B&T October 1, 2018 by The Warren Group

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THE FINANCIAL SERVICES AND REAL ESTATE WEEKLY FOR MASSACHUSETTS BY THE NUMBERS

PAGE 6

County close-up: Worcester Spotlight: Harvard

As the vice president of marketing and sales at Needham-based Direct Federal Credit Union, Michael Ferreer has been implementing digital strategies for roughly four years. With only one branch, the credit union is one of the fastest growing in the state with over $630 million in assets.

IN PERSON

PAGE 9

WEEK OF MONDAY, OCTOBER 1, 2018

RESIDENTIAL REAL ESTATE BY THE NUMBERS

2,225 The number of housing units in Harvard in Worcester County. See the Town Spotlight in By the Numbers on page 6. Source: U.S. Census Bureau

$8.7 million The sale price of the estate in the top spot of this week’s Gossip Report. See page 8 for more. Source: The Warren Group

20% The percent of Americans who now have credit scores of 800 or higher. See Kenneth R. Harney’s column, The Nation’s Housing, on page 4. Source: FICO

4,516 The amount of square feet of the property in the second spot of this week’s Gossip Report. See page 8 for more. Source: The Warren Group

75%

CHECK, PLEASE

DEVELOPER SET TO CASH OUT

Watchdogs Say JP Project Highlights Loopholes BY STEVE ADAMS BANKER & TRADESMAN STAFF

ne of the ground rules for multifamily development in Boston is that market-rate projects are required to subsidize affordable units, which otherwise might never get built because of insufficient financing. Housing advocates are questioning what happens after things don’t go according to the script, as a Brookline developer who has yet to submit an $8.4 million payment toward 42 affordable units prepares to sell a year-old apartment tower in ever-gentrifying Jamaica Plain. “This is a luxury development entering into a neighborhood that we’re trying to stabilize,” said Patricia Flaherty, executive director of Mission Hill Neighborhood Continued on Page 7

The percentage of greenhouse gas emissions caused by buildings in Boston. See Rick Dimino’s column on page 5 for more. Source: Boston, the Green Ribbon Commission and Boston University’s Institute for Sustainable Energy

733 The average credit score of borrowers this year. See The Nation’s Housing on page 4 for more. Source: FICO

$17.15 The residential tax rate in Harvard in Worcester County. See the Town Spotlight in By the Numbers on page 6 for more. Source: Harvard Assessor’s Office

$3.9 million The sale price of the house in the fifth spot in this week’s Gossip Report. See page 8 for more. Source: The Warren Group

Unless otherwise noted, all data is sourced from The Warren Group’s Mortgage Market Share Module, Loan Originator Module, Statistics Module and/or proprietary database. For more information please visit www.thewarrengroup.com/business/ datasolutions.

COMMERCIAL INTERESTS

ALL CASH NO MORE

Despite Economic Growth, New Development Stagnates

Dedicated Board, Months of Preparation Behind GFA’s Decision

By Scott Van Voorhis | Banker & Tradesman Columnist

By Bram Berkowitz | Banker & Tradesman Staff

Boston’s Real Estate Market Rigorous and Detailed Process Behind Banking Marijuana is the Opposite of Hot

Residential Real Estate PAGE 3

Banking & Lending PAGE 8

2 | BANKER & TRADESMAN

OCTOBER 1, 2018

The Week on the Web

Timothy M. Warren Jr., CEO and Publisher David B. Lovins, President and COO

BANKER & TRADESMAN

A ROUNDUP OF OUR MOST POPULAR STORIES FROM THE PAST WEEK

Published by The Warren Group

MARLBOROUGH CFO SENTENCED FOR BANK FRAUD CONSPIRACY

ESTABLISHED 1872

PUBLISHING

Associate Publisher: Cassidy Murphy Associate Editors: Steve Adams, Jess Pitocco Reporter: Bram Berkowitz Contributing Writer: Scott Van Voorhis Audience Solution Specialists: Jenell James, Sarah Ahlgren Advertising Account Manager: Steve Ketler

DATA SOLUTIONS

Director of Sales & Marketing: John Bottini Communications Manager: Mike Breed Executive Data Solutions Account Manager: William Visconti Data Solutions Account Managers: Chris Mirakian, Peter Sullivan

• The chief financial officer of a Marlborough business was sentenced last week in federal court in Worcester in connection with a scheme to commit bank fraud. • John J. Crowley, 62, of Boca Raton, was sentenced to three years of supervised release and ordered to pay restitution of $60,000. Crowley and co-defendant James R. Faro, of Dover, each pleaded guilty to conspiring to commit bank fraud in March. Faro was sentenced on Sept. 18 to two years in prison and ordered to pay roughly $1.1 million in restitution. • Faro is the former owner and president of Sea Star Seafood Corp., a company previously headquartered in Marlborough that distributed frozen seafood products. Crowley is the former CFO for Sea Star. • From October 2010 until August 2012, Sea Star maintained an asset-backed loan agreement whereby a bank agreed to loan Sea Star up to $6 million pursuant to a revolving line of credit. Sea Star pledged its assets – most notably its inventory and accounts receivable – as collateral for the loan.

WALSH INCREASES BOSTON’S 2030 HOUSING PRODUCTION TARGET

INFORMATION SERVICES

Director of Operations & Product Strategy: Samantha Bullock Data Operations Supervisor: Tammy Dandurant

DEVELOPER READY TO REPLACE ANTIQUATED WALTHAM BUILDINGS

• Hobbs Brook Management is the latest developer targeting the central Route 128 submarket for growth in the office and life science sectors, as it begins marketing a new 507,000-square-foot building in Waltham’s Hobbs Brook Park. • The Gensler-designed building – which would become the largest contiguous office building on Route 128 – would replace a pair of aging office buildings totaling 258,000 square feet at 225 Wyman St. • The occupancy rate within the 16-building Hobbs Brook Park is approximately 92 percent, said Patricia Holland, Hobbs Brook’s leasing director. The office and lab-capable structure will be designed to meet LEED Silver certification, and offer a parking ratio of 3.5 per 1,000 square feet. • Wyman Street Advisors Managing Director Charles “Chip” Batchelder is the exclusive leasing agent. Hobbs Brook Management will market the property to a single user or two tenants initially, with a lease of approximately 200,000 square feet needed to begin construction of the internally financed project.

Data Services Project Coordinator: John Keith

FORMER CFO PLEADS GUILTY IN MULTIMILLION DOLLAR EMBEZZLEMENT SCHEME

Data Quality Auditor: Ellen Gendron Acquisitions Coordinator: Linda MacDonald Transaction Acquisition Coordinators: Wally Bullock, Tracey Kelley HR Coordinator: Andy Wells

INFORMATION TECHNOLOGY

Senior Applications Developer: Joe Chan Software Developers: Tatyana Lisyanaya, Michael Paul, Priyadarshini Velayudam

FINANCE & ADMINISTRATION

Accounting Manager: Mark DiSerio Accounts Payable: Olga Khalaydovsky Accounts Receivable Clerk: Stephanie Griffin Human Resources Manager: Linnea Blair

• When Boston Mayor Marty Walsh announced four years ago that the city would create 53,000 new housing units by 2030, the general consensus was that it wasn’t enough, but at least it was something. But it turns out it’s really not enough – with the population of Boston now projected to reach nearly 760,000 by 2030, the mayor today announced the city will increase its housing production goal to 69,000. • Of those units just under a quarter, or about 16,000, will be leased at rents affordable to low- and middle-income residents. • The city will budget about $50 million annually to support housing construction. • Though Boston has lead the way in housing construction, Walsh has been working with the Metropolitan Area Planning Council and leadership in nearby cities and towns to create new housing targets in surrounding municipalities. Those are expected to be released next month.

