Where's The Money

We've been hearing about I-Cubed for a couple of years, but nothing yet has been built under the process.

Nevertheless, "I-Cubed Ready to Roll" was the title of last week's panel for members of NAIOP at the Langham hotel, and three specialists who have been immersed in it from different perspectives were more than a little optimistic.

So were the potential users and beneficiaries in the audience, who NAIOP folks thought would number 75 or so but turned out to be 200.

"This is truly an innovative, first-in-the-nation program," said Jay Gonzalez, undersecretary of Administration and Finance for the state. "This is in many ways exactly the kind of thing the government is about."

OK, I-Cubed. It's anything but simple.

Credited by at least one panelist as the bright idea of Boston Mayor Tom Menino and his assessor Ron Rakow, it's about three i's: infrastructure, investment, and incentive.

Simply put, it's supposed to get some big, and maybe a few small, development projects done at a time when the private and public costs would otherwise be prohibitive.

"This is a bonding program," said Laura Canter, an executive vice president at MassDevelopment. "It will provide public infrastructure -- roads, bridges, parks, water and sewer."

Traditionally a municipality provided this base for development, through bonds or sometimes district increment financing. Or the state came up with the money, through PWED or CDAG or other grant programs. In more recent years, developers took on some of this cost -- but somebody had to pay for it.

"I-Cubed managing to hit all three of those pockets," Canter said. "It's not real estate taxes, but it may as well be."

If a project qualifies -- and there is $250 million available to start off with -- Massachusetts issues tax-exempt bonds for the amount needed. The developer uses the money to build necessary infrastructure. And the developer services the debt during construction.

When the project is complete and presumably generating jobs and taxes, the local community collects taxes, and the state services the bonds.

After auditing, if the payroll, sales, and excise taxes don't cover the debt service, the city makes up the difference (which if prearranged it can have the developer pay). I-Cubed, strongly backed by NAIOP, was passed in 2006 and amended in June of this year.

A 21-day comment period on a new set of regulations implementing it started on Sept. 24 (replacing Department of Revenue guidelines from December 2006), and the state Administration and Finance web site explaining it is now live. The actual law is available at the MassDevelopment website.

John Diemba of Bowditch & Dewey LLP, which sponsored the breakfast meeting, outlined a hypothethical I-Cubed-enabled project.

It would allow $10 million in new infrastructure, debt service for 30 years would be $690,000, the location would provide 100 new jobs at an average of $50,000 in salary a year, and it would generated $8.5 million in sales. MassDevelopment would service the bonds for the state.

Prevailing-wage agreements are required on the projects.

A five-project limit initially in effect was eliminated, so there is thought to be room from some smaller projects, with a minimum of $10 million in infrastructure cost, but none can receive more than $50 million. Also, $50 million of the $250 million that will be available is earmarked for "gateway cities," that is, distressed communities.

The $250 million is not included in the state's overall bond cap, so, "It's going to grow our resources and pay for itself," said Gonzalez.

Priority will be given to distressed communities and to projects designed to achieve a LEED Silver designation of green-ness. I-Cubed money won't be handed out in bidding process -- it's first-come, first-served.

Canter acknowledged that the legislation left the "devilish details," like how revenues are counted, to Administration and Finance.

Also to be negotiated on a case-by-case basis are the amounts that project revenues will be reduced because they are not "new."

If businesses get eliminated, for example, that has to be offset by success of the new project. Relocated businesses aren't counted as new unless there's convincing proof they otherwise would have fled the state. ("I swear under oath that next year I was taking my operation to North Carolina" -- that may not do it, the panel warned.)

"This is the tricky part," Gonzalez said.

Finally, The Greenway



The Rose Fitzgerald Kennedy Greenway officially opens on Saturday, Oct. 4, with a grand celebration and more than 50,000 expected.

The Greenway conservancy is still seeking volunteers to help make sure everything goes well, and you can sign up at the Greenway website.

If you still have questions, click here to email.

The last of the 1,000 personalized Greenway pavers were still being put in last week. Some 1,500 have been sold, but the conservancy pledged to get the first 1,000 -- ordered before the June 30 deadline -- on the Greenway by inauguration day. We haven't found our Aunt Mary's yet, but we're looking.