The Boston Globe from Boston, Massachusetts • 52

THE BOSTON SUNDAY GLOBE OCTOBER 23, 1988 Maiden senator with bank connections has golden touch La- -i4 Mtef Mi 3 UL1 I 1MB .4 I BRENNAN Continued from Page 1 1 obtaining city-owned land and tens of millions of dollars in public financing and bank loans for his many deals. "To all appearances. Jack is an altar boy," said Joseph Carroll, a sometime Brennan critic and 3qngtime editor of This Week, a i iwekly newspaper in Maiden. "If I' he was of another ilk. people would never have put up with the wheeling and dealing that's gone pn.

But Jack's a nice guy." Many in Maiden are persuaded i Brennan's success in business is a direct consequence of his political -stature, which has given him easy i access to bankers. No one has ac-! cused him of any wrongdoing, though. "He has access to some big I banking people and gets mon-J strous loans," said one business- "man who has supported Brennan politically. "But I've never heard of one thing that borders on ille-I gality." i By all accounts, Brennan is shrewd yet cautious, ambitious but reserved, a workaholic but de- voted to his wife, Tricia, and their two sons, John A. 3d and Timo-i thy.

IBS Globe staff photoJoanne Rathe The Odd Fellows Hall on Main Street in Maiden. Public financing used in several developments newspapers The Maiden Evening News, The Medford Daily Mercury and The Melrose Evening News. Despite his extensive outside interests, Brennan has managed to score a string of major legislative achievements in recent years. Including key roles in passing laws that changed banking and the public employee pension system in the state. Brennan's most recent state Ethics Commission financial report showed he made at least $300,000 in 1987 and perhaps much more.

Besides his $55,043 Senate salary, he reported more than $100,000 each in income from his law practice and one real estate firm. The financial form requires no specific figure for income above $100,000. Other financial interests Brennan also reported $40,000 to $80,000 in income from the newspapers and a second development company; and $5,000 to $10,000 from a third real estate business. Besides his law practice and the newspapers, Brennan listed an interest in 24 corporations, trusts and limited partnerships involved in real estate development. He and his wife own their Maiden home and a summer home with 1.6 acres of land in the Har-dlngs Beach section of Chatham on Cape Cod.

The Maiden residence is assessed at $100,000, according to city records. Recent Chatham assessments set a $1.08 million value on the Brennan holdings, which were acquired in stages from 1979 to 1984 at a cost of $295,000. It was not always that way for Brennan. Born in Charlestown, the son of a state worker, his family lived in Brighton's Fidelis Way housing project during Brennan's grade school years. "When I was in the fifth grade, my dad pulled together enough money to move to Maiden," said Brennan.

In Maiden, an ethnically and economically diverse city of about 55,000 about 5 miles north of Boston, Brennan graduated from local schools. He graduated from Suffolk University and Suffolk Law School. Elected in 1972 He was a law student in 1972 when he won a House seat from Maiden, but he lost his seat in a three-way reelection fight for a re-districted seat two years later. Soon after, he joined the successful law practice of Edward J. Bushell, a former Maiden alderman who died in February 1984.

In 1976, Brennan won the vacant Third Middlesex Senate seat that comprises Maiden, Melrose, Stoneham, Wakefield and several Reading precincts. He has been unopposed ever since. He rose quickly under Bulger, first to chairman of banks and banking in 1981, was reappointed in 1983, and then, in 1985, was named assistant majority leader, the No. 3 post in the Democratic hierarchy of the Senate. Brennan has downplayed his ambition: "Sure, I'd like to be Senate president.

I think probably every member of the Senate would like to be the president." As Brennan's clout in government has grown, so have his role and influence in Maiden development circles, where he has been a partner in four major housing or commercial developments and at least 10 smaller ones. Today, major player At first, Brennan's deals were modest, even by Maiden standards. But today he is a major player, by any standard. by offering buyers mortgages at 3 percent interest to cover part of the purchase price. The buyers included Brennan's brother, Thomas, who bought one unit for $45,500.

A bank financed $36,000 of the total, and the agency loaned him $7,500. Another beneficiary was Mary Leavey, the stepdaughter of Elizabeth Leavey, a daughter of Bushell, Brennan's law partner. Her unit cost $64,000. She borrowed $40,000 from a bank and $10,000 from the agency at the same low-Interest rate. Through an aide, Brennan said the units were advertised, and none of the buyers received special treatment.

Mulhern said Brennan's profit margin from the deal was slim. From 1982 to 1987, the redevelopment authority sold four more parcels for condominium projects to Brennan and his partner, James Filaretos, a contractor from Melrose. The projects, which revived the city's Washington Street neighborhood, were financed partly by a $100,000 low-Interest redevelopment agency loan. The Maiden City Council has also sold land to Brennan. In 1985, after council approval, Brennan and codeveloper Michael Capizzi of Wakefield bought the former Daniels School off Eastern Avenue for $504,000.

