A Gentlemen's Agreement
By Andrew W.D. Aoyama, Crimson Staff WriterThese days, Fred H. Humphreys rarely visits Harvard Square.
“Too many memories,” he says, gaze fixed on his brown carpet. “I haven’t been there in a long time.”
Nestled between two much larger houses at the terminus of a dead end road in Melrose, Mass., Humphrey’s home — squat and pale, a worn American flag hanging from its porch — sits nearly forty minutes away from Cambridge. Outside, a thick lid of gravel clouds, dense with precipitation, weighs heavy upon the hushed block as if to seal it off from the city. A slick blanket of leaves carpets the street, the asphalt beneath cracked from years of freeze and thaw.
“The stores I knew are gone; my friends are gone,” Humphreys continues. “Times have changed.”
But the expansive, multi-component audio system in the corner of the room — a perfectly preserved relic of the eighties or the nineties — seems to belie his claim. The record player, CD player, several speakers, and array of knobs and dials have survived in pristine condition, and Humphreys, now 85, handles them adroitly: He has spent nearly his entire life selling and repairing similar systems.
For Humphreys, music was a family passion. The summer after he turned 14, his father put him to work at the music store he ran in Harvard Square — a small business called Briggs & Briggs, located on the corner of Plympton St. and Mass. Ave. Fred and his brother H. Paul Humphreys would wait in the shop until it closed and then sweep the sidewalks and wash the windows of the storefront. Gradually the two boys began to take on more responsibility, eventually learning to repair record players and radios. By the time they were adults, they had inherited the store from their father — just as their father had from their grandfather decades earlier.
For many, the shop was a fixture of Harvard Square since its opening in 1890, the unrivaled source for classical sheet music and records. But in 1999, rising rents forced the Humphreys brothers to relocate, and then ultimately shutter their store. Briggs & Briggs was priced from the neighborhood where it had operated for more than a century, and Fred Humphreys returned to his quiet home on the dead end street in Melrose.
I first learned of the music store while reporting a story on the changing face of Harvard Square last winter. Many historic businesses have fallen victim to rent hikes over the last three decades, but people spoke of Briggs & Briggs like it was some sort of legend.
“Where TD Bank is right now used to be this place called Briggs & Briggs,” Bill Bartley, owner of Mr. Bartley’s Burger Cottage, confided in me at that time. “Best guys ever,” he added immediately, bracing the heel of one hand against the counter and gripping his gleaming spatula with the other.
But as he remembered the fate of his friends across Plympton St., Bartley’s pulse seemed to quicken. Leaning forward, he began to detail how Briggs & Briggs met its demise, gesturing down Mass. Ave. towards the shop’s old location with his spatula. “That’s one of the Harvard clubs, not even the university,” he said, referencing the music store’s landlord. “That’s one of the clubs that’s making money on real estate — they wanted to throw out a really great neighbor, a really great tenant!”
The “Harvard club” to which Bartley referred was the A.D. Club, one of the seven remaining all-male unrecognized single-gender social organizations commonly known as final clubs. The A.D. has for years owned the 1 Plympton St. property which also includes the 1270 Mass. Ave. storefront that first housed Briggs & Briggs, then an Adidas, and today a TD Bank.
“I don’t know if they’d still be there given the business climate of the Square today, but that Harvard club threw them out,” Bartley continued. “They did exactly what [activists] are criticizing these big real estate firms of doing.” At that point, Bartley paused to flip a burger on the sizzling grill behind him. “I understand why a landlord who spent millions of dollars on a building is going to try to get as much money as he can,” he said. “But they’ve got that building for free — someone must have donated the building or whatever; I don’t know how they acquired it — but the money didn’t come out of the pocket of the guy who raised Briggs & Briggs’s rent.”
In recent years, activists, residents, and business owners alike have leveled criticisms at large, out-of-state real estate investment firms — the firms that Bartley invoked — for purchasing significant swaths of land around Harvard Square. By doing so, critics claim, the firms make the Square less viable for locals, driving up rents and often pricing out lower-income residents and small businesses. In December 2017, for example, the North Carolina-based Asana Partners purchased a string of properties on Brattle St., and over the months that followed, several of the businesses that had operated there were forced to close, including Black Ink, Flat Patties, and Crema Cafe. For devotees of Harvard Square, property acquisitions by large firms like Asana have come at the expense of the neighborhood’s historic character.
