Cambridge is proposing to levy a new fee on real estate developers in Kendall Square to help pay for public transit improvements, a model that officials said could be adopted by the MBTA for the Green Line extension and other projects.
A new transportation enhancement fund could be used to pay for upgrades to the Red Line’s Kendall/MIT Station or fund enhanced bus service, said Jason Zogg, a program manager at the Cambridge Redevelopment Authority, which is expected to release a draft of its proposal this month.
The fees would be collected in the Kendall Square urban renewal zone, which is roughly bounded by Main, Binney, and Third streets and Galileo Way.
Cambridge is currently negotiating with Boston Properties, which has a request before the city to amend zoning in the district to permit an additional 1 million square feet of development.
A Boston Properties spokeswoman did not return messages seeking comment.
The proposed fee comes as the Massachusetts Bay Transportation Authority reassesses the planned 4.7 mile extension of the Green Line to Somerville and Medford.
New estimates show the project could exceed its original $2 billion price tag by up to $1 billion.
State Transportation Secretary Stephanie Pollack has suggested that real estate interests along the Green Line corridor could help pay for the extension because they stand to benefit from the new service.
“As everyone knows, the MBTA has far more needs than we are in position to be able to fill,” she said. “We always welcome overtures by both cities and folks in the private sector who are willing to make some of those investments.”
Somerville’s economic development director, Ed O’Donnell, said that city has begun talks with US2, the group in charge of the redevelopment of Union Square, about helping to finance the Green Line project, which would include a spur to a new station in that neighborhood.
“There is an openness to finding funding in a creative fashion,” O’Donnell said. “I’d only say we’re in very, very preliminary talks.”
The Union Square development team did not respond to requests for comment.
Across the city line in Cambridge is the 45-acre NorthPoint development, near where a new Lechmere Green Line T station is proposed. Cambridge community development director Iram Farooq said there were no negotiations with the developers over funding the transit project, but she is open to the idea.
“This is an important conversation to be had,” she said.
A spokesman for the project’s owners declined to comment but said they do plan to take part in meetings with the MBTA.
There is precedent for turning to real estate interests for transit funding.
New Balance Athletic Shoe Inc. contributed $20 million for a new commuter rail station to serve its headquarters in Brighton, while in Somerville, Federal Realty Investment Trust helped pay for a new Orange Line stop at its Assembly Row development. And developers in Boston sometimes help pay for improvements to stations if they’re working on an adjacent building.
But beyond such one-off contributions, there has not been a broad effort to get builders to underwrite MBTA projects and service in their neighborhoods.
Other cities have already done so, however.
San Francisco has a transit impact fee of $14 per square foot on new commercial development that raised $24 million last year; the city’s mayor has proposed expanding it to include developers of new housing projects.
Washington, D.C., raised $25 million for a new subway station with fees on nearby development.
And new streetcar lines in St. Louis and Kansas City are funded in part by a special sales tax on surrounding businesses.
Such assessments are known as “value capture” for the increases in property values that new public transit often creates for private owners, said Stephen Schlickman, executive director of the Urban Transportation Center at the University of Illinois in Chicago.
“When a transit investment is made, it typically spins off value to surrounding properties,” he said. “It’s a freebie to them. Why should it be free?”
Others caution that there’s only so much public improvement that governments can ask developers to fund. Cambridge, for example, already has a $10-per-square-foot fee on large commercial developments to fund community initiatives, including local transit works.
Alexandra Lee, executive director of the Kendall Square Association, said the city levies fees for affordable housing, asks developers to fund everything from street improvements to bike racks, and imposes other demands on them, such as strict requirements for energy efficiency.
While business groups support better transit, Lee said, Cambridge risks making Kendall Square too expensive with fees and demands on real estate owners. “There is this 20-item list of things [developers] are being asked for,” she said. “I don’t think anyone is thinking about all of that holistically.”
But Pollack, the transportation secretary, said it’s fairly standard for developers to help pay for road improvements, so why not public transit? “When it comes to roads, they see that as the cost of doing business,” Pollock said. “But with the T it’s, ‘well, it’s there and it’s already running.’ But the transit system is really no different than the highway system.”