When UMass Dartmouth announced the sudden closure of its downtown arts campus in New Bedford last year, just three weeks before classes began, politicians and university officials were quick to point fingers.
Conflicting allegations created a confusing tangle of blame, as movers emptied two decades worth of art and studio equipment from the sprawling beaux arts building into dumpsters and moving trucks.
The Star Store campus, which inherited a name from the abandoned department store it revitalized in 2001, had helped breathe new life into New Bedford’s struggling downtown, introducing hundreds of students each year to the neighborhood’s fledgling coffee shops, boutiques and art studios.
The satellite campus’ abrupt closure sparked concerns about the neighborhood’s future and scattered students across makeshift facilities at the university’s main arts building in Dartmouth and a strip mall nearby.
An independent state agency soon opened an inquiry into the Star Store’s closure, exploring whether the more than $60 million the Commonwealth poured into the satellite arts campus’ 22-year tenancy constituted fraud, waste or abuse of public funds.
The Office of the Inspector General released that report last week, unveiling the findings of an investigation that gathered previously unseen financial records and included interviews with key sources who had not yet spoken publicly.
The report offers the most definitive account yet of the unusual financial arrangement that created the Star Store campus and, in the view of the inspector general, doomed it to fail from the outset.
The deal that created the Star Store
In 1996, New Bedford’s state senator, Mark Montigny, filed a bill directing UMass Dartmouth to lease privately owned space for a new facility in downtown New Bedford.
Though the bill called for a “competitive” procurement to find a suitable building, the strict qualification requirements ruled out all properties except the Star Store.
The inspector general at the time urged the governor to veto the legislation, warning that circumventing public procurement laws in this manner could lead to a financially “disastrous” deal. But the legislation passed anyway.
“A massive, vacant fire hazard in our city’s center with multiple failed development attempts in the private sector warranted aggressive government investment,” Montigny later said, referring to the Star Store, “and as a relatively new state senator I viewed inaction as unacceptable no matter the political risk.”
State property managers soon drew up a 20-year rent-to-own agreement with the Star Store’s owner, Paul Downey, reimbursing him for the cost of converting the building. Written into the financing was an anticipated $8.1 million of profit for Downey, and an option for the state to purchase the Star Store for $1 at the end of the lease.
State property managers also agreed to reimburse Downey for all of his operating costs once the campus was up and running, including his property taxes, his maintenance bills, the salary of his property manager, and the cost of his new accounting fees.
In his recent report, Inspector General Jeffrey Shapiro called the procurement process “a sham” that enabled Downey to negotiate an unusually lucrative lease at the state’s expense.
“With no competition,” the report said, “there was no incentive for the developer to reduce costs or propose more favorable terms for the Commonwealth.”
In a public statement responding to Shapiro’s investigation, Montigny said redeveloping the Star Store “required creative solutions” because Massachusetts was at its bond cap, preventing the state from handling the project on its own.
Shapiro has since questioned Montigny’s explanation, calling it “highly unusual” for a project of the Star Store’s size to fail to fit under the state’s bond cap. But in an interview, Shapiro said investigators never pinned down other possible motivations.
“We’re troubled that with some people, their memories weren’t clear,” Shapiro said, “and maybe, you know, they knew more than they wanted to share.”
Managing the ‘gift’
Downey finished a complete rehabilitation of the Star Store in time for the fall semester of 2001. At a grand opening ceremony for the campus, Montigny pointed out that UMass Dartmouth and the City of New Bedford were receiving a new college campus without having to pay for it out of their own budgets.
“This is a gift from the legislature to the city,” Montigny proudly said in his remarks.
But the gift proved to be an expensive one for UMass Dartmouth to hold onto.
For 20 years, the Star Store hosted classes, artists’ studios, gallery exhibitions and adult education courses. (The Public’s Radio also rented space there for its South Coast Bureau for several years.) By nearly all accounts, the campus contributed to a renaissance of new businesses in downtown New Bedford, as intended.
But starting in 2006, enrollment at UMass Dartmouth’s College of Visual and Performing Arts had begun a slow decline, from a peak of almost 800 students to around 500 students as the lease neared its end date in August 2021. The intervening years also put wear and tear on the Star Store, leaving an expensive backlog of maintenance problems, including a leaking roof. Newly passed green building codes for state-owned property added another laundry list of necessary renovations.
The inspector general blamed UMass Dartmouth and the state’s Division of Capital Asset Management and Maintenance, also known as DCAMM, for allowing maintenance problems to worsen to the point that a $1 purchase option no longer looked like a good deal.
A building assessment in March 2022 estimated those issues would require a $28.1 million renovation to address — a figure that the university’s chancellor said increased to between $50 million and $70 million as inflation and rising interest rates set in later on during the pandemic.
The inspector general’s investigation found that university officials and state property managers privately began discussing ways to avoid taking ownership of the campus. Email records show they had prepared a new agreement to stay in the building as a long-term tenant for another 10 years.
Montigny, however, insisted that the UMass system assume ownership of the campus.
The demand led to a bureaucratic log jam, with DCAMM’s property managers refusing to buy the Star Store without guaranteed funding to repair it. By the time Montigny secured a letter from the governor committing to partially fund the campus’ renovation, the $1 purchase option had expired.
Downey refused a belated attempt by the state to take the property in August 2022. UMass Dartmouth’s art college, it seemed, would remain a tenant. The university extended its lease on a month-to-month basis.
The last days of the Star Store
The conflict played out so quietly that, almost a year later, few people noticed when Montigny struck a line from the state budget that had been paying the Star Store’s rent for 22 years. His budget amendment, signed into law in August 2023, prohibited any further spending on a Star Store renovation until Downey relinquished the deed.
Downey, however, wound up walking away from the public-private partnership after 22 years with permanent ownership of the Star Store, and as much as $12 million in profit, according to figures from the inspector general’s report.
The inspector general concluded that Montigny, UMass Dartmouth and the Division of Capital Asset Management and Maintenance never shared a vision for the Star Store campus, or a clear division of responsibilities regarding who would plan for and fund its future beyond the original 20-year lease.
“UMass, as the tenant, wasn’t paying for this, so I don’t think they viewed it as their money,” Shapiro said. “DCAMM, I think in many ways, felt that the legislature told them what to do, so they didn’t use their voice or their experience, and they let a really bad deal play out and never said anything at all.”
The result, after more than $60 million of public investment, is that the Star Store is once again sitting empty, looming over the main intersection in downtown New Bedford.