Asana Partners did not respond for comment on those claims.
The A.D. and other final clubs aren’t technically real estate investment firms, and for some, they represent just as integral a part of Harvard Square’s history as any long-standing business. But with their property ownership comes the power to raise and lower the rents of their tenants: The ability of the final clubs to control and manipulate space grants them agency not merely within the Harvard College social scene but also the Harvard Square real estate market. And because of their legal status as social organizations — and not explicitly for-profit entities — the clubs retain a special set of financial advantages that help to insulate them from the forces that have driven so many from the neighborhood.
Scott B. Paton ’87, who identified himself in an email as the current president of the A.D.’s graduate board, declined to comment on behalf of the club.
As they face an uncertain future, the small business owners of Harvard Square — those with long memories, at least — speak of the loss of Briggs & Briggs as a tragedy, an irreparable tear in the neighborhood’s social fabric. But Briggs & Briggs and other small businesses like it have for years existed in a constant competition for space — with large chains, with the University, and even with the final clubs. Sometimes the rules of that competition aren’t necessarily fair.
A Great Neighbor
For nearly as long as the phonograph record existed, so too did Briggs & Briggs. First opened by Albert P. Briggs in 1890, the shop specialized in sheet music, recordings, and musical instruments. Though it eventually came to sell audio equipment, the store never played music on its first floor — too distracting for the musicians who frequented its aisles and leafed through its collections of sheet music.
In 1927, Humphreys’s grandfather, a piano tuner, and William Rice, a mandolin and banjo teacher, purchased the business from Albert Briggs. When Rice died in 1936, the Humphreys family became the business’s sole proprietors.
In 1899, when the business was still owned by Briggs, the music store relocated into a new storefront on 1270 Mass. Ave. It was a newly remodeled building, purchased that year from the estate of Helen M. Niles by a Harvard final club — the A.D. Club. “The A.D. Club, which, by the way, ranks with the Porcellian in social standing at Harvard, buys for the purpose of building a clubhouse, the present house on the corner of Dunster and Mount Auburn streets having long been inadequate for the purpose of the society,” a Cambridge Tribune article reported on April 22, 1899. “Plans have been prepared for a splendid new building which will, probably, call for stores on the ground floor.”
At that time, the club paid $50,000, or about $1,500,000 in today’s currency. Earlier this year, the same property was valued at $7,208,500.
Briggs & Briggs and the barbershop with which it shared the storefront became the A.D.’s first tenants. “We used to have a five year lease,” Humphreys says. “[The A.D. Club representative] would say what he wanted, and my father would say what he wanted, and they’d come to an agreement.”
“It was a gentlemen’s agreement,” Humphreys explains. “They weren’t in the real estate business — it was the A.D. Club!”
Humphreys pauses to describe a list of rules that his father and the A.D. representative would write together: In order to allow customers to enter and exit Briggs & Briggs and the barber shop, members of the club couldn’t loiter in the building’s vestibule. The young Harvard students were also prohibited from standing and smoking on the corner of Plympton and Mass. Ave.
When I ask if he still has the list, Humphreys sighs. “My father got old and he threw it out,” he says. “But there wasn’t ever much arguing about how much to pay or what to do and so forth — my father paid the rent, and when the five years were up, we’d have a new lease.”
A year after the death of Humphreys’s father in 1992, however, that “gentlemen’s agreement” came to an abrupt end. With Briggs & Briggs’s lease set to expire, the A.D. Club drafted new terms that raised the shop’s rent significantly. Though they managed to stay afloat for the five years that followed, Humphreys says he and his brother had no choice but to relocate to a smaller storefront in Porter Square in 1999. The new location proved unsustainable: A year later, Briggs & Briggs closed its doors.
