To read a Boston Globe article from August 2000 regarding a prior amendment to the Transportation Bond Bill which benefitted the Hines South Station project, click here.


© Copyright 2004 The Boston Herald

South Station developers eye sweet deal on $10M debt
By Jack Meyers/ EXCLUSIVE

Sunday, August 8, 2004

At a time when teachers, firefighters and cops are losing their jobs, lawmakers have quietly submitted a sweetheart amendment that would reward a for-profit developer that stiffed the state on a $10 million loan.

The amendment was tucked into a transportation bill late last month that would let the MBTA officials and developers of a planned $600 million skyscraper over South Station renegotiate or even erase a $10 million loan - a debt that came due three years ago but on which not a single payment has been made.

Interest on the unpaid debt is $2 million and counting, according to the MBTA.

``They're going to keep changing the terms of the loan. It could sit out there forever and never be paid off,'' said one source familiar with the deal. ``It's basically giving away $12 million. Is this good economic development? It's another case of insider politics.''

The maneuver benefits TUDC Inc., a for-profit arm of Tufts University, and its partner, Hines Interests. The team has been trying to build over South Station since the late 1980s, but the project has been held up by permitting and financing hurdles.

``A combination of factors beyond the co-developers' control . . . have postponed development and necessitated that the loan be restructured,'' Alex Caswell of Regan Communications, spokesman for the firms, said in a statement.

``We are currently working to reach an agreement that will allow us to repay this loan in a manner that acknowledges the current status of the project and is fair to all concerned,'' Caswell said.

Gov. Mitt Romney's staff is reviewing the bond bill and decisions on vetoes will be made by midweek, a spokeswoman said.

``The T did not seek this out,'' said Joe Pesaturo, spokesman for the MBTA. T officials only learned of the obscure 27-word amendment last month when it showed up in the bond bill, he said.

However, he said the T does support the measure because it would help get the long-stalled South Station project going.

``Our goal is to ensure repayment of the full loan while advancing the project,'' Pesaturo said.

TUDC got a $3 million loan from the state in 1991, a last-minute measure attached to a transportation bond bill. Three years later, lawmakers upped the loan to $10 million. The funds came from the state but were passed through the MBTA, which now manages the account.

TUDC was supposed to begin repaying the loan by July 1, 2001, at the latest. No payments have been made.

TUDC Inc.'s main asset is its right to develop at South Station, awarded by the city. Tufts University, which raised more than $600 million in a just-completed fund-raising campaign, ``has no liability for the promissory note,'' according to a university auditor's report.

Both the original 1991 loan and the $7 million increase in 1994 were pushed by the Senate. For years, TUDC was represented by lobbyist John A. Brennan, a former senator and a protege of Senate President William Bulger. Brennan currently is a registered lobbyist for Tufts' Veterinary School but not TUDC.

This year's amendment was grafted onto the bond bill late in the legislative process by the House Ways and Means Committee, long after it left the Transportation Committee. Members of the Transportation Committee, contacted by the Herald, said they had no idea what the amendment's purpose was.

Rep. John Rogers, chairman of Ways and Means, did not return a call last week.

Some state officials raised objections to the $10 million loans in the past. In 1994, the then-inspector general, Robert Cerasoli, wrote to legislative leaders saying the loan to a for-profit corporation violated the state constitution. He also pointed out that at least $650,000 of the first $3 million had been paid to Brennan's lobbying firm.

``In my view, a private corporation should not be permitted to use state monies to lobby state officials for additional state monies,'' Cerasoli wrote in a Dec. 9, 1994, letter to then-state Sen. Matthew Amorello.

Lawmakers ignored Cerasoli and approved a $7 million hike in the loan.

© Copyright 2004 The Boston Herald

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