MassDevelopment has found a buyer for its ground lease at 100 Cambridge St., and the deal for the 22-story Boston tower couldn’t have come at a better time for the agency.
That’s because MassDevelopment, a quasipublic agency, is grappling with some tough budget cuts. As part of efforts to address a state budget gap of more than $300 million, Governor Deval Patrick last month recommended two cuts that needed MassDevelopment approval: slicing $13 million from the agency’s fund to help Gateway Cities and another $10 million from its brownfields fund that helps clean up polluted properties.
On Thursday, MassDevelopment's board of directors agreed to accept Patrick’s cuts. But the board members knew some relief would be coming: They also voted on how to spend $48 million that the agency would receive from a pending deal to sell the 68-year ground lease for the tower.
Mark Sternman, a spokesman for MassDevelopment, declined to disclose the total sale price or the buyer, citing the fact that the deal has not yet been completed. He said the fully occupied tower includes 565,000 square feet of office space and 35,000 square feet of retail space. MassDevelopment said in October that it had hired Colliers International to market the state-owned tower.
MassDevelopment's involvement dates to 1999, when the then-dilapidated tower was known as the Saltonstall Building. MassDevelopment redeveloped the tower and reopened it in 2004. The agency regularly received more than $20 million a year in lease revenue from the tower, reporting nearly $23 million for 2013.
Now, MassDevelopment will get a onetime injection of cash. The biggest chunk of funds from the sale — $13 million — will be diverted to what’s known as the Transformative Development Fund, established by the Legislature to help Gateway Cities.
MassDevelopment was initially awarded $15 million to make loans, grants, or other investments in projects that could have economic ripple effects in those places — struggling, midsized cities such as Lawrence, Brockton, Fall River, and New Bedford. (Lawmakers designated an additional $1 million for a specific project in Springfield.) Patrick’s budget cuts would have left just $2 million in the new fund. But Sternman said the 100 Cambridge sale will bring what MassDevelopment can allocate back up to $15 million.
Another $10 million will be allocated to equity investments that MassDevelopment will make in other parts of the state to be announced on Monday, Sternman said. The rest of the sale proceeds will be divvied up among funds for addressing blighted buildings, rental housing lending, and a mortgage guarantee program.
Sternman said none of the proceeds will go to the brownfields fund — the other victim of Patrick’s cuts at MassDevelopment — but the agency has $12 million in its brownfields remediation program, enough to last about a year.