The A.D. Club, it turned out, was in the real estate business. Less than a year after the departure of Briggs & Briggs, the club welcomed a new tenant — the athletic-wear store Adidas, which opened on March 1, 2000. Over the fiscal year that followed, the A.D. earned $270,625 in rent from the international retail chain.
Paton, the graduate board president, declined to comment on the rent hike that drove Briggs & Briggs from the Square. Oscar K. Anderson III ’92, a former president and treasurer, also declined to comment. Several other current and former members of the club’s graduate board — including Bartle B. Bull ’93, who until this year served as president of the graduate board, and Michael V. Casciotti ’17, who served as graduate board clerk through 2019 — did not reply to multiple requests for comment.
Bartley wasn’t the only one to lament the small business’s departure. “I just miss Briggs & Briggs,” confessed Louisa Solano, then owner of the Grolier Poetry Bookshop, in a 2001 article in The Crimson. “This should be something similar, more in keeping with the area,” she continued, referencing the Adidas that had moved into the storefront across the street from her shop. In the days that followed its opening, she said, Adidas had taken to blasting loud, pulsing music from its windows in an attempt to attract customers.
The silence that Briggs & Briggs had worked to maintain for its customers and neighbors was no more.
For Pleasure, Recreation, and Other Nonprofit Purposes
The A.D. Club isn’t alone in its ownership of property among Harvard’s storied social groups.
Across the Square, seven other final clubs own clubhouses, storefronts, spaces leased to restaurants, and even a parking lot. Whether willful or not, the clubs are actors in a contentious real estate market dominated by the University; their ownership of property compresses the already-narrow space available to residents and small businesses.
The Delphic Club owns its 9 Linden St. building, valued at $3,646,400.
The building that houses the Phoenix-S.K. Club, owned by the 72 Mount Auburn Trust, is valued at $2,344,900.
The Owl Club owns its 30 Holyoke St. building, valued at $3,224,400.
The Fox Club owns its 46 JFK St. building, valued at $3,234,100.
The Spee Club owns its 76 Mt. Auburn St. building via the 76 Mount Auburn Street corporation, valued at $3,094,000.
The Porcellian Club owns not only its 1324 Mass. Ave. building, valued at $6,179,300, which includes the 1320-1324 Mass. Ave. storefront leased to the Harvard-logo on apparel store J. August, but also the property at 8 Holyoke St, valued at $3,696,800, which until 2017 housed the Mediterranean-inspired restaurant En Boca.
Similarly, in addition to its 2 Holyoke Pl. building, valued at $4,283,500, the Fly Club also owns the adjacent parking lot, valued at $519,700, via the Two Holyoke Place LLC and the property at 45 Dunster St., valued at $5,580,800, via the 45 Dunster Street LLC. The Two Holyoke Place LLC and 45 Dunster Street LLCs are foreign limited liability companies organized in the state of Delaware, but both claim principal offices at 2 Holyoke Pl. — the address of the Fly’s main clubhouse. The 45 Dunster St. property includes both the 82 Mount Auburn St. storefront — which until 2018 housed the 86-year-old men’s clothing boutique J. Press and now features the restaurant Dig Inn — and the second floor space currently leased to the Hasty Pudding.
All told, the final clubs own $43,012,400 worth of real estate across Harvard Square. Of the eight property owning clubs, three — the Porcellian, the Fly, and the A.D. — also act as landlords, leasing space to businesses and even other social organizations. Those three clubs own the greatest share of property wealth, about 64 percent.
Taken collectively, all of Asana Partners’ holdings in Cambridge amount to $54,809,300 worth of property — just ten million dollars more than the final clubs.
As a result, the clubs exert a sizable influence on the Harvard Square property market. “I don’t think it’s dissimilar in impact to an international real estate or financial entity like Asana Partners that has bought up large swathes of property in Harvard Square,” Theo M. Skeadas says of the final clubs and their property holdings. Skeadas serves as executive director of Cambridge Local First, a non-profit small business advocacy network. “The effect is the same: It’s detrimental to the viability of local businesses.”
