IG Report: New Bedford Star Store-UMass Dartmouth Deal ‘Wasteful’

BOSTON (WBSM) — A scathing report was issued today by the Office of the Inspector General regarding UMass Dartmouth's abandonment of the Star Store building that formerly served as its downtown New Bedford arts campus, deeming the it a “sham procurement” and the state-funded lease for over two decades as “wasteful.”

The report, issued by Inspector General Jeffrey S. Shapiro, was directed by the State Legislature and spearheaded by Sen. Mark Montigny of New Bedford.

“The OIG found that the state-funded lease of the Star Store on behalf of UMD was flawed from its inception and resulted in a waste of public funds,” reads the report, entitled “The Star Store 20-Year Lease A Lack of Shared Vision and Collective Accountability Wastes Millions in Public Dollars.”

READ MORE: The Complete OIG Report on Star Store

In a release, Shapiro said that “from its inception, it was a sham procurement,” stating that the process of finding a developer “effectively narrowed down potential respondents to one” and that “the resulting lease was flawed and unusually advantageous to the owner,” Paul Downey.

“In addition to the base rent, the Commonwealth paid for all operating expenses and property taxes,” Shapiro said. “In short, the owner had virtually no out-of-pocket expenses and made millions in profit over the 22 years of occupancy.”

In June 1995, the City of New Bedford took possession of the Star Store building for unpaid taxes, after the building had been vacated in 1987.

The New Bedford Redevelopment Authority designated Downey as the developer in November 1995, and in January 1997, then-Governor Bill Weld signed legislation authorizing the Division of Capital Asset Management and Maintenance (DCAMM) to lease the property. After releasing a request for proposals in October 1997, only Downey emerged as a qualified developer.

In September 1999, the property was sold to Downey for $1, and in February 2000, DCAMM and UMD entered into a 20-year lease with Downey which included the option to buy the building from him for $1 by 30 days before the end of the lease.

During those 20 years, millions in appropriations to maintain the facility, which became the home of UMD’s College of Visual and Performing Arts, were not put to proper use.

The OIG “found that there was no shared understanding among the involved parties – the Legislature, UMD, DCAMM and the property owner – as to who was responsible for what.”

“As a result, funds designated for capital improvements and maintenance were never used and the building was not properly maintained, making the option to purchase less attractive,” Shapiro said. “The parties also collectively failed to communicate and plan for the end of the lease. Consequently, UMD continued its tenancy for an additional two years, wasting nearly $4 million in public funds through the short-term and month-by-month tenancies.”

In August 2023, UMass Chancellor Mark Fuller made the announcement that the CVPA would be abruptly leaving the Star Store campus, just weeks before the fall semester was set to begin. Students were instead sent to what they called subpar facilities on the North Dartmouth campus of the school and in the former Circuit City store at Dartmouth Crossing.

“The collective failure to make a decision to either purchase the building or plan to vacate the building as the end of the lease was approaching was fiscally irresponsible and wasteful,” Shapiro said.

READ MORE: New Bedford Star Store No Longer to Serve as UMass Dartmouth Arts Campus

New Bedford Mayor Jon Mitchell said in a statement that “the businesses, artists and residents of downtown New Bedford deserved better.”

“The Inspector General’s report revealed that at a fundamental level UMass Dartmouth never took seriously its responsibility to plan for the future of the Star Store campus past the expiration of the original 20-year lease,” Mitchell said.

“Although the University had years to plan and budget for its transition from tenant to owner of the building, we now know that it waited until just months prior to the lease’s expiration to even begin substantive discussions with DCAMM – which suggests a lot about the level of seriousness it devoted to the matter," he said.

Sen. Montigny said in a statement he thought that if the lease and public funding had been properly managed by DCAMM and UMD, “student-artists would still be thriving in the Star Store today.”

“I am relieved that the IGO has finally shined a spotlight on the glaring failure of these agencies, outrageous lack of record-keeping, and total failure to serve the needs of our community,” Montigny said. “(UMD) had no plan or desire to retain Star Store, and now it is obvious that it could care less about investing in New Bedford.”

In his statement, Montigny highlighted some of the findings in the Inspector General’s report, including that “neither the Comptroller or DCAMM was able to provide complete data” for some of the rent payments.

“UMD should have been able to produce records covering the life of the lease, but was unable to do so…the Developer likewise could not produce invoices prior to 2011,” the report reads.

READ MORE: Sen. Montigny's Complete Statement on IG Star Store Report

Montigny also pointed to the report’s findings that millions allocated to UMD to fix HVAC equipment and later renovate the Star Store were not used to make capital improvements at the facility, among other issues.

However, Montigny did say that “the Star Store will shine once again.”

“I remain committed to ensuring its next chapter free from the disinterested failures and behind-the-scenes lobbying that unjustly enriched a private entity,” he said.