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State toughens diversity criteria as it looks to divest prime downtown Boston site

On Kneeland Street, MassDOT is again trying again to divest a high-profile Big Dig property

MassDOT is looking to sell off property on Kneeland Street on the edge of Chinatown, including air rights and a city-owned pumping station). Left out of this deal: a steam plant and MassDOT office building (rear of photo).David L. Ryan

The Massachusetts Department of Transportation is strengthening its diversity criteria as it seeks a developer for one of the last prime empty parcels in downtown Boston.

In a first for MassDOT, the diversity of the competing development teams would represent a significant part of the score, 25 percent, when the agency evaluates bids for the 1.3 acres on Kneeland Street known as Parcel 25.

Other factors, also weighted at 25 percent, include the financial return to the state, the team’s ability to execute, and the vision for design and public realm improvements.

In a virtual meeting with developers on Wednesday, MassDOT official Mark Boyle described the site, near South Station, as a “great parcel to cultivate diversity participation.”

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If the formula sounded familiar to the developers on the call, that’s because it resembles one the Massachusetts Port Authority used with considerable success to develop surplus parcels on the South Boston Waterfront. They include one on Summer Street across from the Boston Convention & Exhibition Center that will be home to a new Omni hotel.

“We’ve all been watching to see how the Massport model has been adopted,” said Richard Taylor, director of the Center for Real Estate at Suffolk University. “It’s definitely an inflection point for MassDOT.”

Spokeswoman Kristen Pennucci said all of MassDOT’s land dispositions contain diversity inclusion language, but this is the first one to put a 25 percent factor in the scoring. She said this approach will be “considered on a project-by-project basis” at the agency.

Taylor, a prominent Black real estate developer and former Massachusetts transportation secretary, said this extra standard is critical to spur involvement of more women and people of color in development — by making it essentially impossible for a team without strong diversity to win.

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“You can have all the money in the world,” Taylor said. “You can have all the vision in the world. You can have all the experience in the world. But if you don’t have a strong diversity plan, you would not get more than 75 points. . . . And you’re not going to win with 75 points.”

MassDOT has had a tough time unloading Parcel 25, despite its prominent location near the city’s busiest train station and at the crossroads of interstates 93 and 90. A scrubby empty lot that was used during the Big Dig project three decades ago, Parcel 25 includes air rights development over the Southeast Expressway. It was part of a five-acres-plus assemblage of properties along Kneeland Street that the state previously put out to bid, that also included a steam plant and a MassDOT office building.

But the complexities of accommodating the steam plant and finding a new home for the MassDOT workers proved to be big stumbling blocks.

Last year, MassDOT decided to scale back and offer just the 1.3-acre parcel, without the adjacent properties. The pandemic delayed posting the property, which officially hit the market this month, with bids due April 15.

A city-operated water-pumping station on one corner will probably be included; Boyle said city officials are planning to divest that parcel, which would increase the size of the site slightly, to 1.4 acres.

Zoning allows for buildings of up to 300 feet high, though much lower along Kneeland Street. The site could be developed for a number of uses, such as housing, offices or labs. If housing is built, at least 20 percent of the units must be income-restricted.

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It’s possible that a developer interested in the bigger state property next door might seek to combine them. The state does not have the larger parcel on the market right now, but may try to divest it at a future time.

Taylor said Massport’s success in the Seaport shows the strong diversity requirement doesn’t hamper development. He would like to see other state agencies adopt it, as well as the private sector.

“The hope is that this becomes part of the real estate industry culture,” Taylor said, “and not just part of public lands.”


Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.