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"Non-profit" MIT takes a quick $320 million in Tech Square real estate deal
A tax-exempt defense contractor reaps the profits of progress
According to the Bay State’s leading real estate weekly, MIT is selling Tech Square in Area Four to a California-based investment company for more than $600 million. (Joe Clements, Banker and Tradesman 6/26/06)
In January, The Globe quoted tax-exempt MIT’s real estate manager, Steven C. Marsh, as saying, “It's a great time for us to be taking money out of the deal." (Thomas C. Palmer Jr. Boston Globe 1/14/06)
And what a deal! Five short years ago, MIT paid “just” $279 million for the same property.
This is the second time MIT has owned the land on which Tech Square is now located. Thirty-seven years earlier, the Institute had bought it for one dollar.
Just over fifty years ago, hundreds of tenants were being evicted from that same property as part of an urban renewal and highway master plan to transform Cambridge from a working class city to a university city.
“It is hard enough to find good teachers,” wrote Harvard student Christopher Jencks in a February 1956 issue of the Harvard Crimson. “Inducing them to live in slums is next to impossible… the only alternative is to attack the existing pattern, to develop a new pattern through urban renewal.”
Jencks described the city’s eviction of the poor people who lived in the area east of Portland Street as “the most encouraging sign” that the City had the political will to carry through on urban renewal—or as we might put it today, "ethnic cleansing."
In 1955, the property was seized by eminent domain. The larger part was occupied by the Rogers Block, which was demolished after the last 133 families were evicted. After that, the land stood unused for eight years.
In 1964 the Cambridge Redevelopment Agency sold the property to MIT for one dollar. MIT partnered with The Prudential, and developed it as Tech Square. Yep, folks, and that's how eminent domain works to this day.
For many years, Tech Square’s "anchor tenant" was the mighty Polaroid Corporation. But by 2001, Polaroid wasn’t doing so well—actually, it was defaulting on loans and heading for bankruptcy. The Polaroid Corporation quickly bailed out of Cambridge and Tech Square. The Board of Directors jumped with golden parachutes, after carefully considering how best to cheat thousands of employees and retirees out of “lifetime” medical insurance and pensions.
A few years earlier, Beacon Capital Partners, a huge real estate firm, had bought Tech Square from Prudential/MIT. In 2001, as Polaroid was departing, Beacon made a nice profit by selling it back to MIT for $279 million.
The Beacon Companies' owners have long been among the U.S. Democrat party’s most generous supporters.
MIT and its associated "spin-off" corporations constitute one of the largest defense contractors in the U.S. At least two-thirds of its employees are directly engaged in research, largely underwritten by the U.S. military.
In December 2004, Cambridge City Manager Robert Healey signed an agreement with MIT for Payments In Lieu Of Taxes (PILOT), committing the City for forty years, without bothering to submit it to the city council for review.