“It’s independent of the kind of owner,” she continues. “It’s a function of the rent.” Because they can set rents, Skeadas suggests, the final clubs that lease space have the same agency as a landlord like Asana to either protect or expel their tenants; what they do is ultimately their prerogative. “They could be a small or medium sized building manager, but if they’re charging exorbitant rates, it has the same impact,” she says.
But unlike many other landlords in the Square, the final clubs retain a special set of financial privileges that help enable their longevity: All but the Porcellian have at various points in their recent histories operated as tax-exempt nonprofits, insulating large chunks of their income from federal and state taxation.
Section 501 of the Internal Revenue Code — the federal law regulating domestic taxation in the United States — establishes tax exemptions for several different types of institutions deemed to either serve the public good or merit a special immunity. Perhaps the best known of these is the exemption for 501(c)(3) organizations, or public charities, but in fact the code outlines 29 different types of entities eligible for exemption, ranging from veterans’ organizations — 501(c)(19)s — to agricultural associations — 501(c)(5)s.
Most relevant to the final clubs, though, is section 501(c)(7), which establishes an exemption for social and recreational clubs.
“The central purpose of social clubs is to provide benefits to members, including access to social and recreational facilities such as club houses, golf courses, and swimming pools,” write Jim Langley and Conrad Rosenberg, authors of a continuing education brief on tax-exempt organizations published by the Internal Revenue Service.
“When such benefits are funded by members, exemption has been justified by Congress on the theory that the members will be in the same position as if they had paid for the benefits directly,” they continue. “The practical effect of the exemption is to allow individuals to join together to provide themselves with recreational or social opportunities on a mutual basis without further tax consequences.”
Congress first passed an exemption for social clubs in the Revenue Act of 1916. Less than a year later, the A.D. Club issued a Declaration of Trust, enabling it to apply for tax exemptions.
Unlike a 501(c)(3) — a charity like the Red Cross or Salvation Army — a 501(c)(7) merits tax exemption not necessarily because of its contributions to the public good but rather because its income stems from the dues paid by its members. Because members pay those dues with their after-tax income, the income a social club receives has theoretically already been taxed, rendering any further taxation redundant.
As such, the basis for a social club’s exemption holds only if its income stems solely from its members, and in 1969, Congress extended a tax on “unrelated business income” to social clubs. Under the revised law, income that stemmed from individuals who were not members and sources deemed outside the scope of the organization’s social function was also made subject to taxation.
In order to maintain its tax-exempt status, a 501(c)(7) organization must keep its nonmember income within certain bounds.“To be exempt, substantially all of a social club’s activities must be for a purpose set forth in §501(c)(7),” writes Brian D. Yacker, a certified public accountant, adjunct professor at the University of California Irvine, and managing partner of YH Advisors, an accounting firm specializing in tax-exempt organizations, in an emailed statement. “Accordingly, a social club may receive no more than 35 percent of its total gross receipts from non-member sources without risking its tax-exempt status.” The IRS defines “gross receipts” as “the total amounts [an] organization received from all sources during its annual accounting period, without subtracting any costs or expenses.”
When 501(c)(7)s stray above that 35 percent line for consecutive years, the IRS typically strips them of their tax exempt status, subjecting all of their income — not just their unrelated business income — to taxation.
Of the property-owning final clubs, the Delphic, the Spee, and the Fox have all filed as 501(c)(7) organizations with the IRS within the last five years. Because those clubs don’t also act as landlords, they are better able to keep their unrelated business income within the proper bounds.
The Fly Club, by contrast, operated with 501(c)(7) status until it reorganized its corporate structure in June 1998, choosing to forego its tax exemption and establish the for-profit limited liability corporations registered in Delaware that hold the deeds to its properties. In its final set of tax returns filed as a tax-exempt organization, the Fly declared about $110,000 in income from member dues and donations but close to $400,000 from rent and investments — well beyond the proportions set by the IRS.
