Boston regulators on Thursday approved a $4.6 million tax break to spur construction of a new neighborhood near Fenway Park that would include hundreds of apartments, stores, restaurants, and offices.
The tax deal for the $550 million Fenway Center development, negotiated by Mayor Martin J. Walsh, received unanimous support from the board of the Boston Redevelopment Authority. It is intended to help developer John Rosenthal obtain private funding by improving the project’s finances during construction and the first year of operation.
“This project is going to create over $2 billion in economic development and revenue to the city and state,” Rosenthal said Thursday night. “This is a relatively small [public] investment in order to create a huge return.”
Fenway Center would be among the most transformative development projects in Boston. It calls for five new buildings on state-owned property that straddles the Massachusetts Turnpike near the ballpark.
Former Mayor Thomas M. Menino had balked at Rosenthal’s request for a tax deal. But Walsh, a former head of the Boston Building Trades, said it provides important stimulus to a project that promises to create 1,800 construction jobs and boost economic growth.
The 1.3 million-square-foot complex would contain about 550 apartments, space for stores, restaurants and offices, and up to 1,290 parking spaces.
Fenway Center is a particularly complicated project because it requires construction of a $45 million deck over the Mass. Pike to support its main parking garage as well as a 27-story tower.
Rosenthal and city officials said the tax relief is structured to help fund construction of the project’s retail spaces, not its luxury apartments. After its completion, Fenway Center is expected to generate about $5.7 million a year in tax revenue. The developer would also pay the state $226 million to lease the 4.5-acre development site over 99 years.
Currently, the property generates about $152,000 a year for city coffers.
The tax deal needs approval from state economic officials and the Boston City Council. Rosenthal must also finalize arrangements with the Massachusetts Department of Transportation to begin construction. The two sides agreed to lease terms last year; a spokesman for the department did not return a phone call Thursday seeking comment.
Even with the tax deal, there is no guarantee Fenway Center will be built. The project would be the first successful development to be constructed on so-called air rights over the turnpike since Copley Place was built in the 1980s.
In addition to their high costs, such developments must be built while preserving access to eight lanes of highway and multiple rail lines.
The last attempt to build an air-rights project over the turnpike — a towering condominium, hotel, and retail complex known as Columbus Center — was a spectacular failure.
Lenders pulled out financing as the economy tanked in 2007 and 2008.
Rosenthal has been working on Fenway Center since 2007. It has been delayed repeatedly, first by a long city permitting process and later by protracted lease negotiations with the state. After it won BRA approval in 2009, the project was tied up in a lawsuit for another three years, and Rosenthal has since struggled to lock down final permits and financing.
He has said he is negotiating financial arrangements with the pension fund investor Bentall Kennedy, which has bankrolled several large real estate projects in Boston, New York, San Francisco, and other cities.