WORCESTER – City Manager Eric D. Batista said during Tuesday night’s City Council meeting that the city has spoken with representatives of Worcester Polytechnic Institute about the university’s planned purchase of two hotels, while some city councilors had much harsher words to say about WPI’s plans.
Candy Mero-Carlson, 2nd District councilwoman and chair of the council’s standing committee on economic development, said the city has always had a good relationship with WPI and it was wrong of WPI to notify the city of plans to purchase the hotel until the last minute.
“I just don’t get it,” Mero-Carlson said. “I just don’t understand how you think you can do something this big that has this kind of impact on our city.”
Batista said Tuesday that the city has communicated to university officials the importance of the hotel industry, the industry’s role in economic growth in Worcester and the history that made the construction of the two hotels possible in the first place. He said the city will continue to talk with the university to find a solution.
WPI’s intention to buy the two hotels – the Hampton Inn & Suites at 65 Prescott St. and the Courtyard by Marriott at 72 Grove St. – has drawn sharp criticism from the city’s business and political leaders. University officials confirmed their plans in a letter to the WPI community shared with the Telegram & Gazette on Monday.
Members of the Economic Development Coordinating Council, an informal partnership between city agencies and some of the city’s largest business associations, say Worcester could lose $780,000 annually in property taxes and over $850,000 in annual tax revenue from the hotel and motel sector. In addition, over 100 jobs and 25 percent of local hotel room capacity could be lost.
The hotels are part of the 55-acre Gateway Park project, a roughly $170 million mixed-use development that used public and private funds to clean up contaminated land and rehabilitate old industrial buildings. The project also includes WPI’s 125,000-square-foot Life Sciences and Bioengineering Center.
In their letter to the WPI community, university administrators wrote that the purchases were a response to a looming shortage of student housing.
WPI officials said the properties would remain on the city’s property tax rolls for a period of time after the purchase. The plan is to convert the Hampton Inn into a student housing facility in 2026, while the Courtyard by Marriott will continue to operate as a hotel until at least 2030.
If WPI purchases the Hampton Inn, it may have to pay full property taxes through at least June 30, 2029, due to a tax increment financing agreement the city signed with the hotel’s original owner, SXC Prescott Street Hotel LLC, in 2014.
Courtyard by Marriott is not part of a tax increase agreement.
City Council issues numerous orders regarding WPI purchase
The following orders related to the WPI purchase or payment arrangements with WPI and other colleges and universities were sent to the city administration on Monday:
- Mayor Joseph M. Petty asked Batista to submit a report on the impact of the WPI purchase on the city and to provide an overview of the history of the Gateway Park project and all the agreements the city has with the hotels included in it.
- Councilman Morris Bergman is requesting a report on all Gateway Park agreements, including WPI, all PILOT (Payment-and-Lieu-of-Taxes) agreements with WPI, and all legal actions against colleges and universities to remove property from the tax rolls.
- Mero-Carlson wants a report on what impact the purchase would have on the city’s travel and tourism activities and under what conditions the city could decide to tax a university property.
- Fifth District Councilwoman Etel Haxhiaj wants an update to a January 2023 order for a list of properties acquired by colleges and universities since 2019. She also wants to indicate whether the properties were included in the tax rolls, whether community benefit agreements were signed in connection with new projects and whether any changes were made to PILOT contributions.
“The Council must know all our legal rights”
On Tuesday, Petty said he remembered the work that went into the Gateway Park project two decades ago, saying it spurred the city’s subsequent growth. The project also brought some “tough votes” for city councilors at the time, Petty said.
Petty said he initially reacted “pretty strongly” to the news of the proposed purchase, but was confident the city would come to an agreement with WPI. Petty said, however, that it was important for the city to know its options.
“I think the council needs to know all of our legal rights on this particular issue, know how the (tax increment financing) agreement works on this particular issue and what kind of protections we have as the city of Worcester,” Petty said.
Bergman agreed that the city needs to clarify whether any tax increment agreements, tax replacement agreements or work on the former brownfield sites in Gateway Park could be used as leverage against WPI.
Bergman, as well as City Councilman and City Council Vice Chairman Khrystian King, addressed the payment-in-lieu-of-tax agreements that WPI and other city colleges have in place, saying they should contribute more given the amount of city property they own.
Bergman and King pointed to a bill in the state legislature that would require nonprofits with properties valued at $15 million or more to make payments equal to 25 percent of the property taxes they owe.
“I would like to believe that WPI would do the right thing, but when large sums of money are involved, you have to admit that the expectation that people and organizations will do the right thing is not always there.”
Bergman also suggested that the city explore whether a right of expropriation could be invoked, possibly to purchase the hotel parking spaces.
King believes that if a housing crisis occurs, the city’s colleges and universities would be better off “upgrading” their existing facilities rather than expanding into surrounding neighborhoods.
Haxhiaj pointed to Clark University’s purchase of the former Diamond Chevrolet site as another example of these institutions’ intrusion into residential neighborhoods.
