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May 5, 2007
Partners’ row may threaten project
NorthPoint creators suing each other over payments, contracts
By Thomas C. Palmer Jr., Boston Globe

A partnership formed to create one of the most ambitious mixed-use developments in the Boston area, more than 5 million square feet centered in East Cambridge, is coming apart at the seams.

While the first two residential buildings of the 20-building NorthPoint complex are nearing completion, the two parties — Cambridge North Point LLC and the Boston and Maine Corp. — are suing each other in Boston and Delaware.

They are “hopelessly deadlocked with respect to continued development of the project,” according to one document in the court docket, that is full of allegations of breach of contract and missed payments. Millions of dollars and the future of the project, a planned mini-city with 10 acres of green space and a location along a new MBTA Green Line station, are at stake, according to court papers.

Boston and Maine, a unit of Guilford Transportation Industries Inc., now known as Pan Am Railways Inc., owns 75 percent of the project, planned for 44 acres of former railroad yards in Cambridge, Somerville, and Boston. Cambridge North Point LLC is a group of nearly 100 investors who own the other 25 percent.

Boston and Maine is also suing Jones Lang LaSalle, a publicly traded real estate firm that is managing development, construction, and leasing of the project. In early 2006, Jones Lang LaSalle purchased the privately owned Boston real estate firm Spaulding & Slye, which had made the original NorthPoint deal with Boston and Maine, also a private firm.

Under an agreement that each side says the other has breached, the partners in 2001 formed a separate company to plan, permit, and build 2.2 million square feet of commercial and retail space, about 2,500 residential units, and garage space for 5,000 vehicles.

But in March, Boston and Maine charged in a lawsuit in Suffolk Superior Court that Cambridge North Point, the managing partner, did not make “any substantial development progress for the first four and one-half years of the project.”

Boston and Maine alleges breach of contract, breach of fiduciary duties, and fraud.

A spokesman for Cambridge North Point yesterday denied the allegations, saying that the other side was trying to force the company off the project. “Boston and Maine is now taking aggressive steps to eliminate CNP,” spokesman Scott Farmelant said. A lawyer for Boston and Maine could not be reached to comment late yesterday.

In April, Cambridge North Point filed suit in Delaware, where both companies are based, charging breach of fiduciary duties and asking that the partnership with Boston and Maine be dissolved.

The suit said Boston and Maine owes but has not paid more than $500,000 for development costs incurred in 2006, and $1.6 million for 2007. The suit was reported in yesterday’s Boston Herald.

An agreement signed with the MBTA under which the developers would be given land to build a modern transit station is endangered, court documents say.

One residential condo building is supposed to be completed by June, another by the end of the year. Construction on those continues, a Jones Lang LaSalle spokesman said, but progress on parks and roads at the site has slowed because of the partners’ differences. The spokesman said Jones Lang LaSalle has fulfilled all its obligations.

The Cambridge North Point complaint says the project’s development potential could shrink by 40 percent, there could be “a loss of confidence in the marketplace regarding the project’s image and viability,” and some or all of the 100 or so condo purchasers in the first two buildings could seek to cancel their agreements.

Despite the claims in the lawsuit, “The long-term viability of the project is not an issue,” said Farmelant.

  

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