Through a $10 million combination of renovation and new construction, they built 104 condominium units, which are currently being rented. $15 million office complex In August, the agency sold Main Street Maiden Associates about 9,000 square feet of "sliver" parcels for $466,000 to complete a parcel for a $15 million office complex at 350 Main St. Brennan is a 14.25 percent limited partner. Arturo Gutierrez and John Cataldo, president and executive vice president respectively of the Gutierrez Companies of Burlington, own 50 percent of the deal. The Brennan deal helped most by public financing was the restoration of the historic Odd Fellows Hall at 442 Main St.

The $2 million project with codeveloper John M. Curry of Chestnut Hill received $1 million in tax-exempt low-Interest revenue bonds from the Massachusetts Industrial Finance Agency and $100,000 from the redevelopment agency. The redevelopment agency also gave them a. 20 percent, three-year discount on the lease of up to 35 nearby public parking spaces, and a 10 percent discount for the second three years. The finance agency's records of its $1 million loan list Brennan and Curry as 50-50 partners in the deal.

However, limited partnership papers on file with the state show Frederick Downing of Melrose, a vice president at Pioneer Financial, a Maiden cooperative bank, is a 5 percent partner. His bank did not provide any financing for the deal. Since 1982, Pioneer has loaned 3rennan and his partners more than $5 million on 10 projects of $1 million or less. Longstanding friendship Brennan and Downing both said the banker's involvement In the Odd Fellows project results from a longstanding friendship and not Brennan's dealings with the bank. "I've known Fred Downing for at least 15 years." said Brennan, who described the relationship as personal and professional.

Said Downing: "We're personal friends. I don't sit on any of his loans that come Into the bank. I have nothing to do with it. My Job his mark At least eight of the housing developments in Maiden involving Sen. John A.

Brennan Jr. (D-Malden) also involve Maiden city land or public financing. They are: Homestead Condominiums Brennan and Ugo Di-Biase purchased a building at 81 Washington St. for $43,720 from the Maiden Redevelopment Authority for condominiums. The agency financed the project with a $230,000 low-interest loan and issued 3 percent second-mortgage loans totaling $35,000 to the unit buyers.

Washington Park Condominiums An 1 1-unit, conventionally financed project at 61-71 Washington lot obtained from the redevelopment authority in 1984 for $60,200. Carriage House Condominiums Brennan and contractor James Filaretos bought a rundown rooming house in 1984 and converted it into six rental units at 72-74 Washington St. A bank financed $215,000 of the project, and the redevelopment authority provided a second-mortgage, low-interest economic development loan for another $100,000. Daniels School Condomin- iums In January 1985, the Maiden City Council approved the sale of the former school off Eastern Avenue to Brennan and Michael Capizzi for $504,000, the price set in a re: quest for proposals. The rede- velopment agency recommend- the $10 million Capizzi-Brennan plan for 104 condominiums as being far superior to a smaller, rival proposal for commercial space.

Washington Green Condominiums An 11-unit, $800,000 conventionally financed deal. Brennan and Filaretos purchased a lot from the redevelopment authority The key to many of his deals was securing city-owned land and public financing, though none of the 350-pIus units he has created are priced for low- or moderate-income tenants or buyers. Henry J. Mulhern, the executive director of the Maiden Redevelopment Authority, said Brennan and his partners paid market price for all their redevelopment authority land. "All our values are established by Independent appraisals," said Mulhern.

"It's a very public process. We want developers with substance, continuity and a proven track record." But when Brennan first approached the agency and was des for $66,000 on Dec. 27, 1985. Odd Fellows Hall A $2 million restoration of 442 Main St. in 1986-87 by Brennan and John Curry.

They bought the hall from a drum and bugle corps to convert to office space and financed it with $1 million in tax-exempt low-interest revenue bonds issued by the Massachusetts Industrial Finance Agency, a $100,000 low-interest loan from the redevelopment authority and conventional bank loans for the balance. The redevelopment authority also gave them a 10 to 20 percent discount on the cost of leased parking spaces for six years. Florence Green Condominiums A $1 million, 11 unit project by Brennan and Filaretos with bank financing at 49 Washington a lot purchased from the redevelopment authority in 1987 for $82,500. Maiden Corporate Center A $15 million, office complex at 350 Main St. The redevelopment authority sold several "sliver" parcels totalling a quarter-acre to the partnership for $466,000 in August.

