Will We See More Development Over the Pike?

A recent editorial in The Boston Globe spoke about the successful conclusion of the permitting for Fenway Center, the $450 million mixed-use project over the Mass. Turnpike.   The gist of the piece was that developing air rights is no easy matter.  Besides the very high cost of developing over an eight lane highway, there are the inevitable lawsuits that can stretch an approval process out by 2-3 years.  The Fenway Center case was finally resolved in appeals court.

Columbus Center, another very worthwhile project involving air rights, was not so lucky.  While the financial crisis played a role in its demise, one of the real reasons that it did not move forward was due to the lengthy delays caused by well over 100 public meetings.  No one can deny the appropriateness of having community involvement, but there must be some limit on that process.  Are the city and neighborhood really better off with the scar of an urban highway canyon dividing the Back Bay and the South End than it would have been with a mixed-use project including affordable housing?

The Globe said that “These projects shouldn’t be the last along the Pike.”  However, predictability and transparency are necessary before any developer will be willing to risk capital on a speculative urban development involving air rights.  A few suggestions:

  1. Establish some clear guidelines for developers interested in responding to RFPs for future air rights parcels;
  2. Set a limit on the number of public hearings with the appropriate neighborhood groups within a limited time period;
  3. Allow the developer to opt in to the Permitting Session of the Land Court for any appeals;
  4. Require appellants to post a bond if they choose to appeal the decision of the court;
  5. Allow developers to count some portion of the cost of the infrastructure associated with the air rights project as part of their community betterment payments.

Making Air Rights Development Work

I applaud Matt Kiefer at Goulston &Storrs for his recent article in Commonwealth Magazine regarding the Columbus Center development fiasco and the potential role of government to prevent a similar outcome on future economic development projects.

What first struck me about the difficulty in getting this project through the permitting process in a reasonable amount of time was the lack of public support from the state, city, and neighborhoods.

One would expect loud cheering for a developer who presented a plan to knit back neighborhoods separated for decades and heal a visible, ugly, noisy, urban scar produced by an open sunken turnpike. However, after over 130 public meetings and several years, this project was sufficiently delayed until the development was no longer financially viable. Even with changing design requirements, increasing construction costs, and enormous engineering challenges, the developers still tried to make this project work, requesting state assistance with infrastructure and the affordable housing component. Finally, however, it was a national recession that sealed Columbus Center’s fate.

More recently, other proposed air rights projects have also fallen by the wayside. Four non-profit proposals to build over the Greenway land or exit ramps have failed to move forward. A prime culprit was underestimating the costs to construct over the expressway. And yet, the then-Mass Turnpike Authority continued to consider those and other similar sites as valuable assets worth millions of “up-front” dollars, rather than the liabilities they were to any developer considering construction.

It is challenging enough to commit to build a sizable development in Boston given the high construction costs associated with dense, urban projects.  Add to that the obligation to fund city infrastructure, make linkage payments for affordable housing, and the uncertainty of where the market will be after a lengthy permitting process, and you have a serious set of impediments to growth.

I agree with Matt’s recommendations:

•             MassDOT should look towards ground rents and/or sharing in the profits realized from a sale or refinancing, rather than pressing for larger acquisition costs.  Massport has successfully helped produce many major development projects in the Seaport area using this approach.

•             Building over air-rights is very complicated and costly. Government incentives and a predictable permitting process will be necessary to make the sites over the Turnpike and the Greenway ramps feasible.  The result will be increased tax revenues and a better city.

•             MassDOT should consider outsourcing the oversight for the development of air rights projects to MassDevelopment. It has a proven track record helping to guide development projects throughout the state.

Now is the time to start preparing for an upswing in development interest. If we do not fix these problems now, it could be many years before this highway blight is replaced with productive, well designed, urban mixed use projects.

Air Rights Over the Mass Turnpike

Could this be the right time to finally heal the remaining gashes to the Boston cityscape caused 45 years ago by the construction of the Mass Turnpike?  I am optimistic that the answer is yes. The Boston Redevelopment Authority has reopened the process to review certain air rights project proposals. Although the focus is on the sites at the corner of Boylston Street and Massachusetts Avenue, there are also two other major development sites that could and should move forward: the Kenmore Square project proposed by John Rosenthal and the former Columbus Center project.

There are no redeeming features to having a highway canyon in the middle of one of the most historic and architecturally vibrant cities in the country.  The neighborhoods that were split by this chasm deserve better and the city certainly could use some new, exciting, revenue enhancing developments.

There is no question that residents should have input into the process.  However, the city needs to be a strong advocate for these complex and costly developments to become realities.  Set guidelines that offer sufficient density to allow these projects to work financially and give investors sufficient confidence that they will get through the approval process in a timely fashion.

It’s time to heal the traffic wound and create a thriving community.