The Lowell City Council’s Economic Development Subcommittee met on Thursday to review the status of the city’s agreement with Lupoli Companies LLC to develop two buildings and a parking garage within the Hamilton Canal Innovation District. The meeting was not televised live so I didn’t get a chance to see it. The subcommittee will make its report at this coming Tuesday night’s Council meeting so I’ll write more about it next week.

Because this past week’s Council meeting was uneventful, I’ll use today’s newsletter to provide some background on the Hamilton Canal agreement between the city and the Lupoli Companies.

On December 18, 2020, the city of Lowell entered into a “land disposition agreement” with Lupoli Companies LLC that affected five parcels within the Hamilton Canal Innovation District. The 137-page agreement was recorded at the registry of deeds six months later (on June 10, 2021 in Book 35861, Page 1). The five parcels involved were known as lots 1, 2, 3A, 4 and 5. On the ground, these lots can be grouped into three distinct parcels:

The first parcel consists of Lot 1 which sits between the Kiernan Justice Center and Mill No. 5. It is approximately 22,500 square feet in size. (This is where the new, recently opened, Lupoli parking garage is located.)

The second parcel consists of Lots 2, 3A, and 4. This is the large surface parking lot wedged between the Hamilton Canal and the Pawtucket Canal. Lot 2 has approximately 21,000 square feet; Lot 3A has 11,000 square feet; and Lot 4 has 24,000 square feet for a total of 56,000 square feet.

The third parcel consists of Lot 5, a vacant lot which sits across Jackson Street from Mill No. 5 and across Canal Street from the UMass Lowell Innovation Hub. Lot 5 has approximately 22,500 square feet.

The Land Disposition Agreement recites the following facts:

On January 31, 2020, Lupoli Companies LLC submitted a proposal for Parcels 1 through 5 to the city.

On October 13, 2020, the City Council voted to accept the proposal and to authorize the City Manager to execute a Land Disposition Agreement with Lupoli and to convey the property to Lupoli.

The city agreed to sell these parcels to Lupoli for $2,000,000.

Lupoli Companies LLC agreed to improve the parcels as follows:

On Parcels 2, 3A and 4, construct a 12 to 14 story building with covered parking.

On Parcel 5, construct a 50,000 square foot building.

On Parcel 1, construct a 500-space parking garage.

The “project schedule” agreed to by Lupoli Companies LLC was as follows:

On Parcel 1 (parking garage), commence construction by June 30, 2021.

On either Parcel 5 (50,000 sf building) or on Parcels 2, 3A & 4 (12-14 story building) commence construction (of one of them) by June 30, 2023.

“Construction of the core and shell of the buildings on all of the Development Parcels shall be substantially completed by December 31, 2027.”

Although the parking garage opened for business on March 4, 2024, there has been no visible activity on either of the other parcels which violates the promise that construction of at least one of them would begin by June 30, 2023.

The Land Disposition Agreement contemplated the possibility of some type of default and specified one remedy that would be available to the city. The agreement stated that if Lupoli Companies LLC (the developer) failed to meet this development schedule, the city may declare the developer to be in default by serving a written notice of default upon the developer. The agreement then gives the developer 180 days from receipt of that notice to cure the default. If the developer fails to do that, the city may “declare a termination of title to such development parcel in favor of the city whereupon title shall revert to the city.”

The agreement specifies that the “estate” conveyed to the developer is “fee simple subject to a right of entry for condition broken.”

Under Massachusetts real estate law (which was inherited from Medieval England), ownership of land is measured in terms of time. “Fee simple” is absolute ownership of infinite duration. In the case of an individual, when that individual owner dies, ownership changes, but whoever ends up with the property is decided by that original owner. This is the most common type of ownership today.

Another type of ownership that is common today is a life estate which is ownership measured by the life of a person. Although this is an ancient type of land ownership, it is frequently used today in estate planning. Let’s say an elderly parent wants their adult child to own the property upon the death of the parent. The parent would convey the property to the child now but would reserve a “life estate” for themselves. The moment the parent died, the child would automatically own the property.

