WESTBOROUGH – Ferris Development Group’s attempt to prevent the town from entering a purchase-and-sales agreement with another bidder for the former Regal Cinemas property was rejected.
In a ruling on Jan. 18, Worcester Superior Court Judge J. Gavin Reardon Jr. denied a preliminary injunction filed by Ferris Development in November shortly after the Select Board chose LAX Media LLC – which is the parent company of Apple Cinemas – over Ferris Development and another bidder, Pulte Homes LLC.
Ferris Development claimed the town’s selection of LAX Media “constituted breach of implied contract and violated the Uniform Procurement Act,” according to Reardon.
History of Regal Cinemas
The town had solicited a request for proposals (RFP) for the property at 231 Turnpike Road in June 2022. According to Reardon’s order, the RFPs included five criteria on which to evaluate the proposals, such as purchase price and sustainability.
The property currently has a market value of $2.082 million.
Three proposals were returned — Pulte Homes, which wanted to build 108 condo units; Ferris, which proposed developing a “beehive” space for tradespeople and building contractors; and LAX Media, which sought to re-open the property as a cinema.
All three bids came in over the market value, with Pulte making the highest offer followed by Ferris and LAX Media.
According to court documents, Pulte’s bid was not selected because of a moratorium on additional water and sewer connections in town, along with the proposed purchase being contingent on obtaining all necessary permits — a process that could take up to two years.
LAX Media’s bid was ultimately accepted by the town based on financial benefits; LAX Media’s cinema would include 10 full-time and 20 part-time employees, plus seasonal employees. It would also generate ticket and meals sales, according to court documents.
“The new cinema would have a comparable impact on the town’s municipal operations and resources as the prior cinema,” according to the order. “The town assessor projected the value of LAX’s use of the property to be $9,329,750, which combined with sales and meals taxes would provide the town with a total tax revenue of $192,507.33 annually.”
In comparison, Ferris Development’s beehive would provide about $101,821 in tax revenue, based on the assessor’s projected value of $5.5 million. The beehive would rent building space and generate fees for referring customers to local contractors.
In their proposals, each developer said they had enough cash reserves to purchase the property. Under the criteria of “Ability to Proceed,” Ferris Development had planned to close the sale in October 2022, start construction in January and open in June. LAX Media had no set date, but proposed to spend the first two months after closing to finish design and permitting, followed by construction and opening the theater to the public.
Because it was determined that Ferris Development’s proposal would have a longer permitting period, LAX Media’s bid received a more favorable vote, according to the order.
On the criterion of sustainability, both bids were looked on favorably by the Select Board. Ferris Development proposed solar canopies in the parking lot; donating wetlands protection easements to the town; LED lighting and electric vehicle charging stations. LAX Media proposed installing energy-efficient refrigeration, hot water, lighting and HVAC systems; EV charging stations; and bicycle parking.
After the board chose LAX Media, Ferris Development said its proposal was “objectively superior” and filed the injunction to prevent the town from awarding the property to LAX Media.
The decision
Ferris Development argued that the “town was obligated to judge all proposals only by the established criteria, and that no rational application of the criteria could have resulted in LAX receiving the highest possible ratings…”
Reardon disagreed, saying that “the legislative body of a city or town has broad discretion in establishing the criteria for a buyer and setting the terms of sale.”
The court acknowledged that both bids were “highly competitive.” However, because Ferris Development’s ability to proceed would take longer, “the board had a rational basis to select LAX over Ferris on this criterion.
“The court therefore concludes that the board’s selection was not arbitrary or capricious or made in bad faith,” said Reardon.
RELATED CONTENT
Regal Cinemas bidder alleges Westborough Select Board failed to apply RFP criteria