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Developer default stalls $200m Greenway project

State now seeks new firm to build

By Casey Ross
Globe Staff / June 4, 2010

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Another major development planned for downtown Boston is in trouble, as Massachusetts officials try to remove the designated developer of a stalled $200 million office and retail complex on state land at the edge of the Rose Fitzgerald Kennedy Greenway.

Last month, the Massachusetts Transportation Department issued a default notice to the development team of Hines Raymond LP, which failed to start construction of Greenway Center after winning approval to build a 360,000-square-foot development two years ago. State officials had grown increasingly impatient with the developer for repeatedly delaying the project because of financial difficulties.

The default notice states that Hines Raymond is violating its lease with the state by failing to pay $450,000 in rent as well as not proceeding with construction.

The notice triggers a legal process to remove the developer and find a new company to build on the property, at the northern tip of the Greenway in the historic Bulfinch Triangle.

The Greenway Center was to be the centerpiece of a revitalized neighborhood outside TD Garden, where the surrounding streets remain pockmarked with empty storefronts, despite new apartments and other projects.

Hines Raymond proposed to build a 10-story glass and brick building, with 300,000 square feet of offices and 60,000 square feet of retail space. Most of the retail would have been filled by a supermarket for the North End and West End neighborhoods, where residents had long complained of a lack of affordable food shopping within walking distance.

Government officials familiar with the situation said the state wants to replace Hines Raymond with Trinity Financial Inc., which built the Avenir apartments there last year, and finished second in the initial bidding for the Greenway Center site, in which it proposed housing and a supermarket.

The Massachusetts Bay Transportation Authority, which owns one-third of the property, indicated in legal documents that Trinity would automatically get building rights if Hines Raymond were to fail.

The Massachusetts Transportation Department, which owns the remaining property, still must vote to transfer the designation to Trinity. The agency’s board may vote on the switch Aug. 11, said the officials, who requested anonymity because they were not authorized to speak publicly.

A spokesman for the agency, Colin Durrant, said in a statement: “MassDOT is taking steps to expedite development on the site to ensure that it occurs in the near term. There are ongoing legal negotiations continuing, so we have no further details at this time.’’

A representative of Hines Interest LP of Houston, the lead partner on Greenway Center, said it is still trying to work with the state to advance the development.

“We have made a proposal to MassDOT and the MBTA to move the project forward, and we remain hopeful that we can achieve an outcome favorable to all parties involved,’’ David Perry, a Hines vice president, said in a statement.

Ted Raymond, chief executive of Raymond Property Co., of Boston, now a minority investor in the project, declined to discuss the default notice, but said he hopes to see the property developed, regardless of whether he is involved.

“This is a chance for everybody to put their heads together to really think of ways to get something done,’’ Raymond said.

The default notice indicates Massachusetts officials are intent on removing Hines Raymond.

Trinity Financial declined to comment. In 2008, it proposed retail stores at ground level, with a supermarket on the second floor and several dozen housing units above.

The Greenway Center site has remained vacant for two years, and Hines Raymond recently sought an eight-year extension that would not have required them to build anything on the property, one of the government officials said.

Hines and Raymond have each struggled with other projects in Boston during the recent economic turmoil.

Earlier this year, for example, Raymond was removed as lead developer of a massive two-skyscraper project by the owner of the nearby Government Center Garage.

And Hines has been unable to start construction of a 2.1 million-square foot office, residential, and hotel project on state air rights above South Station.

The state transportation department has faced setbacks on other properties.

This spring, it issued a default notice to the developers of Columbus Center, an $800 million complex over the Massachusetts Turnpike that failed to move forward, and it has had to restart searches for development of two other parcels near the Greenway, in the North End.

State Representative Aaron Michlewitz, whose district includes the Greenway Center site, said yesterday that he was “extremely disappointed’’ to learn of the default notice and would continue to push for a supermarket at the property.

“I would like to have the community take another look at Trinity’s proposal, but if they are building a supermarket, that is a large part of what the community was expecting as part of this development,’’ he said.

Casey Ross can be reached at cross@globe.com.