• The former chief financial officer of two Boston-area companies pleaded guilty yesterday in federal court in Boston for embezzling millions of dollars from his former employers. Edward J. Abell III, 45, of Gloucester, pleaded guilty to five counts of wire fraud and three counts of money laundering. He was indicted on the charges in October 2017. • Abell was vice president of finance and later CFO of Racepoint Global, a global integrated marketing agency based in Boston. In that capacity, Abell oversaw all aspects of the company’s finances and controlled all corporate bank accounts. Between 2006 and his departure in 2016, Abell embezzled over $3.8 million from his employer by writing company checks to Pinehurst Tax Assoc., a firm Abell owned. However, Pinehurst did not provide any services to Abell’s employer. Rather, Abell used Pinehurst as a shell company through which he channeled embezzled funds to personal bank accounts. • In order to avoid detection, Abell created fake profiles for Pinehurst within his employer’s internal vendor database and attributed all the fraudulent payments to Pinehurst as “professional services” in the financial accounting system. Abell also filed false personal tax returns with the IRS, which failed to report the millions he obtained through Pinehurst. • After he was terminated from the marketing and public relations firm, Abell was hired in late 2016 as CFO of the Boston-based consulting and investment banking firm Bulger Partners, where he continued his scheme and embezzled over $140,000.

HERE’S WHAT YOUR PEERS WERE INTERESTED IN LAST WEEK: BANKE R & TR AD ESMA N

Former CFO Pleads Guilty in Multimillion-Dollar Embezzlement Scheme

Three MA Men Charged in Multi-Year Mortgage Fraud Scheme

Greenfield Woman Pleads Guilty to Conspiracy to Hide Money from Bank

52% YIMBY.

Marlborough CFO Sentenced for Bank Fraud Conspiracy

16% NIMBY.

Revere Beach Apartment Complex Sold for $89M

on the 16% Depends circumstances.

Nonprofit Relocating to South End

16% A what now?

Developer Ready to Replace Antiquated Waltham Buildings

Hunneman Announces Leadership Changes

Walsh Increases Boston’s 2030 Housing Production Target

(ISSN 0005-5409)

Volume 199, Number 40 Published each Monday. ©2018 The Warren Group Inc., 2 Corporation Way, Suite 250, Peabody, MA 01960. All rights reserved. No part of this publication may be reproduced without the written consent of the publisher. Banker & Tradesman™ and The Warren Group™ are trademarks of The Warren Group Inc. Subscriptions to Banker & Tradesman: Premium: One year – $379 Two year – $679 Single copies are $10.00 each and are on sale at the offices of the publisher. POSTMASTER: Send address changes to: Banker & Tradesman The Warren Group 2 Corporation Way, Suite 250, Peabody, MA 01960 Phone: 617-428-5100. Fax: 617-428-5119. www.bankerandtradesman.com Periodicals postage paid at Boston, MA

POLL RESULTS

Freetown Cannabis Center Begins $6M First Phase

B&T’s readers are either quite progressive, or eager to appear so. Are you a NIMBY or a YIMBY?

OCTOBER 1, 2018

BANKER & TRADESMAN | 3

RESIDENTIAL REAL ESTATE COMMERCIAL INTERESTS

Boston’s Real Estate Market is the Opposite of Hot Despite Economic Growth, New Development Stagnates BY SCOTT VAN VOORHIS BANKER & TRADESMAN COLUMNIST

as prices shot up 73 percent in 1973, the year OPEC lowered the boom on the U.S. economy. Pumps went dry and irate drivers queued up in long lines at service stations; some resorted to stealing precious fuel from their neighbors’ cars at night. No business reporter in their right mind would have looked at those soaring gas prices and the long lines at gas station and have written a story on the “red-hot” oil market. Fast forward to 2018, and home prices in the Boston area and across the country are reaching record highs. Do a search on Google News of stories with the words “hot” and “real estate market,” and you’ll get bombarded with dozens of pieces about rising home prices in Boston and in cities across the country. And I have to confess that I have carelessly bandied about the word more times than I care to admit during two decades of covering the real estate market in Boston. Like the oil embargo of 1973 that sent gas prices racing upward, there is no real mystery why this is happening: the number of homes for sale has been falling across the country and has hit record lows in Massachusetts.

It’s time to put a moratorium on the use of “hot” as an adjective for the real estate market. Frankly, “inventory-starved” or even “dysfunctional” would be a more accurate descriptor of what’s happening right now in the Greater Boston real estate market.

The median sale price of a single-family home in Massachusetts has been over $400,000 for three consecutive months – an unheard-of record high. The problem with using the word “hot” to describe the current state of affairs in the real estate market is that it puts a thoughtless and undeservedly positive spin on a growing epidemic of housing unaffordability, one of the most really serious issues plaguing the U.S. economy and American society as a whole. A hot market implies high demand. It conjures up homebuilders racing to keep up as buyers snap up new inventory faster than it can be put on the market. Or of home sellers scrambling to take advantage of high prices so they can go out and buy a new and larger home themselves. Yet while every other real estate story talks about the hot market, the reality is there is no

way of truly knowing how deep real estate demand is right now in the Boston area.

Anti-Housing Culture Prevents New Development

Local NIMBY building restrictions have put a stranglehold on new housing construction in Greater Boston for decades. As a result, housing developers in Greater Boston, unlike most other business people, are no longer able to ramp up production in response to market conditions. Demand has been outstripping our artificially capped supply of new homes for years in the Boston area, driving home prices ever higher. The median price of a home in Massachusetts recently crossed into record territory, hitting $402,000 in August, up 5.8 percent over last year, according to The Warren Group, publisher of Banker & Tradesman. The median sale price of a single-family home in the state has been over $400,000 for three con-

secutive months – an unheard-of record high. However, a look back at new home and apartment construction decades ago offers some clues as what a truly hot real estate market might look like. Back in the 1980s, tens of thousands of new homes and apartments were built every year in Massachusetts, making it roughly average in terms of new housing construction in the U.S. That’s 30,000, even 40,000 new homes, condos and rental units a year. Fast forward 30 years: Boston is far richer, with a booming economy and a rising population, compared to the 1980s, when the region was just starting to emerge from a decadeslong slump. Yet developers took out building permits for a grand total of 17,230 new homes and apartments in 2017, a number that is actually a significant improvement over first few years following the Great Recession. Continued on Page 7

NAIOP Massachusetts cordially invites you to attend the 2018 Distinguished Real Estate Awards Gala honoring Related Beal for achievements in real estate, charitable activities, and community betterment. David Begelfer will receive the Edward H. Linde Public Service Award in recognition of his 27 years of service to NAIOP.

