Developers pressed to fund extra T service
As debate roars over how to fund improvements to Greater Boston’s dysfunctional mass transit system, state officials are increasingly pressuring real estate developers to pitch in.
In recent months, they have reached agreements with developers of two big projects north of downtown to pay for extra service on the MBTA’s Orange Line.
The arrangements mark a new approach to subsidizing public transportation with developers’ money. Traditionally, builders have agreed to improve, or build, transit stations located near their projects, but they haven’t funded operations.
With more such deals likely on the way, transportation advocates say they could someday become standard practice — a way to meet the added demand on the system from new apartment and office buildings sprouting along T routes.
The deals are modeled on a $7.4 million agreement struck in 2015 between the MBTA and the Encore Casino to finance extra service, particularly on nights and weekends. They’re the first among more traditional developments, however — and the first to focus on rush hour service.
“We were intrigued by the idea,” said Mark Rosenshein, project manager for the redevelopment of Hood Park in Charlestown. “To the extent I’m relying on a public system, I don’t have any problem investing in that system to make sure it works.”
The developers of Hood Park — an eight-building campus of office space and housing near Sullivan Square — agreed to pay about $830,000 over 15 years for one extra Orange Line train during early afternoon rush hour. The company behind XMBLY, a 1.9 million-square-foot complex planned near Assembly station in Somerville, agreed to spend about $241,000 to subsidize evening service.
Given the MBTA’s $2 billion operating budget, the money involved is modest. But transportation experts say it’s only fair to seek assistance from real estate developers who often profit handsomely from their projects’ proximity to public transit.
Land around MBTA stations has become precious during Greater Boston’s ongoing real estate boom. Sixty-eight percent of office space under construction, and 45 percent of housing, is located within a five-minute walk of a T or commuter rail station, according to data from real estate firm Perry.
Developers routinely tout their projects’ closeness to the T in marketing materials, and rents are often higher in buildings with easy access to transit. In many cities and towns around the region, builders can get a break on costly requirements to build parking spaces if they can demonstrate that many residents and workers in their buildings will commute by train.
“Transit-oriented development not only adds people to transit but also generally benefits from the system as a whole,” said Marc Draisen, executive director at Metropolitan Area Planning Council. “It seems legitimate that they should kick in some money to help it.”
To some extent, developers have been doing that for years.
Executives with the Massachusetts Department of Transportation declined interview requests, saying they are busy with the ongoing crisis at the Registry of Motor Vehicles. But a spokesman did say the agency has long worked with developers to fund improvements at T stations.
Among those deals, office giant Boston Properties in the last few years has financed upgrades to both North and Back Bay stations in exchange for the right to build towers atop them, and it paid $3 million for transit upgrades in Kendall Square under a deal with the Cambridge Redevelopment Authority.
Most notably, Cambridge and Somerville officials in 2016 tapped neighboring property owners to help close a $75 million budget gap that threatened to halt an extension of the Green Line in those cities.
Huge projects such as Boston Landing in Brighton and Somerville’s Assembly Row have helped pay for MBTA stations, which developers of both have said were key to the success of their projects.
Until recently, however, such deals have not included funding actual train service. Tamara Small, CEO of real estate trade group NAIOP Massachusetts, said developers want to make sure their money is well spent.
“The key part of all this is that there needs to be accountability,” she said. “Not just throwing money at the T, but showing that the money is being used in a way that benefits the project and the community overall.”
Hood Park’s Rosenshein said that might mean counting trains to make sure the extra Orange Line service he’s paying for is actually being offered.
Hood Park’s deal with MassDOT calls for it to fund the cost of one extra train for a half-hour each afternoon — a time of day when added ridership from Hood Park is projected to push the Orange Line over capacity — minus the fares paid by those new riders. It’s part of a broader plan to speed up Orange Line service over the next few years — from a train every seven minutes to one every four or five.
“Our transportation consultants are going to study how many trains are coming through,” Rosenshein said. “If our investment isn’t showing any value, I make go back to [MassDOT] and say, ‘Can we have a conversation about where my money is going?’ ”
MassDOT officials wouldn’t discuss deals they might be working on, but Rosenshein said he has talked with other developers, including one with a site on the Red Line.
Eventually, Draisen said, MAPC would like to see this become standard practice, with a formula that lays out exactly how much money a developer near transit would contribute, instead of one-off deals being cobbled together. Many cities in California, he noted, levy so-called transportation impact fees across the board.
Chris Dempsey, director of Transportation for Massachusetts, said the state should look to Asian cities, such as Hong Kong, that for years have linked real estate investment with transit system expansions. But he also noted that service subsidies from developers aren’t going to fix what ails the T.
“It’s helpful,” Dempsey said. “But we shouldn’t think this is going to be the answer, or that there’s no longer a need for big public investment simply because there’s a few developers chipping in.”