The Massachusetts Department of Transportation (MassDOT) has unexpectedly halted its search for a developer for a prime Rose Kennedy Greenway parcel in Boston, marking the second time in a year the state has broken off a bid to build along the new downtown park system.
"Yesterday, MassDOT's Office of Real Estate and Asset Development notified project proponents that the designation process for Parcel 9 is being terminated," MassDOT spokesman said in a brief statement emailed to Banker & Tradesman. "MassDOT has consulted with the [Boston Redevelopment Authority] and (the) city closely and going forward will take a fresh look at how the redevelopment of Parcels 9 and Parcel 7 can meet the goals of the Commonwealth, the city's vision for the Market District and neighbors, while also bringing in revenue to MassDOT."
Parcel 9 in BostonMassDOT could not be reached for further comment.
The 30,000-square-foot parcel is sandwiched between the Greenway and Faneuil Hall, making it one of the most visible development parcels downtown. Four developers - the Gutierrez Co., the DeNormandie Cos., Eastat Realty Capital and the Boston Museum - bid on the parcel last April.
The Massachusetts Turnpike Authority, which controlled the parcel as a vestigial piece of the Big Dig's construction, failed to designate a developer before the agency was folded into MassDOT on Nov. 1, 2009. At the time, outgoing transportation secretary James Aloisi told Banker & Tradesman he expected MassDOT to designate a developer on Parcel 9 "promptly."
However, last month, MassDOT secretary Jeffrey Mullan threw the brakes on the designation process, saying he had concerns about "the financial viability of the proposals."
Parcel 9 is the latest in a string of stalled development projects the state has on its hands.
Last month, MassDOT announced Jones Lang LaSalle had walked away from the planned redevelopment of the USPS parcel at South Station.
Last September, the Pike rejected a leasing and redevelopment bid by the WinnCompanies for a nearby Greenway development parcel, the Parcel 7 Garage. That bid would have allowed the Pike to pocket 80 percent to 90 percent of the parcel's net income over the first ten years of the lease; over the proposed lease's first 30 years, Winn offered to pay the Pike $75 million. Boston Mayor Thomas Menino envisioned Parcel 7 and Parcel 9 serving as the lynchpins in a new year-round market district.
Eamon O'Marah, managing partner of Eastat Realty Capital, said his firm's $45 million housing proposal has had committed construction financing for months.
"We are puzzled by the decision," he said. "We would be creating 275 construction jobs. We're creating affordable rental housing. We were recommended for designation at the December 2 board meeting. It's disappointing."