TO RESERVE YOUR SEAT, PLEASE VISIT WWW.NAIOPMA.ORG

4 | BANKER & TRADESMAN

OCTOBER 1, 2018

OPINION EDITORIAL

EDITORIAL CARTOON

Drain the Swamp, Indeed

ven judging by our new standards of politically acceptable behavior, it’s been quite a week in Washington. Apologies if this editorial is out of date by the time you read it; the news cycle moves fast in Trump’s America. The Brett Kavanaugh confirmation hearings dominated the headlines, along with the willhe-or-won’t-he get fired or quit Rod Rosenstein story. But the mid-week revelation from the Washington Post that CFPB policy director Eric Blankenstein authored a series of racist and sexist blog posts added insult to the injury already done to the consumer protection agency. Blankenstein admitted he wrote the anonymous posts but argued the opinions he expressed 14 years ago as a 25-year-old – calling most hate crimes hoaxes and questioning whether using the n-word makes someone inherently racist – had no bearing on his ability to do his job today. His job today, by the way, is to enforce fair lending and antidiscrimination requirements. Calls for Blankenstein to step down or be fired were swift but muted. The Post broke the story the evening before Dr. Christine Blasey Ford’s testimony at Kavanaugh’s confirmation hearings, the dominant story in the week’s breathless news coverage, leaving little bandwidth for the latest scandal in the D.C. swamp. “With such abhorrent views, Eric Blankenstein shouldn’t be let anywhere near the CFPB’s fair lending division, let alone running it. [CFPB acting director Mick Mulvaney] must fire him immediately,” Karl Frisch, executive director of Allied Progress, a consumer advocacy organization that has been critical of Mulvaney’s leadership at the CFPB, said in a statement. Blankenstein was still employed at the CFPB as of Friday morning. But Blankenstein, as repugnant as his views are, is just one example of the new normal in the nation’s capital. To take just the CFPB as an example, three years ago the bureau was an aggressive enforcer of laws protecting consumers from discriminatory lending practices. Mulvaney has stripped the bureau of its ability to enforce the laws it was created to keep. Once a watchdog, the CFPB is now a toothless old hound – and an expensive one, since the acting director gave his staff large raises. When an agency is expensive but useless, it won’t be long before it is nonexistent. The swamp has not been drained. It has been restocked with political operatives far more vile than those they replaced. Worse than that is the lack of accountability – there’s no consequences for abhorrent views or actions, not in the organization or the administration. All that’s left is an overworked press corps, trying to inform the American people of the actions of their elected and appointed officials, and a very tired constituency conserving their energy for hugely important fights like that of a supreme court justice nomination. Blankenstein won’t be fired. But he should be. They all should be. Men and women who express opinions such as his, whether it was five years ago or 50, should be held accountable. Drain the swamp.

Banker & Tradesman Cassidy Murphy

Associate Publisher c m u r p h y @th e w a r r e n gr ou p . c om

Timothy M. Warren Jr.

Publisher T i m o t h y M. W a r r e n

Publisher 1975-1988 Keith F. Warren

Publisher 1928-1975 W i l l a r d C. W a r r e n

Publisher 1901-1928

T H E N AT I O N ’ S H O U S I N G

Americans’ Credit Scores Hit Record High Consumers Are More Informed and More Careful BY KENNETH R. HARNEY WASHINGTON POST COLUMNIST

illions of Americans have a new record high average FICO score, and that’s positive news for homebuyers, sellers, lenders and the economy overall. What that score of 704 signifies, according to Ethan Dornhelm, FICO’s vice president of scores and analytics, is that 10 years out from the housing bust and the global financial crisis, Americans are “making more judicious use of credit.” They’re using less than the maximum amount of credit available to them, paying their monthly mortgages on time and exhibiting fewer glaring negatives in their credit-bureau files. FICO scores predict the probability that a borrower will default on a loan. They run from 300 –indicating that the individual is extremely high risk – to 850, meaning almost no risk of default. A score of 704 is considered good and, along with other favorable factors in your application, will help get you approved for a mortgage – though not necessarily at the lowest interest rate and fees available. A score of 750 will get you primo rates and terms, but a 450 will probably get your application tossed. In the mortgage arena, FICO scores are used by virtually all lenders, and are the only scores that mega-investors Fannie Mae and Freddie Mac accept. They are also used extensively for credit card, auto loan and other loan applications. FICO periodically studies a 10-million-person sample of the 200 million-plus consumers whose credit histories are on file at the three national credit bureaus. The average score of consumers nationwide was 686 in 2009. Since then, average scores have been improving gradually along with the economy, lower unemployment and rising incomes. The five-point increase from 699 in 2016 to 704 this year is one of the largest twoyear improvements on record. There are a few noteworthy trends jump out of FICO’s latest data on Americans’ scores. Age matters: Young people 18 to 29 tend to have lower scores than other age groups – they score an average 659. Part of the reason may be that many of them have so-called “thin” files with relatively few credit accounts or transactions in their histories. When they fail to make payments or pay late on a credit card, the

event weighs more heavily on their score than it would if they had longer histories with more accounts. The average score for people ages 40 to 49 is 690, and for seniors 60 and older it’s 747. Fewer people are hobbled with collection accounts: When you don’t pay back what you borrowed, your lender may hire third-party collectors to track you down. That gets reported to the credit bureaus and can depress your FICO score for years. Twenty-eight percent of all Americans had collection accounts on their credit files in 2015; today it’s just 23 percent. Rock-bottom FICO scores are fewer: In 2009, 7.3 percent of American consumers had terrible scores, ranging between 300 and 499. Now that’s down to 4.2 percent. In 2009, 8.7 percent of consumers scored between 500 and 549; today it’s down to 6.8 percent. Overall, fewer Americans now have FICO scores below 650 than in previous years. In 2009, just under 35 percent of consumers scored 649 or less; today it’s 28.7 percent. Super scorers are increasing: A record number of Americans – nearly 22 percent, more than one of every five – now have FICO scores of 800 and higher. Forty-two percent score between 750 and 850.

Though FICO scores for most categories of consumers are up, average scores for people taking out home mortgages are sliding in the opposite direction.

Mortgage Borrowers’ Scores Are Dropping

Though FICO scores for most categories of consumers are up, average scores for people taking out home mortgages are sliding in the opposite direction. Borrowers had average scores of 745 in 2009 and 2013; now they’re down to around 733. This may seem odd, but FICO sadi it shows that lenders are relaxing their approval standards slightly to include a broader range of borrowers – people with thin files, dings in their credit histories and higher debt-to-income ratios. Think Millennial first-time buyers and people who hit a rough patch during the Great Recession. What to make of the latest FICO numbers? Lessons learned from the housing bust and the recession clearly are having impacts on consumers’ scores and behavior. Dornhelm believes that more Americans have access to – and understand – their credit scores better than in previous years, and they’re avoiding doing things that can depress them, such as maxing out on credit cards. If you’re smart, you’ve been doing the same.

Ken Harney’s email address is harneycolumn@gmail.com

OCTOBER 1, 2018

BANKER & TRADESMAN | 5

OPINION ACCESS FOR ALL

Replacing the Northern Avenue Bridge A Transportation Project Whose Time Has Arrived BY WILLIAM LYONS SPECIAL TO BANKER & TRADESMAN

he list of transportation projects that could have a transformative impact on the Seaport District is very small. Most of the projects on the list are beyond the reach of our current funding environment, including and especially major expansions of our transit system. However, there is one project slowly making progress that will have a generational impact on the Seaport District – the rehabilitation of the Northern Avenue bridge. The Northern Avenue bridge once served as the primary gateway to the extensive port facilities in existence on the waterfront from the time of the bridge’s construction in 1908 until its closure in 1997 (pedestrians could use the bridge until 2014). Unfortunately, the closure of the bridge occurred just as the Seaport District was evolving into its current day center of commercial activity. Since its closure, there has been a vast amount of speculation about what should happen to it. Boston Mayor Marty Walsh has assembled a task force to elicit ideas about the future of the bridge and to decide its fate. Some have suggested a linear park with lush landscaping. Others have suggested a bike and pedestrian path. Still others have suggested that it be populated with shops and rechristened as a retail destination. Predictably, many of the private sector interests in the Seaport District would like it reopened to traffic, since the district is severely underserved by transportation and the resulting congestion is choking growth. But why do we need to choose? Why has this been made this out to be a binary choice? Can’t we have more than one function in this vital corridor, much as we have done for the rest of the Seaport’s transportation systems?

