Columbus Center is one of two prominent Boston projects that could receive financial help as a result of a recent federal decision to expand the city’s Empowerment Zone.
Financial help could be on the way for a pair of air-rights projects in Boston.
The U.S. Department of Housing and Urban Development recently approved the expansion of Boston’s Empowerment Zone (EZ) to include all of the Turnpike Air Rights developable parcels – the right to build above the Massachusetts Turnpike.
The designation provides developers and investors access to a series of tax credits and low-interest loans to spur construction in those areas. A combination of New Market Tax Credits, a federal program that allows investors to receive a tax credit worth 39 percent of the initial investment over seven years, and more than $100 million in tax-exempt bonds, will now be available for two high-profile projects.
Thomas Miller, the Boston Redevelopment Authority’s director of economic development, said the designation could assist the proposed Columbus Center in the city’s South End and One Kenmore near Fenway Park, the air-rights projects that are planned “in the air” on decks above the turnpike.
Construction was expected to begin in 2005 on Columbus Center, the $650 million air-rights project that would be built on a 7-acre deck over the highway and railroad tracks near the Back Bay MBTA station. When completed, it would connect the Back Bay, South End and Bay Village neighborhoods, which are separated by the turnpike’s giant chasm.
But problems over funding have plagued the massive development as construction costs have soared since it received approval from the BRA in 2003. The 1.3 million-square-foot proposal includes a 35-story glass tower and four 11-story buildings that will house 451 condominiums, a 180-room hotel, 917 parking spaces and nearly an acre of open space. Other amenities include a spa, restaurants, grocery store and daycare center.
Project proponents say the plan will create a new urban village complete with housing, parks and an array of retailers that will replace one of the city’s worst eyesores. But the question of whether to provide public funding for Columbus Center has been a hot-button issue.
While the BRA’s Miller said the EZ designation “was not being done for Columbus Center,” HUD spokesman Brian Sullivan said the agency was told by city officials that the new zone designation would allow construction of Columbus Center to begin immediately.
“This puts additional financial tools on the table,” said Sullivan.
Alan Eisner, a spokesman for WinnDevelopment, the Columbus Center developer, said the Boston-based company is pleased by the EZ designation.
“From our point of view, including the air-rights parcels is good news,” he said. “It makes us eligible for tax credits, but it does not guarantee we will get them. But this is a key ingredient to get the deal done. We believe the project will go forward.”
WinnDevelopment is negotiating the final cost of the project with construction companies, Eisner said. Once they have the final numbers, the developer will meet with investors to determine if there is a short fall and how it will be met.
‘This Will Help Us’
About 2 miles away is One Kenmore. Plans are under way for four buildings, bounded by Brookline Avenue and Maitland and Beacon streets, with 799,320 square feet of housing and 56,700 square feet of retail. The project would be built on 75,000 square feet of land, including the vast surface parking lot at Yawkey Station and 85,000 square feet of air rights. A steel deck would cover the turnpike where a portion of the development would sit, similar to Copley Place and the Prudential Center.
The project envisions 688 units of housing, most in a pair of high-rises totaling 17 and 20 stories with the rest in two 7-story buildings lining Beacon and Maitland streets. A parking garage for 496 vehicles would be wrapped by housing so that it is not seen from the street.
John Rosenthal, president of Meredith Management Corp., developer of One Kenmore, said the designation of the Empowerment Zone could make funding the $400 million project that much easier.
“I’m sure this will help us from a financing standpoint,” he said. “We are still at least two years away from the start of construction, but if the state has not reached its bonding cap we will explore all the possibilities.”
Boston’s EZ includes 6.8 square miles already includes some of the city’s most diverse neighborhoods. Its nearly 60,000 residents or 10 percent of the city’s population, live in Chinatown, Dorchester, Jamaica Plain, Mission Hill, Roxbury, the Seaport District, South Boston and the South End.
The latest approval also allows the city to add portions of already-developed air rights directly above the Turnpike. This area includes portions of the Hynes Convention Center, Prudential Center, Copley Mall and the John Hancock Center parking garage.
Boston Connects Inc. (BCI) administers the city’s EZ to greater economic opportunity through job creation and skills training. The approval could create employment opportunities for residents of the Empowerment Zone and allow for new businesses located within the new zone to take advantage of tax credits. Projects built using these air rights will now be directly linked to job opportunities for neighborhood residents.
One of the goals of Empowerment Zones is to increase the number of job opportunities for EZ residents. To implement this goal, the federal government has made both wage and other business tax credits available to businesses located within the EZ. These businesses can take advantage of one of the EZ tax credits and claim up to $3,000 annually for each EZ resident they hire. Additionally, the City can issue bonds to make low interest loans to businesses located in the EZ for financing properties within the zone.
Since its inception, BCI has invested more than $108 million in programs, services and bond financing in Boston’s EZ.
