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Deal set for a tower on gaping Filene’s site

BOSTON -- Developer Millennium Partners will take control of the long-idle Filene’s property in Downtown Crossing and build a tower on the site with retail stores, office space, and residences, city officials briefed on the transaction said last night.

The firm will become an investor in the massive project and team up with its existing owner, Vornado Realty Trust of New York. Vornado has been a constant irritant to Mayor Thomas Menino since it stopped construction on the site 3 1/2 years ago, leaving a giant crater in the heart of the city’s central shopping district.

The breakthrough deal would end one of the biggest real estate debacles in city history, and trigger a substantial makeover of that section of downtown Boston. The terms were not disclosed.


City officials said several retail stores and restaurants will be built at the base of the building, with offices and residences above. The broad outlines suggest a project of similar scale to the original 39-story complex Vornado tried to build, although officials said it will probably be slimmer and taller.

It comes after Menino and other city officials recently began pressuring Vornado to get moving on the project by threatening to interfere with the company’s other major investment in Boston: Construction of a $1 billion casino at the Suffolk Downs racetrack.

In Boston, Millennium Partners has developed the Ritz Carlton Hotel and Towers nearby, and it is building Hayward Place residences across from the Ritz. Executives with Millennium Partners could not be reached for comment. Vornado officials also could not be reached for comment.

City officials emphasized that Millennium will lead the project, with Vornado taking a more passive, minority role. Millennium is buying out the other investors in the project, including JPMorgan Chase & Co., according to a person involved in the project who declined to speak about it publicly.


With Millennium in charge, city officials said they expect a revised development plan for the property will be submitted for approval within 60 days, and that they hope construction will resume within a year.

A news conference to announce the deal is planned for this morning at Boston City Hall.

John B. Hynes III, a Boston developer who represented minority owners, said he is pleased a deal to move it forward has finally been reached. He had previously helped plan the $700 million redevelopment, which included a similar mix of stores, offices, residences and a hotel.

“Anything that gets the project going is terrific for the city,’’ Hynes said. “I’m disappointed I’m not going to be part of it, but I’m thrilled it’s actually happening.’’

The new building by Millennium will be designed by architect Gary Handel, who also drafted plans for the Hayward Place building. His firm, Handel Architects LLP of New York, has designed skyscrapers around the globe, including the Aire residential building, a striking 42-story on Manhattan’s Upper West Side, the Four Seasons Hotel in Miami, and The Trump Soho Hotel in New York.

City officials familiar with the new deal said the final details of the project remain to be worked out, but that it will include a large, mixed-use tower with a variety of retail stores and restaurants at the street level, a small amount of office space above, and residences on the upper floors. The officials, who asked for anonymity because they were not authorized to speak about the deal publicly, said a citizen advisory group will be appointed shortly to help review the revised plans.


The 2008 work stoppage on the Filene’s site left a giant hole in Downtown Crossing, a commercial district that Menino has been trying to revive with fresh development and an array of cosmetic improvements. Vornado stopped worked in the summer of 2008, when its development team could not get a loan to finish the construction.

Since then, the property has served as a daily reminder of the economic downturn, with the hollowed-out skeleton of the old Filene’s building looming over surrounding properties. Vornado has spent more than a year trying to sell some or all of the site, but it rejected multiple offers, according to people involved in the process.

The project’s troubles also triggered an angry standoff between Menino and Vornado’s chairman, Steven Roth, who at one point in a public talk suggested developers can extract government financial concessions by allowing urban properties to sit idle and become blighted. An angry Menino responded by accusing Vornado of using Filene’s as a “bargaining chip to improve its bottom line’’ and initiated a process that led to the revocation of the company’s building permit.

Last night, however, officials in his administration celebrated the new deal, which they said will finally break the logjam over the redevelopment and dramatically speed efforts to revitalize Downtown Crossing.

“The downtown is going to be transformed as this and other buildings open in the area,’’ said one city official. “We’re going to have people, living, working and playing in this area. It’s already improving, and this project will put it in the stratosphere.’’


Casey Ross can be reached at cross@globe.com