A Multi-Purpose Bridge The Boston Globe editorialized on Aug. 13 that the Northern Avenue bridge should be repurposed into a linear park with bicycles and pedestrians, fashioned in the tradition of New York’s High Line. Others have also advocated for this approach, notably Boston Preservation Alliance. But can we really afford to decrease traffic capacity in the fastest growing neighborhood in the city? Especially since there are only a half-dozen viable ways into the district?

Can’t we have more than one function in this vital corridor, much as we have done for the rest of the Seaport’s transportation systems? Early in the history of the bridge, there was a fire station located on it. It does not take much imagination to envision a new civic purpose on a new or refurbished bridge. Whether the ultimate use includes a city park or a retail destination (or both), it does not rule out the use of some portion of the bridge for transportation purposes. In fact, without a transportation purpose, it is hard to imagine investing $100 million of tax dollars into a structure that is principally for a park or for private interests. I am fully engaged in the movement to reduce our carbon footprint and shift our travel patterns to

more sustainable modes of transportation. I have advocated for more sustainable transportation systems within these pages and in industry forums across the country. But until we invest wisely in expansion of real transportation options, we cannot expect the employees, residents and shoppers who are traveling to the Seaport to arrive by any mode of travel other than an automobile. The admirable expansion of private transit options in the Seaport has made a small difference, but has only been achieved because the business community has invested in private shuttle systems as a means of last resort to get their employees to work and retain high quality human capital. There is another way forward. The transportation use of the Northern Avenue bridge could be limited to high capacity shuttle vehicles with a permit to cross the bridge. The volume of such vehicles would be considerably smaller than if it were open to the general public. Just as importantly, a dedicated bus lane on the Northern Avenue Bridge could have a very meaningful impact on congestion on the Moakley Bridge and throughout the Seaport. It is essential to the future of the Seaport that we not squander the opportunity to promote transit by making the Northern Avenue Bridge into a corridor for transit traffic. It is not often that a project comes along with a potential $100 million impact on congestion. It may not happen again in the Seaport District in my lifetime. It is hard to imagine that the Northern Avenue bridge would not continue to serve the transportation purpose for which it was originally constructed. But it just might.

William F. Lyons Jr. is president and CEO of the Fort Hill Cos.

A GREENER CITY

Finding Solutions to Boston’s Carbon Emissions Challenge Commercial Real Estate to Take Up Environmental Mantle BY RICK DIMINO SPECIAL TO BANKER & TRADESMAN

ddressing the impacts of climate change will require a serious commitment from all levels of government throughout the world, but the action plans for metropolitan Boston must be homegrown. If we want to see greenhouse gases (GHG) emissions decline, this region must take an active role to do its part. Boston Mayor Marty Walsh’s vision is ambitious; in 2017 he set the goal for the city of Boston to be carbonneutral by 2050. His plan, called Carbon Free Boston, will largely depend on the actions and potential solutions in four key sectors: buildings, transportation, electric power and waste. Preliminary findings show that buildings will play a significant role if Boston is going to be successful in reaching this ambitious goal. Therefore, dramatic changes are needed for institutional, commercial, industrial and residential buildings alike. Carbon Free Boston is a project between the city of Boston, the Green Ribbon Commission and Boston University’s Institute for Sustainable Energy. It is studying the four sectors mentioned above that have been determined to be the largest GHG emitters in Boston. The final report of this work is expected this fall. It is already becoming clear that there are many difficult decisions ahead for state and city government, as well as the private sector and residents throughout Massachusetts. Early findings show that Boston’s buildings account for a shocking 75 percent of the city’s GHG emissions. This may be a slight surprise, as our economy does not rely on industrial production facilities and the skyline is free from the classic images of pollution such as coal

plants and giant smoke stacks. Can Boston significantly reduce the output of GHG emissions from buildings? It will involve significant energy retrofits and net-zero energy building construction – but a one-size-fits-all approach will not work here, as there is such a diverse range of uses, sizes and ages in our current buildings and economy.

Carbon Free Boston has exposed a hard truth: the energy efficiency potential from new buildings will not be enough to balance out the negative impacts of our existing buildings. Existing Buildings Are the Real Challenge Carbon Free Boston has exposed a hard truth: the energy efficiency potential from new buildings will not be enough to balance out the negative impacts of our existing buildings. New projects like the GE headquarters in Fort Point or the LEED Platinum status achieved at 101 Seaport are models for all future construction, but the new projects are not the problem. We can expect that 85 percent of Boston buildings in 2050 are already here today. How we improve their energy use is essential to our future emission goals.

The largest real estate owners in the city of Boston recently met to discuss Carbon Free Boston’s initial findings and potential solutions. This group, called the “First Movers,” includes city buildings, hospitals, higher education institutions and privately-owned facilities. In aggregate, these property owners are responsible for almost half of Boston’s GHG emissions from buildings and make up a natural group to discuss policy and technology options, best practices, data and find areas for partnerships, such as joint powerpurchase agreements. It is encouraging that this group shares Walsh’s goals and is taking action. In addition to energy efficiency, other strategies to reach carbon neutrality in buildings include a strong shift to renewables, including renewable power purchase agreements and requirements for solar energy systems on rooftops, incentives for residential window and HVAC upgrades and continued reporting requirements through the Building Energy Reporting and Disclosure Ordinance. Systemwide strategies will also be needed, such as grid modernization, district energy applications and energy storage deployment. The coastline, economy and quality of life in Massachusetts are already at risk today and in the near future because of the impacts of climate change. Carbon reductions now through 2050 will help in reducing climate impact. Carbon Ready Boston has defined the climate impacts, the city’s vulnerabilities and has started to outline key resiliency strategies. Becoming carbonneutral and implementing climate resiliency strategies need to be part of any policy design and construction initiative related to infrastructure and building development. It is our new reality.

Rick Dimino is president and CEO of A Better City.

6 | BANKER & TRADESMAN

OCTOBER 1, 2018

BY THE NUMBERS COUNTY CLOSE-UP

WORCESTER

SPOTLIGHT Harvard

YEAR SETTLED 1658

Amos Bronson Alcott, along with his daughter, Louisa May Alcott, helped start a utopian, socialist farm called Fruitlands in 1843 on Prospect Hill. It only lasted seven months, with the inhabitants hoping to live off the fruits of the land without buying anything from the outside world. Alcott’s experience at Fruitlands inspired her novel “Little Women.”

