Arrested Development

Burgundy-capped stools line up against the counter at Angie’s Newburyport restaurant. “What ah you havin’, hun?” the waitress chirps with that New England accent some lament is a fading badge of Massachusetts authenticity.

At Angie’s these days, the gossip sizzles almost as loudly as the hash, especially since Chuck and Ann Lagasse, the downtown’s biggest landlords, sold a stake in dozens of downtown and waterfront properties to billionaire mall developer Stephen Karp, who paid the couple $38 million.

Many here hope that Karp will now do for this historic seaside city what he’s already doing on Nantucket, the exclusive destination for the elite where he is the largest commercial property owner. Many others hope he won’t. They fear their town will become a theme park representation of a New England seafront village (there’s already—gasp!—a Talbot’s) and that they’ll be priced out. With them, they say, would go everything that’s genuine. It’s already happening, these people say, just as it has happened in other picture-postcard communities whose character proved a profitable selling point that boosted retail revenues and real estate prices. “I couldn’t afford to do today what I did a half century ago, when I bought my acre and built my house,” says Bill Plante, a former editor at the Newburyport Daily News.

But Newburyport offers obstacles beyond resistance from the locals. The waterfront, presumably the center of any major redevelopment, is weedy and unkempt. There’s dispute over where to put the parking that will be needed to support a proposed hotel and other businesses. Decades of previous plans have gone nowhere. The man who last urged developing the waterfront says it could cost $100 million. Down at Angie’s, the wags are all speculating about what will happen next.


FROM A SMALL plane taking off from Plum Island Airfield, you can make out Newburyport on the south bank of the Merrimack about a mile inland from where the river meets the Atlantic between Salisbury Beach and Plum Island. The coastal city of 17,000 just shy of the New Hampshire border looks like a postcard, with its red-brick shops, cobblestone streets, and Federal-style homes built with the wealth that poured in from the rum trade, the construction of swift-masted clipper ships, and other early industries.

By the 1960s, however, Newburyport had fallen on hard times, with much of the downtown boarded up. Then a man named Chuck Lagasse, who moved to town from neighboring Haverhill and owned a company that made handles and other parts for coffins, bought a handful of buildings and lowered rents. All anyone knew about Lagasse up until that time was that he’d moved his company, now called GI Plastek, to the industrial park, and subdivided a vacant supermarket into a mini mall. Suddenly he was buying property all over town.

Lagasse had a mentor: Walter Beinecke, the aging heir to the S&H Green Stamps fortune. Beinecke had experience with developing property in small towns—specifically, on Nantucket. “One way of looking at it was that Walter was Obi-Wan Kenobi to Chuck’s Luke Skywalker,” jokes former Newburyport Daily News reporter Dennis Kennedy. “Beinecke was the guiding light,” says Pete Morse, former president of the Newburyport Five Cent Savings Bank. “He had done it before in Nantucket and he saw Newburyport as a little Nantucket.”

The Lagasses soon became Newburyport’s largest commercial landholders, owning a quarter of the downtown. They renovated the Atkinson Building. They invested in the Horton’s Yard condominiums. They converted an old restaurant into the Black Cow. They bought and are renovating Michael’s Harborside, another restaurant. “We’ve done a lot of work on historical buildings, some that have been in families for generations,” Chuck Lagasse says. All of this activity sparked other rehab work, and property values rose. Everyone was happy. Then to some critics in town young Skywalker began sounding more like the heavy-breathing Darth Vader.


DRESSED IN a buckskin skirt and an Edwardian velvet jacket seeded with tiny buttons, Jacalyn Bennett is everything you might expect in a maker of women’s lingerie. A supplier to Victoria’s Secret and other retailers, she runs a manufacturing empire employing thousands in Asia and the Near East. But on the home front, she’s been fighting Chuck Lagasse.

When Lagasse proposed a waterfront hotel, Bennett filed a complaint in land court against it. The lawsuit continues, and the hotel plan has languished ever since. “We’ve tried several times to make proposals that would help her and accommodate her,” Lagasse says. “We’ve tried to come up with some amiable resolution.” One, he says, was the idea of buying Bennett’s buildings and leasing them back to her.

Meanwhile, almost from the start of the time he owned their buildings, some of Lagasse’s merchant tenants started getting “percentage leases,” under which he became entitled to a portion of their revenue in addition to the rent. One shop owner complains the contracts all but turned them into concessionaires and made it nearly impossible for them to sell their businesses. Then, in the mid 1990s, the Lagasses fell behind on the property taxes on their downtown buildings, which were eventually paid when the city refused them an extension. Last year, court records show, Newburyport Five Cent Savings Bank called in the balance of their outstanding loans. Meanwhile, Beinecke, Chuck Lagasse’s guiding light, had moved to Texas and died in May of 2004. Finally, Lagasse turned to Karp. By early last year, Karp and his company, New England Development, had bought a stake in most of Lagasse’s deeds for a total of $38 million. Stephen Karp was King of Newburyport.


LAGASSE TOLD the community journal the Undertoad that developing the waterfront could cost up to $100 million and needed someone with resources like Karp, who built 20 shopping malls up and down the East Coast and sold them for $1.7 billion.

A year or so on, however, not much has changed. Lagasse still manages the properties now he now co-owns with Karp and his company. A plan to build on one eight-acre portion of the waterfront is expected later in the year. Meanwhile, the battle over the proposed hotel remains mired in court. And people in Newburyport say they haven’t yet gotten a glimpse of Stephen Karp.

“I read in the paper the other day that I haven’t been available [in Newburyport] and it surprised me because no one ever asked me,” Karp says, sitting in a conference room in his Newton office. Looking fatherly in a blue shirt and yellow tie, with a ruddy face and gossamer hair, he admits, “We have probably not done a good job on PR within the town with the change from the Lagasses to our company. But we thought it was important because of their local involvement with the community that they continue to be actively involved with what we’re doing up there.”

Back in Newburyport, people are waiting to see what Karp has up his sleeve and if, once again, visions of Nantucket will shape the future of their city. They’re divided about whether or not that’s a good thing. “Is exclusivity a boon or a bomb?” asks David Hall, another commercial real estate owner. Lagasse says the debate is healthy. “Look at the time we’re spending on development issues—not just us, but the time that all the people in the city spend on it,” he says. “It’s something the city should be proud of.”

Additional reporting by Rebecca Dorr.