MassDevelopment came up with its own funding for two economic development programs on Thursday, allowing the authority to relinquish $23 million in state money the Patrick administration says it needs to help close a $329 million hole in this year’s budget.
The Patrick administration proposed a series of spending cuts last month aimed at balancing the budget, including a $200 million reduction in executive branch spending, a $25 million cut in municipal aid, and the elimination of $25 million in funding contained in a recently passed economic development law. Legislative leaders indicated they favor different cuts, but so far haven’t taken any action.
The MassDevelopment board voted on Thursday to relinquish the $23 million the agency was promised in the economic development law, in part because the authority now finds itself flush with cash. The authority’s board voted in executive session to sell the ground lease for 100 Cambridge Street, a transaction that is expected to net the agency $48 million, a large infusion of cash for an agency that reported $79.8 million in revenue for the year ending June 30, 2014.
The Saltonstall State Office Building at 100 Cambridge Street in Boston was closed in 1999 due to asbestos concerns and MassDevelopment, the state’s finance and economic development agency, was brought in to redevelop the property. The building reopened in 2004 and has had a 95 percent occupancy rate since 2007. The buyer of the 100 Cambridge Street lease was not disclosed at the MassDevelopment board meeting. Agency officials said the state will also receive proceeds from the ground lease sale, but the amount was not disclosed.
MassDevelopment also is relinquishing to the state about $10 million allocated in the economic development law for brownfields redevelopment, but agency officials say that program should go on without interruption in 2015 because the authority has $12 million in cash on hand for that program.
Of the $48 million MassDevelopment expects to receive from the sale of the 100 Cambridge Street ground lease, the agency plans to use $13 million to replace funds being relinquished to help balance the state’s budget. The rest will be allocated for other programs at the authority.
The $13 million is going into a new initiative aimed at using economic development tools to transform sections of the state’s 26 Gateway Cities. All 26 Gateway Cities submitted applications to participate in the so-called transformative development program, but only 10 were selected. The 10 were Brockton, Haverhill, Holyoke, Lynn, New Bedford, Peabody, Pittsfield, Revere, Springfield, and Worcester. Malden and Everett may receive some limited help under the program.
Gateway Cities not selected for the program include Fall River, Fitchburg, Lawrence, Quincy, Salem, and Chelsea. Chelsea’s absence is interesting because the city manager of Chelsea is Jay Ash, who has been picked by Gov.-elect Charlie Baker to be his secretary of housing and economic development, a position that automatically will make him chairman of the MassDevelopment board when Baker takes office next month. Ash was on vacation Thursday and could not be reached for comment.