YEAR INCORPORATED 1732 TOTAL AREA 27 square miles POPULATION 6,520 DENSITY 240 TAX RATES Residential: Commercial:

STATISTICAL SNAPSHOT MEDIAN SALES PRICE

Community

Jan.-Aug. 2018

Ashburnham Athol Auburn Barre Berlin Blackstone Bolton Boylston Brookfield Charlton Clinton Devens Douglas Dudley East Brookfield Fitchburg Gardner Grafton Hardwick Harvard Holden Hopedale Hubbardston Lancaster Leicester Leominster Lunenburg Mendon Milford Millbury Millville New Braintree North Brookfield Northborough Northbridge Oakham Oxford Paxton Petersham Phillipston Princeton Royalston Rutland Shrewsbury Southborough Southbridge Spencer Sterling Sturbridge Sutton Templeton Upton Uxbridge Warren Webster West Boylston West Brookfield Westborough Westminster Winchendon Worcester Worcester County

Change from 2017

TOTAL NUMBER OF HOUSING UNITS 2,225

SALES VOLUME Jan.-Aug. Change from 2018 2017

$251,800 17.79% 63 -13.70% $167,500 24.07% 110 -18.52% $265,000 11.58% 173 18.49% $206,500 10.49% 54 20.00% $395,000 -18.43% 17 -5.56% $305,450 17.04% 46 -37.84% $628,500 13.70% 63 1.61% $404,225 4.99% 40 2.56% $202,000 -8.18% 25 -3.85% $285,500 -3.06% 100 2.04% $275,000 18.03% 70 -17.65% n/a n/a n/a n/a $345,000 7.14% 79 21.54% $254,500 8.30% 89 2.30% $229,900 12.15% 25 38.89% $200,000 9.59% 272 7.94% $199,450 14.00% 166 -8.79% $384,750 -1.45% 128 -7.25% $199,000 1.02% 10 -47.37% $664,000 1.53% 46 9.52% $321,000 11.28% 205 11.41% $349,950 -9.10% 40 -11.11% $274,822 12.17% 48 17.07% $360,000 10.60% 54 8.00% $255,000 16.70% 78 1.30% $265,000 8.16% 277 -1.07% $285,500 0.88% 98 -11.71% $443,000 4.88% 50 19.05% $340,000 2.10% 188 5.03% $276,500 7.07% 105 0.96% $250,500 -10.50% 18 -5.26% $270,000 13.68% 5 25.00% $207,500 1.22% 36 -23.40% $450,000 -0.66% 128 0.79% $314,900 2.96% 95 -15.18% $219,950 -17.36% 12 0.00% $245,000 6.13% 102 -13.56% $294,950 1.74% 48 6.67% $250,000 3.09% 7 -12.50% $244,000 15.69% 17 30.77% $380,000 22.64% 39 62.50% $251,500 45.38% 16 60.00% $327,500 9.17% 82 22.39% $400,000 -0.25% 287 5.13% $599,900 5.71% 107 13.83% $199,000 7.60% 103 14.44% $222,500 -9.15% 68 -26.88% $368,000 4.40% 52 -14.75% $310,000 0.40% 89 -1.11% $335,000 -0.87% 69 1.47% $238,950 24.13% 74 25.42% $497,000 11.50% 72 0.00% $325,000 6.56% 78 -16.13% $199,950 3.07% 54 50.00% $235,000 10.33% 121 -9.70% $299,950 11.09% 54 -14.29% $266,100 23.77% 26 -10.34% $545,000 8.35% 129 10.26% $290,000 -8.08% 63 -13.70% $194,750 6.32% 88 -24.79% $235,000 6.09% 890 -0.56% $275,000 6.59% 5,749 -0.55%

• Statistics based on single-family home sales of $1,000 and above, excluding condominiums and foreclosure deeds • Source: The Warren Group

$17.15 $17.15

“I want to do something splendid before I go into my castle, something heroic or wonderful, that won’t be forgotten after I’m dead. I don’t know what, but I’m on the watch for it, and mean to astonish you all, some day.” — Louisa May Alcott (1832–1888), briefly a resident of Harvard

MEDIAN SALES PRICES 500000 $500,000 $400,000 400000 $300,000 300000 $200,000

200000

$100,000

100000

0 ’09 2009

’10 2010

’11 2011

’12 2012

’13 2013

’14 2014

’15 2015

’16 2016

’17 2017

• All sales thru August YTD • Graph based on single-family home sales of $1,000 and above, excluding condominiums and foreclosure deeds

Worcester Massachusetts

• Source: The Warren Group

SALE VOLUME

TOP 3 MORTGAGE LENDERS Rank

6000 6000 5000 5000 4000 4000

Lender

% of Market Share

Fairway Independent 5.57% Mortgage

Quicken Loan Inc

5.32%

LoanDepot.Com LLC

3.78%

Rankings and Mortgage Market Share stats include purchase and refinance mortgages for single-family homes through June 2018 Market share percentage based on volume of mortgages • Source: The Warren Group

3000 3000

TOP 3 LOAN ORIGINATORS

2000 2000 1000 1000

’18 2018

Rank

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ’09

’10

’11

’12

’13

’14

’15

’16

’17

• All sales thru August YTD • Graph based on single-family home sales of $1,000 and above, excluding condominiums and foreclosure deeds • Source: The Warren Group

’18

Lender

Organization

William B. Murphy

Fairway Independent Mortgage

Brian M. Moore

Fairway Independent Mortgage

Wesley S. Oliver

United Shore Financial Services LLC

Ranked by volume of loans through June 2018

TOP 10 EXISTING HOME SALES Street Address Community

Buyer Seller

Date Price

32 Bridle Path Shrewsbury

Igor Samartsev Nilesh V. Shah

6/6/2018 $2,275,000

600 W Main St. Northborough

Mark A. Notash Terri T. Vogel

80 Prospect St. Upton

4 5

Rank

Street Address Community

Buyer Seller

Date Price

1 Kennedy Ln. Southborough

Christopher Robinson Edward R. Price

6/27/2018 $1,293,000

6/21/2018 $1,525,000

7 Orchard Hill Dr. Westborough

Kalpana Mittal Dwight P. Aubrey

6/5/2018 $1,250,000

Judy S. Norton Beau Cheval Farm Inc.

8/13/2018 $1,500,000

67 North St. Shrewsbury

Heywood Estates LLC Helena S. Ellis IRT

7/13/2018 $1,200,000

2 Nipmuc Ln. Southborough

James A. Harris Danielle L. Williams LT

7/16/2018 $1,450,000

29 Pine Hill Rd. Southborough

Matthew Hamel Kathleen M. Mcdonough

8/3/2018 $1,198,900

39 Sears Rd. Southborough

1 Nipmuc Lane RT David M. Ferris

7/27/2018 $1,400,000

39 Presidential Dr. Southborough

Michael J. Williams Jane E. Gordon

7/16/2018 $1,195,000

• Statistics from June-Aug. • New Construction Excluded • Source: The Warren Group

Rank

OCTOBER 1, 2018

BANKER & TRADESMAN | 7

COMMERCIAL REAL ESTATE CHECK, PLEASE

Housing Advocates Criticize Lack of Follow-Up by BPDA Continued from Page 1 Services. “Having the affordable units offset the private market housing is important to us, and we want to make sure they’re paying into the pool.” The property at the center of the dispute is known as Serenity, a 195-unit apartment complex at 105 South Huntington Ave. which opened in June 2017. Developer Cedar Valley Holdings, a subsidiary of developer Tony Nader’s Brookline-based Longwood Group, bought the 1.1-acre vacant parcel overlooking Olmsted Park from the state in September 2005 for $1.1 million.