The default provision in the city’s Land Disposition Agreement contemplates another type of ownership: “fee simple subject to a right of entry for condition broken.” That’s a term I haven’t encountered since law school many years ago but, as this agreement demonstrates, it is still valid and useful today.

In the past, this method of ownership was often used in gifts of real estate to religious or governmental organizations. For example, “I grant parcel A to the First Congregational Church to be used for religious purposes but if it ceases to be used for religious purposes, I or my successors, may enter on the property and retake ownership for breach of that condition.” Another example would be “I grant Parcel B to the city of Lowell to be used for recreational purposes but if it ceases to be used for that, I or my successors may enter on the property and retake ownership.”

The agreement further states that if the city declares a default and retakes the property, the city would attempt to resell the parcel to another developer. The proceeds from that subsequent sale would be applied as follows:

Reimburse the city for all costs and expenses in connection with the recapture including unpaid taxes and the proportional salaries of city employees involved in retaking the land.

Reimburse the developer for the fair market value of any improvements made to the parcel by the developer.

Any money leftover would be retained by the city.

While this may all seem very straightforward, the law is infested with gray areas and the developer’s lawyers would likely dispute the city’s rights under the agreement and tie the matter up in litigation for years.

There is also some language in the agreement that states that the failure of the developer to comply with this agreement with respect to a development parcel shall only affect that development parcel and not any of the others. This would permit Lupoli Companies (by their related LLC) to retain ownership of the parking garage and all the revenue it will generate while the city ties itself up in a lengthy court process over the two vacant parcels.

The city did convey these lots to the developer and the developer appears to have paid the city the $2 million purchase price.

By a deed dated June 8, 2021, the city of Lowell conveyed Lot 5 (for the 50,000 square foot building) to 291 Jackson Street LLC (Salvatore Lupoli manager) for $500,000. (Book 35861, Page 170).

By another deed also dated June 8, 2021, the city of Lowell conveyed Lots 2, 3A, & 4 (for the 12 to 14 story building) to 341 Jackson Street LLC (Salvatore Lupoli manager) for $1,130,000 (Book 35861, Page 177).

By a deed dated October 14, 2021, the city of Lowell conveyed Lot 1 (for the parking garage) to 330 Jackson Street LLC (Salvatore Lupoli manager) for $403,206.24 (Book 36448, Page 119). The reason this deed was executed four months after the other two is that there was a title issue affecting the property that had to be addressed by a petition to Land Court. Rather than delay the project, the city and Lupoli Companies LLC executed an amendment of the land disposition agreement that leased the property to Lupoli until the title issue was resolved. This permitted Lupoli to begin work on the parking garage prior to obtaining outright ownership of the parcel.

Also, the city of Lowell conveyed a 2,630 square foot lot adjacent to Lot 1 to Lupoli Companies LLC to be combined with Lot 1 for the parking garage footprint. This was an unused portion of the street between the garage and Mill No. 5. It allowed a slightly larger footprint for the garage.

In other activity related to these parcels, on October 29, 2021, the Lupoli Companies LLC entered into a mortgage with Lowell Five Cent Savings Bank that used Lot 1 (the parking garage parcel) to secure a loan of $19.7 million. On July 5, 2022, the bank and the LLC executed an amendment to that mortgage that increased the indebtedness to $22.9 million.

More recently, on February 27, 2024, the three LLCs that own the various parcels joined in a mortgage to Lowell Five to secure a loan of $1,325,000.

From a real estate records perspective, that seems to be all that has happened to these parcels thus far.

To be continued next week . . .

****

If you’re reading this on Sunday morning, don’t forget that Charlie Gargiulo’s talk on his memoir on growing up in Little Canada is today at 2pm at Lowell National Park Visitor Center at 246 Market Street.