpalmer@globe.com.


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