“We didn’t know the developer was going to attempt to sell the property so early on in his ownership. To me, it seems like a lien against the property that needs to be fulfilled prior to sale.” – Patricia Flaherty, executive director, Mission Hill Neighborhood Services Nader gained approval from the former Boston Redevelopment Authority in 2013 for the project, then estimated at $60 million, including plans for 32 on-site affordable units reserved for households earning up to 70 percent of the area median income. At the time Boston’s inclusionary development policy required Nader to include 13 percent affordable units on-site, or pay a $200,000 per-unit “cash-out” fee toward their creation elsewhere in the neighborhood. Longwood Group notified the BRA that it was unable to break ground because of rising construction costs in September 2015. Under the revised approval, Nader would pay $8.4 million to support 42 new affordable units elsewhere in Jamaica Plain or Mission Hill. Such payments are crucial to nonprofits seeking to piece together financing for affordable projects, housing experts say, to bridge financing gaps between high development costs and lower anticipated rents. “Everybody knows what a desperate need we have for affordable housing,” said Richard Thal, executive director of the Jamaica Plain

Neighborhood Development Corporation, noting that the group had 3,000 applicants for 39 affordable apartments it completed last year at 75 Amory Ave. The significant payouts generated by large projects such as Serenity, Thal said, could help complete financing packages for future affordable projects that have all their permits in hand. His group is partnering with The Community Builders on a 112-unit rental complex at 250 Centre St., which could include up to 71 income-restricted units. From its outset in 2000 through 2016, Boston’s inclusionary development program generated $97 million toward over 1,700 affordable units, with 89 percent of the projects including at least some affordable housing on-site. BPDA Compliance Director Peter Sasso notified the firm on May 18 that its payment had been due on March 16, when the building’s final certificate of occupancy was issued. The letter gave Longwood Group a payment deadline of March 16, 2019. Brokerage Newmark Knight Frank in July announced it had been hired to market Serenity for sale. The news prompted state Rep. Jeffrey Sanchez, whose district includes Mission Hill and Jamaica Plain, to criticize the lack of progress on the affordable housing payment. In a letter to Mayor Marty Walsh, Sanchez asked the BPDA to hold a community meeting on the status of the affordable contribution. “The lack of follow through on that agreement, and absence of community outreach in the process of this transaction, is deeply upsetting,” wrote Sanchez, who did not respond to requests for additional comment. Housing advocates say they expect the $8.4 million obligation will transfer to the new owner, but questioned whether the sale

Built on a former vacant lot acquired from the state of Massachusetts, the Serenity apartment complex on South Huntington Avenue in Jamaica Plain includes a 6,827-square-foot interior courtyard with views of the Emerald Necklace.

could delay the payment even further. “We didn’t know the developer was going to attempt to sell the property so early on in his ownership. To me, it seems like a lien against the property that needs to be fulfilled prior to sale,” said Flaherty, of Mission Hill Neighborhood Services. “If there’s a sale, we don’t want to be dealing with a new owner.”

Corporate Housing Fills Up 24 Units

Longwood Group broke ground in 2016 on the 246,186-square-foot steel-framed complex, containing high-end amenities including a roof deck with swimming pool, and obtained $84.3 million in debt and equity financing. The grand opening was held in May 2017, with Miss Massachusetts Alissa Musto delivering a piano recital. Amid community fears that many of the apartments would be filled with college students, Nader had agreed to a series of occupancy restrictions prior to the original BRA vote in 2013: no units would be rented to undergraduates, and apartments could not be subleased. So housing activists were taken aback in June 2017, when Longwood Group announced

it had leased 24 units to Churchill Corporate Housing, bringing occupancy up to 38 percent. “It goes against the whole idea of these new apartments being part of the permanent housing stock. It’s not going to help address affordability issues if they’re converted to corporate short-stay,” JPNDC’s Thal said. The complex lists three units available for lease at monthly rents from $2,744 to $3,135. BPDA spokeswoman Bonnie McGilpin said short-term rentals do not violate the agreement prohibiting subleases. If the property is sold, the new owner will be responsible for making the payment, McGilpin said. Newmark confirmed that the property remains on the market. Longwood Group declined to speak with Banker & Tradesman. In a prepared statement, the company said, “We are gratified by the response of the market in this neighborhood that serves the Longwood medical area and nearby educational institutions. This neighborhood is strong, and we recently decided to put our Serenity property on the market. We are cognizant of our obligations to the city and the community.”

Email: sadams@thewarrengroup.com

HOT PROPERTY Each week, Banker & Tradesman commercial real estate reporter Steve Adams spotlights a commercial real estate property in Massachusetts notable for its high deal activity, unique design or one-of-a-kind special features.

Hot or Not? Continued from Page 3 Builders would probably have built a lot more homes and condos – and sold them all – but for the anti-housing culture that dominates the suburbs of Greater Boston. Fewer homes getting built, in turn, have resulted in a dramatic drop in the number listings on the market. There were 38,000 homes for sale across Massachusetts in September 2006. This August, that number had dropped to a pathetic 14,597. That is the lowest number of homes for sale in August since the Massachusetts Association of Realtors began tracking that number. Inventory, or homes on the market, has fallen in 78 of the last 79 months. Dysfunctional, inventory-starved, miserable, or just plain messed up – have your pick of adjectives. But “hot” is one thing the Greater Boston real estate market right now is not.

Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.

WHAT: 33 NEW YORK AVE. WHERE: FRAMINGHAM OWNER: KING STREET PROPERTIES BUILT: 1979 THEY SAID IT:

“33 New York Ave. was the perfect fit for our client, due to its centralized location, planned renovation, and ownership’s depth of life science experience.” — Richard Ruggiero, executive managing director, Newmark Knight Frank

• Nasdaq-listed biotech company Replimune Group Inc. has leased 63,278 square feet at 33 New York Ave. in Framingham for a new office, lab and pharma manufacturing facility. • Boston-based King Street Properties acquired the former MetroWest Daily News property in February for nearly $9.3 million and announced plans to build a 9,000-square-foot addition that expands the building to 107,350 square feet. • Woburn-based cancer treatment researchers Replimune recently raised over $100 million in an initial public offering and sought a new facility for expansion. The company is scheduled to take occupancy of the new space in the third quarter of 2019. • Newmark Knight Frank Executive Managing Directors Richard Ruggiero and Mark Winters represented Replimune in the lease transaction. Cushman & Wakefield’s Kevin Hanna and Paul Leone represented King Street Properties.

THINK YOUR PROPERTY IS HOT? Drop Steve a line at sadams@thewarrengroup.com

8 | BANKER & TRADESMAN

OCTOBER 1, 2018

BANKING & LENDING ALL CASH NO MORE

Rigorous and Detailed Process Behind Banking Marijuana Dedicated Board, Months of Preparation Behind GFA’s Decision BY BRAM BERKOWITZ BANKER & TRADESMAN STAFF

ntil until very recently, it looked like the first recreational marijuana dispensary in Massachusetts would open without a financial institution to bank it. But a few weeks ago, Gardner-based GFA Credit Union came to the rescue, making the explosive announcement that it would become the first in the Bay State to bank this burgeoning sector of the industry. While the decision seemingly came out of nowhere, it was made through a meticulous process that involved a dedicated board of directors, lots of education and preparation and a serious work ethic. “It’s something we did very thoughtfully. We did not just wake up one day and say, ‘Hey, let’s get into this space,’” Tina Sbrega, CEO of GFA Credit Union, told Banker & Tradesman. “I really applaud our board of directors for having the vision and taking the time to really understand what legalization of cannabis means for the state of Massachusetts and New Hampshire, where we also have branch locations.” Financial institutions have been leery of touching deposits related to recreational or even medical marijuana in states in which it is legal, primarily due to concerns that they might run afoul of federal anti-money laundering and bank secrecy laws. Before GFA stepped up, Century Bank was the only known institution in Massachusetts

that provided typical banking services to Massachusetts medical marijuana facilities. But the Medford-based institution made no indication it would offer those same services to recreational marijuana businesses. Earlier this year, Steve Hoffman, chairman of the state’s Cannabis Control Commission, seemed so certain that no financial institutions would step forward, he floated the idea of a state-run pot bank – a concept that never gained any traction. Massachusetts officials and stakeholders have been concerned that leaving the state’s marijuana industry – which is projected to bring in $1 billion in revenue by 2020 – as an all-cash business might be an open invitation for crime and lead to public safety issues.

