8. A communication transmitted from Richard C. Rossi, City Manager, relative to Awaiting Report Item Number 16-39, regarding the Green Line Extension (GLX) Project.
By taking a leadership role in helping to address the funding shortfall, the City of Cambridge has been instrumental in initiating a framework for municipal contributions that I believe will be critical in enabling the MBTA’s Fiscal and Management Control Board and MassDOT’s Board of Directors to support the continued development of the GLX project. As detailed in the attached letter to Secretary Pollack, I have agreed to enter into discussions with the state, pending final City Council approval, regarding a direct financial contribution to GLX project improvements located in Cambridge, in an amount up to $25 million; the precise monetary contribution would be made jointly by the City and the North Point developers, and would be subject to a number of conditions as laid out in the letter. I will present this letter during my testimony to the joint meeting of the MBTA and MassDOT Boards on May 9th, at which time we expect they will make a decision regarding the future of the project.
Throughout these discussions, I have been clear with Secretary Pollack that entering into a final agreement on this contribution will require significant discussions with the Cambridge City Council and the North Point developers, along with a Council vote to approve the appropriation of funds for the GLX. At this point in time, I have not entered into any binding agreement to make a contribution, and I look forward to working closely with you over the next several months, with the goal of developing a final agreement with the Commonwealth that the City Council will support. This communication is intended to provide you with an update on this initial framework, and there will be many opportunities for further discussion and sharing of information prior to any formal vote on whether the City Council supports a direct financial contribution to the GLX.
Given the complexity of the issues that need to be discussed, I believe that we need to initiate these more detailed discussions quickly-once we know that the MBTA and MassDOT Boards have voted to move the project forward. With that in mind, I recommend that this issue be referred to the Committee on Transportation and Public Utilities for further discussion.
Very truly yours,
Richard C. Rossi, City Manager
May 9, 2016
Secretary of Transportation and Chief Executive
Massachusetts Department of Transportation
10 Park Plaza
Boston, Massachusetts 02116
Re: Letter of Intent – Green Line Extension Financial Contribution
For many years, the City of Cambridge has been a strong supporter of the relocation of Lechmere Station and the Green Line Extension (GLX) from Cambridge to Somerville and Medford. The purpose of the GLX project is to improve regional air quality, encourage sustainable growth, promote economic development, and provide a convenient means of public transportation for residents, employees, and visitors along the GLX corridor. This project will benefit the three municipalities it touches as well as the entire Greater Boston region and the Commonwealth of Massachusetts. This Letter of Intent (LOI), which I am submitting to the Massachusetts Department of Transportation (MassDOT) Board of Directors and the Massachusetts Bay Transportation Authority (MBTA) Fiscal and Management Control Board, is intended to set forth the terms and conditions that I, as the City Manager of the City of Cambridge, intend to discuss with and recommend to the Cambridge City Council as the basis for the City of Cambridge to commit to contributing to the construction costs associated with the GLX, to the extent legally permissible, and subject to City Council approval and appropriation of funds.
While the Commonwealth’s appeal for local funding contributions at this late stage in the project represents an extraordinary request, I believe that the value of this project to the City of Cambridge, the Boston Region, and the entire state requires us to respond in a meaningful way to help move this project towards reality. I also intend to work with the North Point developers to obtain commitments from them to contribute financially to the GLX in partnership with the City.
The Green Line Extension Project
The City of Cambridge supports the GLX and I will recommend that the City Council approve the City contributing an amount that the City Council considers to be a fair and reasonable amount to assist in offsetting the cost of the project, in partnership with the Federal Government and the Commonwealth of Massachusetts, based upon the proposed total budget for the project and the proportionality of Cambridge’s monetary contributions of new revenue thereto, the City’s reasonable financial capabilities, the contributions of new revenue from the other municipalities the GLX touches, and assurance that the project will commence as scheduled and continue reasonably to completion.