The partners began acquiring the rest of the site in 1981-1982. Brennan is the group's lawyer and a 14.25 percent limited partner in the venture. Contractor Arturo J. Gutierrez of Lexington holds a 37.5 percent share. Brennan also received a $6,000 home-improvement loan at 3 percent Interest from the redevelopment authority in 1979.

In January 1987. Brennan and Filaretos bought from the city a small vacant lot on Greenwood Street at public auction. Their $25,000 bid was the only one submitted. -BRIAN C. MOONEY ignated for a project in 1981, he had no continuity or track record.

"In those days, developers were not competing," Mulhern said. "Interest rates were high, and no one was building housing. He was willing to take a risk when nobody else was." Authority deeded parcel The authority deeded to him and his partner, Ugo DiBiase of Lynnfield, a quarter-acre parcel and building on Washington Street near Maiden Square. The price was $43,720, which the authority more than covered with a low-interest $230,000 construction loan to build the five-unit Homestead condominiums. The agency sweetened the deal is to bring business Into the bank." Pioneer President Richard Bolton did not return calls from the Globe seeking information about Brennan's relationship with the bank and the role Brennan's partners played in a $10 million stock sale in 1986 to help bail the bank out of financial trouble.

Of the 21 investors who bought the stock, 1 1 were bank directors. Curry, Gutierrez and Cataldo pumped $2.5 million into the bank by buying a combined 25 percent of the stock. Their investment earned them seats on the bank's board. Curry, Gutierrez and Cataldo did not return calls, and Brennan issued a statement saying: "Mr. Curry, Mr.

Gutierrez and Mr. Cataldo are all accomplished private businessmen. I in no way influenced their decision to invest in Pioneer Financial, nor did I recruit them as investors in Pioneer Financial." Turned to larger banks Although Brennan continues to do business with Pioneer, he has turned to larger banks to finance his biggest deals. His major creditor today is the First American Bank for Savings in Dorchester, which is sustaining heavy losses primarily from bad loans to condominium developments. The bank financed both of Brennan's biggest deals the 1985 Daniels School project and the recently completed Gateway condominium and office project on 2.3 acres near Maiden Square.

In both deals, Brennan's partner is Capizzi. First American loaned the partners $9.2 million to build the Daniels School condos and later issued them a $4 million line of credit. The partners secured a $34 million loan for the Gateway project, including personal lines of credit of $500,000 and $750,000 to Brennan and Capizzi. The Gateway is the largest, riskiest and most controversial development undertaken by Brennan. The twin, 12-story towers, housing 203 units, dominate the west end of Maiden Square.

It has drawn a barrage of flak from tenant and neighborhood activists, who say it overwhelms the area without providing affordable housing. Labor unions have picketed the site many times to protest the use of nonunion workers. As the project got under way in 1986, Brennan lobbied the MBTA to move a commuter rail stop con-nectlon with the Orange Line from 'We're personal friends. I don't sit on any of his loans that come into the Frederick Downing of Pioneer Financial the Oak Grove station near the Melrose line to the Maiden Center station where it had been located years before. Brother handled request MBTA spokesman Peter Di-mond confirmed Brennan's brother, James, an MBTA employee, handled the request from local business leaders to move the stop from the residential Oak Grove area to Maiden Center.

"Mr. Brennan, in his capacity as a transportation officer, did talk to Sen. Brennan, in his capacity as an elected official from Maiden," Dimond said. Business leaders, not Brennan, initiated the move, Dimond said, adding General Manager James O'Leary approved the move. John Brennan said he asked O'Leary to approve the move to benefit the downtown area, nqt his project.

In fact, he said, the service will not enhance the Gateway project because commuter rail riders coming from as far away as the Merrimack Valley will have little reason to get off there. "If anything, the move detracts from my project," he said. "Those trains are pretty noisy." I But advertisements for the Gateway project state "commuter service Is Just a few steps away'! from the complex, which features! luxury units with starting prices' of $89,000 for studios. for one-bedroom units andj $165,000 for two-bedroom units. Sales have been sluggish, how- ever, because of the region's sag-! glng condominium market.

"We hope it doesn't become a white ele- phant," one city official said. So does Brennan. The Gateway' project could make or break him; financially. It Is the part of the de-! velopment game beyond the realm of politics. "I love this city; I live here," Brennan said.

"I have to walkt down the street every day, and I'm able to hold my head up. I've tak- en a risk. I've taken a chance on 5 some of these projects, and I've made an investment in my com-1 munity." iI do have an obli gation to provide tor my family, but don't believe I've kllowed my private dealings to Interfere with my public duties. I believe they complement one another. Sen.