The Journey

Upper management at GFA and the board of directors began looking at the idea of banking recreational marijuana about a year before it pulled the trigger, according to Sbrega, who said the idea really stemmed from the credit union’s mission statement, which includes helping the underbanked. “We looked at Colorado and started reading stories about employees being paid in cash and not being able to bank it,” she said. “That clearly to us became a real public safety issue for our communities.” A few months later, in the beginning of 2018, things didn’t get any easier when U.S. Attorney General Jeff Sessions rescinded the Cole Memo, Obama-era guidance that essentially said the federal government would not interfere with marijuana programs in states in which they are legal.

“We looked at Colorado and started reading stories about employees being paid in cash and not being able to bank it. That clearly to us became a real public safety issue for our communities.” – GFA CU CEO Tina Sbrega “The rescission of the Cole Memo certainly caused us to pause, but we still understood that we had the FinCEN (Financial Crimes Enforcement Network) guidelines to follow, the Cole Memo and BSA (Bank Secrecy Act) guidance,” said Sbrega. “We still felt we had a road map to follow to stay out of harm’s way.” Shortly after, Sbrega stumbled onto Partner Colorado Credit Union and its wholly owned credit union service proTina Sbrega vider Safe Harbor Services, which is when things really started to kick into gear. Safe Harbor’s platform works with both the financial institutions and the marijuana businesses to make sure all operations comply with all local rules and federal regulation. “They are troopers,” said Katrina Skinner, general counsel and interim president at Safe Harbor. “You need not just senior management, but a board that is very forward-think-

ing. It’s not for everyone. Some boards have zero interest in it.” Skinner said any financial institution interested in banking recreational marijuana will need a minimum of six months to conduct its own due diligence. And when GFA begins banking marijuana clients, each one will take at least three or four weeks to vet. Sbrega said they need know the people running the business and everyone involved in the LLC, as well as conduct audits and collect loads of other information and documentation on clients. This rigorous process was one of the major concerns Sbrega had during preparation: How to implement all the procedures and policies while ensuring compliance with all regulations. That is why she said GFA took the time it needed before making the announcement – it wanted to have full confidence that it could safely provide its services to the recreational marijuana industry and be in full compliance. “There is no room for error,” she said.

Email: bberkowitz@thewarrengroup.com

GOSSIP REPORT 1

CARLISLE

Address: 383 River Road, Carlisle Price: $8,675,000 Size: 10,195 square feet on 8.3 acres Buyer: John Power and Biodiversity T Seller: HCML LLC Agent: Senkler, Pasley & Dowcett, Coldwell Banker Residential Brokerage Sold: 9/14/2018

The property in the top spot in this week’s Gossip Report sits on 8.3 acres overlooking the Concord River and Great Meadows National Wildlife Refuge. The Georgian Revival-style estate has 16 rooms. The fully landscaped grounds feature a pool, carriage house apartment, pool house and pergola.

4 2

NANTUCKET

Address: 61 Wanoma Way, Nantucket Price: $5,756,000 Size: 4,516 square feet on 4.69 acres Buyer: DJG Associated LLC Seller: Lina F. Hoey and Peter E. Hoey Sold: 9/12/2018

BOSTON

Address: 221 Beacon St. #1, Boston Price: $4,250,000 Size: 2,408 square feet Buyer: Brian Gladden and Judith Gladden Seller: See Real Estate LLC Agent: George Haroutiounian, Boston Homes Realty Sold: 9/10/2018

HYANNIS

Address: 23 Atlantic Ave., Hyannis Price: $4,000,000 Size: 4,230 square feet on 2.2 acres Buyer: BW Residential LLC Seller: Hurricane Hall LLC Agent: James Collins, Cape Cod Oceanview Realty, Inc. Sold: 9/14/2018

BREWSTER

Address: 112 Governor Prence Road, Brewster Price: $3,900,000 Size: 6,273 square feet on 0.64 acres Buyer: Daniel B. Belanger and Kathleen M. Belanger Seller: Margaret Wood and Richard Wood Agent: Dee Higgins, oldCape Sotheby’s International Realty Sold: 9/12/2018

OCTOBER 1, 2018

BANKER & TRADESMAN | 9

IN PERSON

One Branch, All Digital

Q: With one branch and over $630 million assets, what digital

strategies and platforms has Direct Federal successfully used to build up its business?

Our entire strategy is based upon allowing members to bank with us wherever, however and whenever they want. We survey our members regularly, asking them to rate the ease in which they access our products or information on our services. We have carefully selected and partnered with leading vendors in the credit union industry to implement systems that support that strategy. We use the same vendor for both our online and mobile banking platforms, which allows for continuity from system to system, and we diligently follow their roadmap of implementing enhancements as soon as they have been beta tested and are available. We have found that key features such as bill pay, remote deposit capture, account transfers, personal financial management tools and peer-to-peer payments have allowed all of our members to bank with us without having to come to our branch. All our deposit account and loan applications are online and have been modified to make that application process as simple as possible. We continue to modify our application to enhance the user experience as much as possible and our members can apply for and open accounts and loans within minutes.

Q: Why did Direct Federal choose to embrace such a digital approach when most credit unions are very traditional?

Twenty-five years ago, our former CEO believed people would begin to value digital banking as a more convenient practice for banking transactions and that fewer people would require brick and mortar branch offices for their everyday banking needs. By transitioning to a one-branch credit union, we were able to reinvest our operational savings back into our membership by offering the lowest rates on loans and the highest rates on deposits. Our current CEO, Joe Walsh, recognizes the importance of ensuring efficiencies across the credit union, so our fewer than 70 employees are working collaboratively and efficiently to manage the credit union as we look to end the year with more than $700 million in assets. We have embraced lean practices in our operation and work tirelessly to collect information from our members, employees, board members, vendors and community at large to find new ways to add value and eliminate waste to our customers.

Q: Direct Federal has a Smart Start program, aimed at helping Millennials

MICHAEL FERREER

build credit. Why did you decide to do this program and how is it working?

Title: Vice President of Marketing and Sales, Direct Federal Credit Union

Our SmartStart program focuses on both the Millennial and Generation Z age groups and includes auto loans, apartment loans and credit cards for individuals with no credit history. It also includes a unique first-time homebuyer program that allows for only 10 percent down with no private mortgage insurance required.

Age: 39 Industry experience: 20 years

BY BRAM BERKOWITZ BANKER & TRADESMAN STAFF

s the vice president of marketing and sales at Needham-based Direct Federal Credit Union, Michael Ferreer has been implementing digital strategies for roughly four years. With only one branch, the credit union is one of the fastest growing in the state with over $630 million in assets, largely due to a digital philosophy that began before digital was mainstream. Ferreer has been with the company since 2014 and is charged with growth of the credit union. He started his career while attending college at Boston University as a part-time, entry-level data analyst for East Cambridge Savings Bank. He would eventually go on to become vice president of marketing at East Cambridge Savings Bank and did a stint at Central Florida Educators’ Federal Credit Union before landing at Direct Federal. Banker & Tradesman caught up with Ferreer to discuss Direct Federal’s digital strategy and the success behind it.

We have carefully selected and partnered with leading vendors in the credit union industry to implement systems that support that strategy.

The program was designed to start relationships with the younger population of our neighbors who may be looking for unique financial solutions for their banking needs. Establishing these relationships early with the next generation of our members keeps us focused on sustaining Direct Federal into the future while providing relevancy to our banking solutions to a larger population of our community.

Q: What is the best advice you can give other credit unions trying to take on more digital initiatives?