GLX will comprise seven Green Line stations. The project will relocate Lechmere Station and create a new Green Line station in Union Square in Somerville. Five additional stations will also be built outside of Cambridge, between Lechmere Station and College Avenue in Medford along existing railroad rights of way.
The GLX stations will be designed in accordance with MassDOT/MBTA station requirements. MassDOT will obtain all necessary legal approvals for the GLX and its operations from any local, state, or federal agencies. The GLX will be constructed in accordance with a construction management plan approved by MassDOT, and will be operated and maintained by the MBTA. Service, at a minimum, will include stops on both inbound and outbound trains during standard MBTA service hours. MassDOT will be responsible for compliance with all state procurement requirements, public bidding laws, and any other laws applicable to MassDOT due to its governmental status. In making this financial contribution to MassDOT/MBTA’s construction of Lechmere Station and the other improvements that are part of the GLX project, the City does not commit to taking on any additional responsibilities related to the planning, design, construction, operations, or maintenance of any GLX facilities.
Value of Financial Contribution
I intend to recommend to the Cambridge City Council that the City contribute fair and reasonable funding, as set forth in this letter, to support the GLX project and to help close the currently anticipated budget gap that remains after the project is value engineered, in the event that all other efforts to procure and employ federal and state funds for the project have been exhausted and a gap remains that can only be addressed with monetary contributions from Cambridge, North Point developers in Cambridge, and other municipalities. The financial contribution will be based upon the value of the infrastructure improvements in Cambridge and the economic, environmental, and mobility benefits those improvements create, and will be subject to the requirement that other municipalities contribute their reasonably proportionate share of new revenue required for the gap funding.
I am prepared to enter into discussions with the Cambridge City Council and the North Point developers to seek their approval for the City to contribute up to $25,000,000 of new revenue towards the completion of the GLX project, in the manner described below. The exact nature, timing, and form of this contribution is still to be determined, but it will represent new revenue to the project that will directly contribute to closing the funding gap together with proportionate contributions of new revenue from other municipalities that the GLX project will touch. The contribution from Cambridge-based sources will make up not more than one third (1/3) of the total amount of new revenue that is provided from the municipalities of Cambridge, Somerville, and Medford for the gap funding.
Use of Financial Contribution
This $25,000,000 commitment of new revenue from Cambridge-based sources will be used solely for the construction of the project-related improvements within the City of Cambridge, including the new and relocated Lechmere Station that will be built as part of the GLX. MassDOT and the MBTA will work with the City of Cambridge to establish a mechanism to ensure that the funds are used in this manner, and will ensure that any expenditure of those funds will be for the GLX project only and consistent with the terms and conditions outlined in this letter.
Assuming the Cambridge City Council and the North Point developers commit to contributing to the GLX project as outlined above, the City of Cambridge will work with MassDOT, the MBTA, and other relevant state agencies to develop mechanisms for disbursing the agreed upon funds and committing those funds to the Commonwealth for the GLX project. These mechanisms could include direct cash contributions, state borrowing backed by guaranteed payments from the City of Cambridge (through the Cherry Sheet or other appropriate mechanism), or other similar mechanisms for payments from the City of Cambridge or the North Point developers. Over the course of those discussions, I expect to reach agreement with MassDOT and/or the MBTA on the amount to be paid, the period and frequency of payment, the mechanism of payment, and any regulatory or statutory changes that may be necessary to accomplish the foregoing. The City of Cambridge expects the Commonwealth to stipulate that any funding provided by the City will not be transferable to any state expenditure other than those directly related to those portions of the GLX project that are constructed within the City of Cambridge and that the City of Cambridge’s share of new revenue provided for the gap funding is not more than one third (1/3) of the total amount of new revenue provided by all municipalities for the gap funding. To the extent that any regulatory changes or special legislation is required at the state level to enable a specific payment mechanism, I expect MassDOT, the MBTA, and other state agencies to pursue said regulatory changes or special legislation in an expedited manner.