Though the tax-exempt clubs still must pay taxes on their nonmember income — income from rents, investments, and sales of securities, for example — they are exempt from taxation on the income they receive from their members — dues, donations — on the federal level, Langley and Rosenberg explain. Similarly, while Massachusetts law also requires organizations exempt from taxation under section 501 of the Internal Revenue Code to pay a state tax on their unrelated business income, they are excused from Massachusetts corporate excise tax and property tax.
Thus, in the constant competition for space in Harvard Square, many of the property-owning final clubs have been afforded a special advantage over small businesses and lower-income residents. Uniquely situated to remain in the spaces they have occupied for decades, the clubs reduce the supply of property available for lessees, driving up rents across the neighborhood.
Not long after the departure of Briggs & Briggs, the A.D. Club underwent a series of significant changes. In 2001, the club organized as a nonprofit corporation and applied for tax-exempt status. Prior to that date, it had existed formally as a trust — “The A.D. Club of Harvard College,” originally declared on Feb. 13, 1917.
But on Oct. 1, 2001, the trust transferred the deed of its 1 Plympton St. property to the newly established nonprofit corporation, charging one dollar for the building and then terminating the trust that same day. The four men listed as trustees in the deed transfer — David S. Lee ’56; Francis L. Coolidge ’68; Samuel B. Carr, Jr. ’78; and Oscar K. Anderson III ’92 — assumed positions on the corporation’s board.
“The Corporation is organized and shall be operated exclusively for pleasure, recreation, and other nonprofit purposes, including, but not limited to, the promotion of social intercourse, friendship and loyalty to Harvard College,” its articles of organization state.
That year, the A.D. began to file its federal taxes as a tax-exempt nonprofit. All tax-exempt organizations are required to make their federal tax returns accessible to public inspection via the IRS’s database, affording insight into the A.D.’s income sources, gross receipts, and balance of member and nonmember income.
Between its new tenant and lucrative investment profile (the club at that time held stock in defense contractor Raytheon and energy giants ExxonMobil and Royal Dutch Shell, among others), the A.D.’s unrelated business income soared in the years following its incorporation: In its 2001 tax returns, the club claimed $58,506 of income from investments, $718,570 from sales of its securities, and $270,625 from the rent it received from Adidas, amounting to a total of $1,047,701 of gross nonmember income, or 57 percent of its gross receipts. That proportion fell slightly in 2002 then jumped to 71 percent the next year and continued to climb until reaching a peak of 94 percent of gross receipts in 2006, buoyed by $979,658 in securities. Following the 2007 tax period, when the A.D.’s nonmember income totaled 79 percent of its gross receipts, the IRS stripped the club of its tax exempt status.
In each of the seven years that it filed as a tax-exempt nonprofit, the club’s non-member income surpassed the 35 percent threshold set by the IRS, averaging 76 percent of its gross receipts. Its member income — from club dues, alumni donations, and a curious source of revenue described on its filings only as “restaurant sales” — never surpassed 45 percent. Over the same period, the average proportion of nonmember income across all 501(c)(7) organizations in the United States amounted to only seven percent.
While the A.D.’s investments and securities proved extremely lucrative in specific years, it was the leasing of the 1270 Mass. Ave. storefront, which for a century had housed Briggs & Briggs, that proved one of the club’s most stable sources of income: Fetching nearly $300,000 annually, rent from the storefront provided more than half of the club’s nonmember gross receipts in 2002, 2004, 2005, and 2007.
Because of its status as a landlord, the A.D. Club lost federal recognition of its status as a social club.
Paton declined to comment on the loss of the A.D.’s tax exemption. Bull, Anderson, and Casciotti all did not reply to multiple requests for comment on the same concerns.
An Uncommon Commitment
A few hours after the conclusion of a particularly rowdy Harvard-Yale football game, Fred Humphreys remembers seeing a stream of cans and bottles cascade from an Adams House window. He watched them clatter to the Plympton St. sidewalk, sending shards of broken glass into the street. An ashtray followed moments later with a metallic clang.
Finally, a radio crashed to the ground, coming to rest amidst a bed of debris and shattered glass. The drunken laughter emanating from the open window ceased immediately.
It was relatively early in his tenure at Briggs & Briggs, but Humphreys remembers meeting two distraught students on the sidewalk and surveying the rubble together.