Implementation of technology and focus on digital initiatives must align with your organization’s overall strategy. Our CEO has opined that for every dollar spent in technology and every step made down the digital pathway; you must be willing to spend as much and travel as far for your people. Our member services center comprises nearly a third of our employee population and we spend a tremendous amount of time training, coaching and developing each member of our staff to be integral voices in our company’s future direction.

FERREER’S FIVE FAVORITE RESTAURANTS:

Carlo’s Cucina – Brighton

Buttercup – Natick

Sweet Basil – Needham

The Farmhouse – Needham

Cook – Needham

10 | BANKER & TRADESMAN

OCTOBER 1, 2018

BANKING & LENDING DOWNTICK IN CHECK USE

U.S. Bill Payment Transformation: the Momentum Accelerates Need for Consumer Data Changes How Banks Integrate Payment into Online Experience BY DAVID ALBERTAZZI AND GILLES UBAGHS SPECIAL TO BANKER & TRADESMAN

anks and billers have long focused on outsourcing payments capabilities to third parties, largely to provide as much flexibility as possible to consumers while minimizing overhead costs. But as consumerization in payments evolves, driven by factors such as shifting customer expectations and emerging technologies, banks and billers are reassessing their bill pay service capabilities. Consumer power is growing and switching providers is becoming easier than ever in most industries. As a result, bill payment providers are seeking to place more control into their customers’ hands. The growth of real-time payments and the demand for contextually relevant data that can be used by consumers, banks, and billers means bill payment services now need to focus on changing how payments fundamentally work and how they integrate into the broader experience. This means investing in back-end capabilities and reassessing how payments function, as this has a core impact on the overall payment experience. To gain a more thorough understanding of the current U.S. bill payment market, Aite Group conducted interviews with payment executives from 12 leading organizations, including banks, utilities and telecommunication companies, insurance firms and healthcare and education service providers from February 2018 to March 2018. ACH is a market trend that dominates the payments landscape. Check use is still significant but is in decline, and electronic payment methods are on the rise. ACH makes up close to half of all bill payments by volume. Although other tools are gaining ground, they have some way to go before displacing ACH transactions. Checks are a major cost center for both banks and billers, and they remain a pain point despite the decline in usage. One implication to the rise of ACH is that electronic bill pay represents significant cost benefits for banks and billers while also improving the customer experience. Consumers are also increasingly shifting

to biller-direct payment channels. Cards are more widely used at the biller-direct level and represent a major competitive point against bank bill pay services. Banks and billers are increasingly looking at modernizing their bill pay capabilities. The growth of digital channels alongside ingrained consumer habits means that a growing volume of consumer bill payments is

Banks and billers need to focus on an adaptive technology strategy in bill pay that meets these needs head on and that reacts to future shifts. now done biller direct. Although many banks interviewed by Aite Group state they are currently looking or have previously looked at offering some form of card-based bill pay service (cash advances) it remains low on the agenda. Both billers and banks are now focusing on enhancing their bill pay capabilities, primarily through greater use of digital channels as well as better integration and use of real-time data capabilities.

Consumer Expectations Drive New Payment Strategy

As consumerization in payments evolves, banks and billers are reassessing their bill pay service capabilities. The variety of factors affecting consumer expectations continues to evolve, and these factors will continue to change in the near term. Banks and billers need to focus on an adaptive technology strategy in bill pay that meets these needs head on and that reacts to future shifts. Although undoubtedly a major driver of digital transformation and investment activity for banks and billers, an increasingly customer-and mobile-centric approach also provides the potential to significantly reduce overhead costs particularly for customer support staff both on-site and in call centers. Aite Group recommends that payment executives should explore partnerships. The road to get there will not be easy or inexpensive, particularly for setting the technology stack and infrastructure to facilitate real-time payments. Banks and billers need to think strategically as to how they want to play and

Operation Welcome Home

compete in this market. They should look to partner with payment providers to fill out their product offerings and to develop and implement these new payment services. Payment executives should also assess back-office capabilities. As the bill pay space becomes more data rich, flexible and functional to its end users, it will place growing pressure on existing legacy infrastructure. Tinkering with front-end technologies will help improve the experience and create efficiencies, but long-term development will necessitate an appraisal and likely modernization of back-office capabilities. Aite Group’s findings suggest that payment executives should focus on real time and learn from other markets. They should implement a strategy that allows customers to easily, safely and securely originate and receive faster payments can be complex, as they are irrevoca-

ble. U.S. banks and billers should learn from other countries that have already rolled out real-time payment systems so that they know what to expect and can learn from missteps in other implementations. By taking advantage of the value-added messaging capabilities, payment executives could get more out of their payment process. Standards like ISO 20022 can provide transparency and efficiencies to the entire order-to-pay process; banks and billers should fully leverage these standards to provide additional insights and context to the payment experience.

David Albertazzi and Gilles Ubaghs are senior analysts on Aite Group’s banking and payments team. To learn more about Aite Group’s research coverage of banking technology and retail banking, please contact Aite Group at info@ aitegroup.com.

Revere Beach Apartment Complex Sold for $89M A luxury apartment complex on the Revere waterfront has been sold to a South Carolina investment firm for $89.25 million. Greystar acquired the 230-unit Ocean 650 property from the original developers, Dedham-based Upton & Partners and TA Realty. The price works out to $388,000 per unit. Guardian Life Insurance provided a $48-million mortgage. Completed in June 2017, the property includes three wood-framed residential podiums above 315 parking spaces on two levels. Amenities include co-working space, a courtyard and pool. 650 Ocean was designed by Boston-based Arrowstreet, which also

was responsible for the master plan for the 1.4-million-square-foot Waterfront Square redevelopment of parking lots on nine acres next to the MBTA’s Wonderland station. Greystar manages a $31 billion portfolio for institutional investors, including nearly $10 billion in U.S. developments.

E Q UA L H O U S I N G

O P P O RT U N I T Y

This powerful mortgage product created for active duty military members, members of the Reserves and National Guard, Veterans and Gold Star Families now comes with $2,500 closing cost assistance.

$2,500

Closing Cost Assistance Now Available!

Just one more way MassHousing is helping Massachusetts buyers overcome challenges to home ownership. Income and purchase price limits apply. Subject to credit approval, not all applicants will qualify. Must be a first-time homebuyer.

888.843.6432 www.masshousing.com/owh

OCTOBER 1, 2018

BANKER & TRADESMAN | 11

CLASSIFIEDS SECTION

THE ONE PLACE TO FIND OPPORTUNITIES

Classified Ads can also be accessed online. Visit bankerandtradesman.com and click on The Marketplace.

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To Place in Classifieds, Please PREPAREDan FOR:Ad PESCO PUBLICATION: Banker &Contact Tradesmen Steve Ketler at 617-896-5307.

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2 Adjacent Parcels of Land 1022 & 0 Main St., Fitchburg, Ma tueSday, Oct 9, 2018 @ 11aM

2 adjacent parcels of land totaling 30,533+/-sf. Sold separately. 1022 Main St sold first then 0 Main Street. 1022 Main St: 13,457+/-sf of land improved by a 1,890+/-sf old style service station bldg. with 3-bay garage. 0 Main St: 17,076+/-sf of land. Terms of sale: A deposit of $7,500 per sale or $15,000 total by cash certified or bank check will be required at the time & place of sale & balance in 30 days. All other terms announced at sale. Neither Auctioneer, Mortgagee nor Attorney make any representations as to the accuracy of the information contained herein. Riccardo L. Rullo, Esq., Law Offices of Frank N. Dardeno, Somerville, MA.

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V I S I T C L A S S I F I E D S. B A N K E R A N D T R A D E S M A N. C O M

12 | BANKER & TRADESMAN

? OCTOBER 1, 2018

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