John A. Brennan Jr. To those who know him, he is anomaly an intensely private man in the very public business of jjotitics, pursuing parallel careers hat often blur the line between golitician and entrepreneur. gteviewed documents An examination by The Boston felobe of Brennan's business ventures included a review of several hundred pages of documents and more than two dozen interviews. revealed Brennan, in less than even years, has made a small fortune in real estate, and may now 5e the wealthiest member of the Jfenate.

The Globe's findings show: I Six of his Maiden projects involve land bought from the city or he Maiden Redevelopment Au-ihority: two others were aided by Jpw-interest loans from the redevelopment authority and a state agency. His first condominium project was financed entirely by the redevelopment agency, which also (esued loans at 3 percent interest unit buyers for part of the cost. The buyers who benefited included his brother and a relative by Carriage of Brennan's law partner. As Brennan began a $34 mil-Jon condominium development in J986, he lobbied the Massachusetts Bay Transportation Authority to move a commuter rail stop tjp a station across the street from the project. A second Brennan brother, who works for the MBTA, ljelped facilitate the move, which Maiden business leaders supported.

An executive of a Maiden ljank that has loaned Brennan's ventures more than $5 million is a Jartner in one of his deals. In an interview, Brennan, who since 1985 has held the post of assistant majority leader in the Senate, defended his outside activities ajnd denied he enjoys an edge because of his position. J'l've been open and above-tjoard on everything," Brennan said, "All of this was done in do have an obligation to provide for my family, but I don't believe I've allowed my private dealings to interfere with my public duties. I believe they complement cine another. pi'l'm held to a higher standard because of whom I am.

It's tough for me because people are very conscious of who I am when they deal with me." Loans based on soundness 5 Brennan said he has been able tp get loans because his deals are "If a project does not make financial sense, it won't be financed no matter who I am," he "I don't have any more leverage than anyone else." Besides his development work and Senate duties, Brennan is senior partner in a thriving Maiden law practice and for the past two has owned a one-eighth interest in three Maiden-based As a legislator, Brennan has made ployee pension liability. In addition, Brennan last year prevailed in a nasty dispute with the House of Representatives over redrawing legislative districts. The courts upheld his redisricting after, striking down the House versions. Another major piece of legislation he initiated was passed a decade ago, namely the "one day or one trial" Jury selection reform pilot program in Middlesex County that became a model for the state. "I think I've been able to balance my interests very, very well," Brennan said In an Interview.

"I'm able to do a number of different things due to the fact that I've got good people working with me in both the public and private sectors, I've been able to have significant accomplishments in the public sector." Brennan said he works long hours at least six days a week to Juggle his various Interests, but he said his legislative work takes up more than 50 percent of his time. He said his position at Maiden Publications, the newspaper group published by David Brickman, takes up the least amount of time. "Basically, my role in the newspaper Is one of an investor and somewhat of a business adviserand whatnot," Brennan said. "I Even though he holds what for some people would be three other full-time jobs, Sen. John A.

Brennan Jr. (D-Malden) has remained a legislative force on Beacon Hill. In addition to the post of assistant Senate majority leader, which he has held since 1985, Brennan has a lucrative law practice and a real estate development business, and owns one-eighth of three Maiden-based daily newspapers. As Senate chairman of the Committee on Banks and Banking from 1981 until 1985, he opened up the banking Industry to interstate' mergers within New England and greater competition between commercial banks and the smaller thrift Institutions, such as cooperative and savings banks. "He revolutionized banking In the state and region," said one Boston bank executive who has had his differences with Brennan.

"Brennan was ahead of the rest of the country." Brennan has also been the chief Senate proponent of a series of laws aimed at reforming the state's public employee pension system. They include laws tightening the requirements for disability pensions, allowing more flexibility In the Investment of pension funds and beginning the process of funding Massachusetts' $16 billion unfunded em don't have anything to do with any aspects of the editorial side. That's Dave Brickman's newspaper." Brennan's purchase, with Maiden businessman Warren Jackson, of 24 percent of the newspapers in 1987. put him on a collision course at the time with another legislator state Rep. Angelo Marotta (D-Medford) whose outside activities paralleled Brennan's.

Marotta filed suit against Brennan in Middlesex Superior Court in April 1987 claiming Brennan, who was Brickman's lawyer, short-circuited Marotta's bid to buy stock in the newspapers and, with Jackson, purchased It himself. They reached an out-of-court settlement, the terms of which neither will discuss. "Angle and I are friends," Brennan said. "Whatever differences we may have had are behind us. I'll leave it at that." Despite the setback, Marotta, whose real estate holdings In Medford are at least equal to Brennan's in Maiden, has not been denied his new career in the news business.

After losing out to Brennan, he bought a controlling interest in This Week, a weekly newspaper that competes with the dallies in Maiden and Medford. BRIAN C. MOOftEY.