After a preliminary agreement between the City of Cambridge and MassDOT is reached regarding the elements describe above, and after the final adoption of any necessary regulatory or statutory actions, the City will have an additional period to obtain the legally mandated and/or otherwise required local public approval, as well as completing negotiations with the North Point developers resulting in their approval of funds to be contributed to the GLX project, prior to the execution of any final agreement. Should the City of Cambridge not approve or obtain those approvals, the City will not be held responsible for any financial contributions or other commitments.
Priority in Use of Funds
I would like to be explicit that my objective in providing this letter is to indicate my commitment for Cambridge and the North Point developers to take the above steps only in the event that all other federal and state funding sources have been explored and that but for monetary contributions of new revenue from the City of Cambridge, the North Point developers and the other municipalities, there is a gap in the federal and state funding for the project that cannot be filled by any other means. In the event that the Cambridge City Council and the North Point developers approve this funding and the project costs turn out to be less than anticipated at this juncture, I also expect the City of Cambridge to be relieved of a portion of that funding commitment in a fair and proportional manner. To ensure this outcome, the funding provided from Cambridge-based sources will only be accessed once MassDOT and the MBTA have provided appropriate assurances that Cambridge’s contribution of new revenue to the gap funding is partially or wholly necessary proportionately with other municipal funding sources of new revenue in order to construct the project and that the project-related improvements in Cambridge have been or will be fully completed in a manner that enables service to the relocated Lechmere station to commence operations.
Future State Policy
To my knowledge, never before has a municipality or group of municipalities in Massachusetts been asked to assume a portion of the cost of a large infrastructure project. Traditionally the state and federal governments have worked together to fund these projects, and to address cost overruns, with an understanding that municipalities in Massachusetts have a limited ability under Massachusetts law to raise new revenue or to dedicate local funding to costs outside of routine municipal services such as education, public safety, public health, and local infrastructure. Given the Commonwealth’s request for municipal funding contributions for the GLX, it will be an important factor in Cambridge’s decision as to whether to contribute municipal funding to this project that there be appropriate assurances that when future infrastructure projects face similar funding circumstances, the local municipalities will be treated in a similar manner with respect to expected financial contributions.
I commit to work with MassDOT and the MBTA toward entering into a final agreement by September 30, 2016. In advance of a final and binding agreement to contribute funds to the GLX, I require assurances that the Commonwealth of Massachusetts and the MBTA have the legal authority to accept such funds and expend them according to the requirements and expectations set forth in this letter and any subsequent agreements between the parties referred to herein. To the extent that any special legislation or regulatory action is required at the state level to enable or ensure this legal authority, I expect MassDOT, the MBTA, and other state agencies to pursue said special legislation or regulatory action in an expedited manner.
I look forward to continuing to work together with you, the MassDOT Board of Directors, and the MBTA Fiscal and Management Control Board to advance this important project.
Very truly yours,
Richard C. Rossi, City Manager
Joint Statement of Somerville Mayor Joseph A. Curtatone and Cambridge City Manager Richard C. Rossi Regarding the Green Line Extension
May 5, 2016
Today the Cities of Somerville and Cambridge Massachusetts are pleased to make this important announcement of our continued support for and commitment of new funds to bridge the funding gap that will allow the construction of the Green Line Extension Project (GLX) to move forward.
It is our understanding that MassDOT has completed its review of the GLX and developed a new cost estimate, and that on Monday, May 9, MassDOT will transmit information for review and evaluation by the MBTA Fiscal and Management Control Board (FMCB) and the Massachusetts Department of Transportation Board of Directors that includes a revised budget and plans and a statement of need for municipal governments hosting the GLX to contribute funding. Based on that understanding, we are prepared to make a recommendation that our municipalities assist the state in the funding solution for this project.
We would like to thank the Commonwealth of Massachusetts and the interim design team for their swift but careful scrutiny of the project plans and budget, their commitment to the inclusion of public and municipal feedback, and their diligence in developing a new strategy for moving forward. Should the FMCB approve their expected recommendation to construct the GLX, residents of the Commonwealth will reap the benefits of the team’s critical effort for decades to come.