His grandfather didn’t always take well to his college-aged neighbors and their antics. He likely wouldn’t have pitied their situation. But on that particular afternoon, the shop’s patriarch was fast asleep in his chair. The younger Humphreys led the nervous students into Briggs & Briggs and helped them choose a replacement. Before his grandfather had awoken from his nap, Humphreys had replaced their radio.
“Every day was a challenge,” he says, eyes animated by his memories of Briggs & Briggs. Humphreys rifles off a list of the businesses that used to operate in Harvard Square, asking after each of their owners by name. He’s disappointed when I tell him how many have closed.
Perhaps it was this sort of neighborly attitude that Solano, the previous owner of Grolier, referenced when she wished that Adidas was “more in keeping with the area.” But very few of the places Humphreys mentions still endure today: If there existed a trait that unified the neighborhood, perhaps it has dissipated.
“I think everyone has an obligation to preserve the vitality of our community, the accessibility of our community to people of all socioeconomic backgrounds, and its historic character,” says Skeadas, the director of Cambridge Local First. “But the reality is that a commitment doesn’t exist unless it’s regulated.” Skeadas references a handful of individual property owners who hold the same values as her organization — but given that they are so few and far between, their commitments matter little on the whole, she says.
“I would hope that [landlords] do have that kind of commitment, and I think we’re better off when they do,” she continues. “But it’s an uncommon commitment.”
Given their unique legal status and eligibility for tax exemptions, the final clubs are some of the best situated of any of the Square’s actors to uphold the commitment Skeadas outlines: The Porcellian, for example, has for decades maintained its lease with the clothing store J. August, which first opened in 1891.
But when Humphreys’s father died and the “gentlemen’s agreement” that governed Briggs & Briggs’s lease ruptured, it appears as if the A.D. Club reevaluated its obligations. Though the club may be historic in its own right, its actions marked just another move in the perpetual competition for space in which all the neighborhood’s residents must jockey.
Squeezed between the University, large real estate firms like Asana, and even the final clubs, lower-income residents and small business owners are left with little room to compete.
“I’ve tried to think,” Humpreys continues. “Could we have made it if we stayed another year?” He shifts his gaze from the carpet to the window, seems to watch as the gray lid of gravel clouds presses down further upon his quiet block. “I don’t know.”
— Andrew W.D. Aoyama is the Magazine Chair of the 147th Guard. He can be reached at andrew.aoyama@thecrimson.com. Follow him on Twitter @AndrewAoyama.
A Note on Methods:
Real estate data in this story was sourced from the Cambridge Property Database, an online collection of municipal assessment records. Calculations used “Assessed Value,” the sum of “Building Value” and “Land Value,” the same measure used to calculate property taxes.
Fifteen Minutes obtained the final clubs’ tax filings via the IRS and the information service GuideStar, which maintains a database of Forms 990 for American nonprofits.
FM scraped the data on the A.D.’s income sources over the period the club filed as a nonprofit from the National Center for Charitable Statistics’s IRS Core Files, a dataset published annually by the Urban Institute. The NCCS Core Files itemize and consolidate the data presented on Form 990 for each active and reporting nonprofit in the United States. FM verified the data recorded in the Core Files against the A.D.’s actual Form 990 for 2001, 2006, and 2007, accessible on GuideStar.
This article uses the NCCS’s measure of gross receipts, calculated as the sum of rental income, securities sales income, product sales income, investment income, public contributions like donations and grants, program service revenue, membership dues, and interest from savings. For the purpose of calculating the member and nonmember proportions of the A.D.’s gross receipts, FM considered rental income, investment income, and income from the sale of securities to be nonmember sources, while all other income sources — public contributions, program services revenue, membership dues, etc. — were counted as member sources.
FM obtained corporate filings — like the A.D.’s Articles of Organization and subsequent annual reports — from the Massachusetts Secretary of the Commonwealth’s online database for corporations and business entities. Other documents — leases, property deeds, tax liens, mortgage agreements — were obtained through the Massachusetts Registry of Deeds.