Kendall apartment tower developer offers century of access to garden, more for $1M (updated)
Kendall Square’s rooftop garden may be smaller, but at least your great-grandchildren will be able to appreciate what’s left of it – and all because a company worth nearly $2 billion in revenue last year wants $1 million in help from the Cambridge Redevelopment Authority.
The authority’s five-member board confirmed an agreement Wednesday that stretches out payments from developer Boston Properties in answer to the company’s request for $1 million to help it build the 200,000-square-foot residential tower it promised on Ames Street, attached to the same garage bearing the rooftop garden.
In return, the “open space covenants” for the rooftop garden would be extended 99 years, said the board’s development officer, Tom Evans. Instead of expiring in 2050, the use of the garden as open space in Kendall Square would go until 2112 or 2113, depending whether the deal becomes official late this year or early next year, and Boston Properties has to “pursue a series of public programs there” as well.
“It’s not quite in perpetuity,” Evans said Thursday.
It was the City Council that voted in March 2012 to let Boston Properties take away 42 percent of the garden for a structure connecting Google offices in buildings on opposite sides of its central garage. The open space covenant was scheduled to end in 2022, but to sway councillors Boston Properties extended it by 28 years, to 2050. They also promised – again – to put up an apartment tower.
This is the developer’s third time around for a residential project in the square, with a previous attempt being scuttled at the last minute when the economy tanked, Boston Properties’ senior vice president for development, Michael Cantalupa, has said. Getting $1 million from the authority is a way to avoid that happening again.
“When Boston Properties looked more closely” at building costs, say the meeting minutes accepted Wednesday, “infrastructure costs had risen to a point beyond what a multifamily urban high-rise can afford to carry … Boston Properties is asking CRA to contribute $1 million to close the financial gap to make this project feasible to develop as planned.”
The project would start construction as early as fall 2014, taking from 22 to 24 months to finish before leasing units in the summer of 2016, according to company estimates. The building will hold from 240 to 250 units, with 30 to 32 of them reserved for lower-income tenants, and there will be another 9,000 square feet at street level for commercial space – none of which, apparently, will make enough money fast enough to satisfy Boston Properties’ budget needs.
Expenses adding up
Boston Properties is one of the largest owners, managers and developers of high-end residential, hotel and office properties in the country, mainly in Boston, New York, Princeton, N.J., San Francisco and Washington, D.C., and has seen revenue and profits rise every year for the past five years. Revenues rose 7 percent last year from 2011 and profit rose 5 percent. Performance last quarter was down, but the company still entered the current quarter with $1.6 billion in cash. The $1 million from the authority is about 0.06 percent of the company’s current cash, or half of one percent of its total revenue last year.
Still, the company said it was facing “extraordinary” costs on Ames Street, adding up to an estimated $85 per square foot when including such things as the $2 million it has to pay for an 8,660-square-foot portion of city sidewalk to make its tower design possible. (Other expenses identified by the company: utility relocation and streetscaping, the cost of reconfiguring the garage and relocating a loading dock, and a $4.7 million payment to the CRA for a 1979 development agreement.) The company also committed last year to spending about $2.3 million on two street-level open space areas, also in exchange for taking away much of the rooftop garden.
“Boston Properties estimates that the difference between the amount of money it can spend to make the project work and the amount it believes it now must spend as a result of site assembly costs is $1 million, and is seeking CRA assistance to close that gap,” Evans said.
“First large-project review”
A letter of intent signed by Cantalupa also gives the authority a seven- to 10-year payback of development fees, giving the quasi-governmental authority the benefit of a steady flow of revenue over time, and, in addition to review and approval of the Ames Street tower, “Boston Properties shall also permit the authority meaningful input on [its] design and construction.”
“We haven’t fully worked this out yet, but we’re looking at parallel review between the CRA and Planning Board,” Evans said.
Last year members of the authority board gave design suggestions for the Google connector structures to Boston Properties, but company officials shrugged them off. This agreement could change that balance of power, with chairwoman Kathleen Born noting that the company’s request for help “offers the potential to make CRA more of a stakeholder,” according to board minutes from October.
“This is the first large-project review by the board from soup to nuts,” Evans said. “We have heard consistently from the public they want this to be a signature piece of design work, [and board members] wanted to assure the public that we’ll be reviewing this very carefully, because it’s a big project. They have a real interest in the design of this building.”
In the words of the minutes:
On a roll call vote, the CRA board voted unanimously to direct working board committee, staff and legal counsel to meet with BP to negotiate an agreement that includes BP’s deferral of payments to accommodate Ames Street Housing … and verification necessary to create housing site.
Of course, Boston Properties extending an open space covenant to 2113 may be less impressive than it sounds. The same garden was under an open space covenant until 2022 when the council voted to take 42 percent of it away from the public.
This post was updated Nov. 22, 2013, to clarify the relief it offered Boston Properties and remove the City Council’s role in that offer.