City garage site deal is snarled in bureaucracy

Developers have long imagined a gleaming new tower rising where a squat, city-owned parking garage has sat for decades, dwarfed by Financial District high rises. Officials have long imagined selling or leasing the Winthrop Square property because the city could reap tens of millions of dollars.

But now as Mayor Martin J. Walsh’s administration weighs eight proposals for a skyscraper on the site, there are bureaucratic headaches on the ground.

A vote that had been anticipated Wednesday in the City Council was delayed because councilors want more details. A fiscal watchdog wrote a letter warning Walsh that the process of developing the property “should be stopped and reevaluated” because recent steps “do not appear to be motivated by the best interest of the taxpayers.”

And a longtime critic of City Hall discovered that the Walsh administration overlooked an obscure law and failed to obtain City Council approval when it sought to transfer control of the garage to the Boston Redevelopment Authority. The disclosure by the critic, Shirley Kressel, forced the issue to go before the City Council, which held a hearing Monday.

Walsh’s spokeswoman, Laura Oggeri, said the administration did not know that a 33-year-old law required City Council approval.

“Once that language specific to parking garages was realized by the city, we began to move through the process of obtaining City Council approval for this project,” Oggeri said in a statement.

None of the snags seems significant enough to derail a lucrative development that could have a significant impact on Boston’s skyline. The saga of the Winthrop Square parking garage could offer a preview of the process — and complexities — of selling or leasing city-owned land to private developers.

One potential site could be the 11-story city-owned building at 26 Court St., which the School Department recently vacated. Another property could be City Hall, which Walsh targeted for demolition and development in his campaign for mayor.

For now, the focus remains addressing questions about the Winthrop Square garage.

“The city hardly if ever comes into ownership of something that is going to return this much money to the city coffers,” said fiscal watchdog Matthew A. Cahill of the Boston Finance Commission. “I want there to be a process that is thoughtful and takes time to fully recognize what the possibilities are here.”

A major sticking point has been the role of the Redevelopment Authority, a quasipublic agency with financial operations separate from the city’s general fund. Watchdogs and councilors expressed concern that the authority would keep the money if it managed the sale or lease of the Winthrop Square garage.

Councilor Salvatore LaMattina, chairman of the committee that held Monday’s hearing, said he thought the Redevelopment Authority could be in the best position to fetch the largest price for the property.

“I just don’t want the money going to the BRA,” LaMattina said in an interview. “Everybody wants the money to go to the taxpayers.”

The land, if approved for a tower, could be worth as much as $70 million, according to the director of the Redevelopment Authority, Brian P. Golden. In testimony before the City Council, Golden said he met with the Finance Commission to assuage concerns about the authority keeping profits from the sale.

“We made clear that the revenue — minus BRA expenses — was going to move to the city,” Golden said.

The redevelopment authority provided councilors a document on Wednesday outlining specifics about sale proceeds, a selection panel to choose among bidders, and other issues. LaMattina said he would not call for a vote because councilors needed time to study the details.

Kressel, the critic who forced the hearing, described the transfer of the garage to the Redevelopment Authority as unlawful.

“If I hadn’t stirred this up, this would have gone through and none of you would have known,” Kressel said, adding, “The BRA has spent all of its 57 years cutting the City Council out of [having] any voice in what it does, and what it does is increasingly everything in the city.”

There is nothing simple about the Winthrop Square garage.

The concrete edifice at 115 Federal St. held roughly 1,125 parking spots until it was condemned and closed in May 2013. The garage was owned by the City of Boston but was managed by the Redevelopment Authority.

When it operated as a garage, proceeds from parking went to the Boston Housing Authority, which used the money to help pay for security. The arrangement dated to the administration of former mayor Thomas M. Menino, who used the parking revenue to offset a federal funding cut to the Housing Authority, officials said.

To get the best deal for the garage, the Redevelopment Authority should oversee the sale and development of the property, said Samuel R. Tyler, president of the Boston Municipal Research Bureau, a fiscal watchdog agency funded by business and nonprofits.

But the city should retain ownership of the garage, Tyler said. Before moving forward, the Redevelopment Authority should clearly define what fees it will collect.

In a letter to councilors, Tyler wrote that all proceeds from a sale or lease should go to the city, and the money should be directed to capital investment or to subsidize middle- or low-income housing. The money should not be used as a one-time stopgap to cover day-to-day expenses.

“It’s a prudent fiscal rule,” Tyler said. “If you’re selling a capital asset, it then should be used for capital purposes not for operations.”