Open Space Finance – The Post Office Square Model

En route to Burlington, Vermont this week, I attempted to book my flight via Boston’s Logan Airport in order to have the opportunity to tour
and photograph Norman Leventhal
Park in the financial
district. What’s of particular
interest? Below the park deck are seven
stories of underground parking in the Garage
at Post Office Square
; the symbiosis between the park amenity and the
parking facility is explicit in the Garage’s marketing: “Park above, park below.”

Real estate developers including Leventhal renovated
adjacent buildings in the 1980s and 1990s. Starting in 1983, Leventhal, with the support of Mayor Kevin White and a
committed group of supporters, engaged in a legal fight to wrest the property
from the owners of an existing concrete ramp which many believed had devolved
into blight. In 1990, legal victory in
hand, Leventhal and company razed the structure and built a carefully designed
subterranean version to provide 500,000 square feet of space to accommodate
1,500 cars. In 1992 the park opened to
the public. An aerial photo communicates
the prominence of the green space in the city’s financial district.

Leventhal Park
itself is just 1.7 acres and at least 54 inches deep – enough to support trees
and other foliage. Within its area are a
year-round restaurant, fountains and public art, as well as ramp access to the
cars hidden below.

The expense of the innovative project was $80 million – $126
million in 2007 dollars – and capital was raised from a range of sources. Fleet Bank made a conventional loan of $50
million. The nonprofit trust established
to construct, maintain and program the facility, the Friends of Post Office
Square Trust, issued and sold shares in the parking structure which businesses
could acquire for $65,000. In addition
to the amenity value for employees and customers, these investors received
title to a parking space and a compounding 8% dividend payable when the debt
for the construction is paid off. 450
such investors stepped up, raising almost all of the remaining $30 million. At the end of the day, the construction cost
per parking slot was $34,000 at the time (roughly $53,000 in 2007 dollars).

I have assembled a very basic sketch of what this type of cash
flow might look like; using these assumptions, the project would have commenced
producing positive cash flow after ten years of operation. But today, presumably within a few years of
paying off twenty-year debt for the construction and with parking demand in
Boston’s financial district very strong – not to mention the international
brand of the park at Post Office Square – the future of this space is very
green, in many ways indeed.

When the project’s cash flow becomes positive, if not
already, proceeds will go to pay the dividends promised to investors, and
excess beyond that to neighborhood park facilities in Boston. This is a successful model worth imitation.

Thanks to Ben Welle at the Center for Parks Excellence
at the Trust for Public Land
for suggesting an excellent summary of the
development and financing of Leventhal Park, in Peter Harnik’s (director
of the Center) valuable book, Urban
Parks and Open Space
.

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