Union Square MLDA Timing — File 203528

Union Square Revitalization Plan Phasing of Development Provisions Contained within the Master Land Disposition Agreement (MLDA) In its responsibility to advance the goals and objectives of the locally and state approved urban renewal plan for the Union Square area, the Somerville Redevelopment Authority (SRA) has executed a master land disposition agreement (MLDA) with the designated master developer Union Square Station Associates (US2). The agreement contains certain provisions that establish the timing for required actions by the developer that are synchronized with the implementation schedule for the Union Square MBTA’s Green Line Extension (GLX) project and, more specifically, the GLX station construction in Union Square. Bound by the terms of the MLDA, US2 must adhere to certain conditions with respect to the phasing of commercial, mixed use, and residential development and the building of a neighborhood park. By satisfying the conditions of the agreement, the developer preserves its relationship with the SRA and is able to plan for a logical and timely progression of specific projects and thus have the confidence to invest the requisite amount of time, energy, and financial resources necessary to advance the elements of a complex multi-phased development project. Failure by the developer to meet these conditions can result in serious penalties that would reduce or delay the anticipated financial results from the proposed development in Union Square and may, in the most serious of circumstances, lead to the reversion of property ownership to the SRA and the forfeiture of status as the designated master developer. The following outline highlights the major provisions of the MLDA that address the phasing of the development by US2: Residential Collar: This is a development term-of-art for a provision within an agreement that prevents the developer from building more planned residential property until other development requirements are met.  Under the MLDA, the developer has the SRA’s approval to build its planned residential property on Parcel D-2. No additional residential development can be started by the developer on other parcels unless the office/lab building phase on D-2 has commenced, with the following exception: if some of the developer’s inclusionary housing requirement for the D-2 Parcel is to be located on Parcel D-7, then the residential development planned for Parcel D-7 can also be built before the office/lab phase on D-2 commences. (MLDA section II.A. pp. 4-5)

 If there are housing units being built on Parcel D-7 to satisfy any of the inclusionary housing requirements for the residential development on Parcel D-2, then no Certificate of Compliance and no release of the reverter provision (note: as described below) on the D-2 Parcel will be provided to the master developer until housing is complete on Parcel D-7. (MLDA section II.H. p. 18) Reverter Deadlines – Parcel D2: In the MLDA, the “reverter” provision gives the redevelopment authority the right – upon failure by the developer to accomplish certain specified activities - to take legal possession of a parcel of property it has sold to the master developer and to re-market and sell that property to another developer. When the SRA exercises the reverter provision, no reimbursement of the purchase needs to be made to the master developer until the property is re-sold and only if there are sufficient funds from the re-sale of the property to the new developer. The reverter provision may be exercised under the following circumstances: For Failure to Commence Construction on Parcel D-2 (MLDA section VIII.2.i.(a), p.38):  On residential phase, within 24 months of acquisition of the parcel.  On office phase, within 24 months of start of the Union Square GLX station.  On office phase, within 60 months of acquisition of the parcel, if no GLX. For Failure to Complete Construction on Parcel D-2 (MLDA section VIII.2.i.(b), p. 38):  Four (4) years after commencement of construction, regardless of whether residential or office phase. Note that US2 is not required to close on the D-2 block until they receive evidence of the City’s funding of required offsite infrastructure for the D-2 block (see attached copy of MLDA’s Exhibit M) and a copy of the executed construction contract for such portion of this required offsite infrastructure needed to occupy the D-2 block. (MLDA section II.E.1, p.11) Neighborhood Park (as defined in zoning): In the MLDA and in accordance with the community’s open space goals captured in the Union Square neighborhood plan and the proposed Union Square zoning, the master developer is required to acquire land and build a neighborhood park well in advance of the deadline for completing the redevelopment of all of the parcels. (MLDA section II.D.iii, p. 10)

 An open space parcel(s) must be acquired for a neighborhood park when US2 activates development on any combination of the development parcels which would result in 30% completion of the total project.  The parcel(s) acquired by the master developer for open space must be developed by the master developer as a neighborhood park when US2 activates development on any combination of development parcels which would result in 50% completion of total project.  With regard to a project that is being undertaken that reaches either the 30% or 50% completion thresholds and thereby triggers the deadline for either the acquisition of open space parcel(s) or the development of the neighborhood park respectively, the developer would not be eligible to receive a Certificate of Occupancy for the project until the neighborhood park parcel(s) has been acquired or developed in accordance with the applicable deadline.  Further, if the project that triggers either of the neighborhood park related obligations under the MLDA is being undertaken on a parcel that has been conveyed to the developer by the SRA, the developer would not be eligible to receive a Certificate of Compliance or a release of reverter until the relevant neighborhood park related obligation is met. (MLDA section III.D. p. 28) Outside Completion Schedule (Entire Union Square Project): Under the terms of the MLDA, the master developer and the SRA have agreed to be mutually bound by all of the provisions of the agreement pending compliance with both the required timetable for the development of Parcel D-2 and a more general performance schedule that sets the outside limits to the time available to the developer to complete projects on all of the development parcels. In that the Union Square Revitalization Plan calls for the redevelopment of numerous non-contiguous parcels which are - in large part - owned by unrelated private interests, the general performance schedule takes into consideration the complexities of the land assembly process along with other factors including the anticipated schedule for infrastructure improvements necessary to accommodate the amount of the proposed development, fluctuations in the regional and national economy, competition for commercial development in the area and the likely rate of absorption of new commercial space. (MLDA Exhibit C) The master developer’s project activity must meet the following overall benchmarks for performance in order to maintain master developer status:  50% Completion = USQ Station Opening + 10 years  75% Completion = USQ Station Opening + 15 years

 100% Completion = USQ Station Opening + 20 years If, in the unexpected circumstance, no GLX station was built the outside time limits for the developer’s completion schedule would be tied to the following specific dates:  50% Completion = December 31, 2032  75% Completion = December 31, 2037  100% Completion = December 31, 2042 In terms of the Union Square development timeline, it is important to keep in mind that this outside completion schedule is the worst case scenario not only for Somerville but for US2 as well. Both parties would like to see the Union Square redevelopment completed well ahead of this schedule and US2 has every incentive to build at a more aggressive pace.