It is our understanding, however, that without firm financial commitments from our municipalities that the GLX could be canceled and the Commonwealth would forfeit not only its $996 million federal New Starts grant award, but an estimated $700 million in “sunk costs” of the state’s $996 million share of the project. Additionally, the fulfillment of the public needs that this project was designed to meet would remain unrealized.
The purpose of the GLX is to improve regional air quality as required by legally binding resolutions, reduce roadway congestion, encourage sustainable economic growth, and provide a convenient means of public transportation for Massachusetts residents, workers and visitors. To ensure that these needs and goals do not go unmet, the cities of Cambridge and Somerville intend to seek to expand their financial partnership with the Commonwealth to construct elements of the GLX program, subject to and contingent upon approval by the Cambridge City Council and the Somerville Board of Aldermen.
It should be noted that both the cities of Cambridge and Somerville have previously invested significant funds and resources in sunken costs in support of the GLX project, including the City of Somerville’s investment of more than $8 million for land acquisition and other infrastructure, that have relieved the Commonwealth of several specific required project costs. Similarly, the developers of the North Point area are investing tens of millions of dollars in improvements that support and enable the GLX to occur. Expanding this financial partnership is an extreme and unprecedented arrangement for a state infrastructure project. Despite the fact that our cities bear no responsibility for the cost overruns that brought the GLX to this moment of crisis, we will seek to support the Commonwealth by expanding our cost-sharing role. The Green Line is that important to our communities, our region, and our state.
It is our understanding that the new cost estimate for the GLX will retain core program elements including seven light rail transit stations including a spur to Union Square, a Vehicle Maintenance Facility, a Community Path, and related utility upgrades. With that clear understanding, it is our intention as Mayor of the City of Somerville and City Manager of Cambridge to recommend to the Somerville Board of Aldermen and the Cambridge City Council that our cities commit to underwriting project costs for specific, tangible elements that would deliver meaningful public safety and quality-of-life benefits for our residents.
After discussions with the state, the needed value of new financial participation in the GLX for the City of Somerville is projected to be $50 million and the value of the City of Cambridge’s contribution is projected at $25 million, including financial contributions from the North Point developers, to close the funding gap. Again, any contribution will be subject to Board and City Council approvals.
Furthermore, it is our intention to work, alongside MAPC, with Governor Baker’s administration and the cities’ state and federal delegations to seek legislative action on new and refined “value capture” tools capable of supporting new infrastructure investments around Massachusetts. In addition, we request that the Commonwealth establish a baseline tracking framework for future Infrastructure Investment Incentive (I-Cubed) state tax revenue accruals generated by transit-oriented development around the GLX, so as to not preclude a formal application to use eligible I-Cubed revenues to offset Cambridge’s and Somerville’s proposed municipal contribution, if they choose that option.
It is clear that the Commonwealth is shifting to a new paradigm for major transportation infrastructure investments. Across the nation, many states have established predictable and equitable frameworks for local value capture financing in state transportation projects. As we work toward that goal, Somerville and Cambridge will stand with the Commonwealth to advance the state of the art. We do so with the expectation that this is truly a new precedent for statewide policy, and that our communities will not be held to higher standards than other Massachusetts municipalities seeking state and federal financing for roadway, transit or other infrastructure projects.
Additional Comment from Massachusetts Area Planning Council:
“I want to congratulate the Cities of Cambridge and Somerville for making this unprecedented municipal commitment to help fund a critical state transportation project,” said Metropolitan Area Planning Council Executive Director Marc Draisen. “The Green Line Extension will have a significant, positive impact on our region in terms of jobs created and retained, new housing units created, and increased transit access for tens of thousands of residents. Cambridge and Somerville have shown a willingness to help invest in a project that will benefit themselves and their neighboring municipalities. We applaud them and MassDOT for working together to create this opportunity to advance this project.”