Transmitting Communication from Louis A. DePasquale, City Manager, relative to the appropriation of $5 million from Fund Free Cash to the Public Investment Fund Executive Department Extraordinary Expenditures account, for the City’s first contribution to the GLX project

City of Cambridge Executive Department Richard C. Rossi * City Manager ^SS^'SX1 Li5a a petenon • 'Deputy City Manager September 26,2016 To the Honorable, the City Council: I am pleased to transmit for your review the attached final draft Project Participation Agreement (PPA) between the City of Cambridge, the Massachusetts Department of Transportation (M^assDOT), and the Massachusetts Bay Transportation Authority (MBTA), relative to the Green Line Extension (GLX) project. This agreement-which is the result of an extensive negotiation process between the parties-builds on the framework described in the letter that I transmitted to you at the May 9, 2016 City Council meeting and discussed at the subsequent meeting of the Transportation and Public Utilities Committee on May 24, 2016. As initially described at that meeting, the City has agreed to make a very significant contribution to the funding of the Cambridge portions of the GLX, in the amount of $25 million. This contribution, along with additional contributions and funding allocations from municipalities and the Boston Region Metropolitan Planning Organization, will help fill the identified funding gap for the GLX, clearing the way for the project to move forward, leading to the construction of a new Lechmere Station, and opening up the full development potential of the North Point area. Separately, we are negotiating an agreement with DivcoWest (the major developers of the North Point area) regarding a contribution of $12.5 million, such that the overall Cambridge contribution would be split evenly between the City and DivcoWest, During the negotiations regarding the PPA, we have been able to build in a number of key provisions that protect the City's interests: • Most critically, the PPA includes a clause that requires MassDOT to return the entire amount of the City's contribution if the relocated Lechmere Station is not open for revenue service within ten years of the start of construction. This guarantee protects the City against any future decisions to modify or cancel the project in a manner that doesn't lead to the relocation ofLechmere Station, which is the most critical outcome from our perspective (Section c.4.(a) on page 4), • The PPA also includes a clause that suspends the City's future contributions if the project is delayed by more than six months, which both protects our financial interests and provides additional impetus for MassDOT to contmue to move the project forward expeditiously (Section C.4.(b) on page 4). • The contributions under the PPA are structured to avoid the need to appropriate funds during periods of time when the City's free cash balance is not certified by the Commonwealth following the end of the fiscal year (Section C.l. on page 3). • The City's contributions under the PPA will be held in a separate expendable trust, and the City will be entitled to a yearly financial accounting of the status of this tmst (Section B. on page 3). • MassDOT will provide the City with regular updates on project costs and schedule (Section B.4. on page 3).

In transmitting this proposed agreement, I am requesting the City Council's approval to sign this document and commit the City to contributing $25 million over the course of five years, with the first payment to be made on March 1, 2018. The document would then be held in escrow for a short period, until the City has completed negotiations relative to the contribution agreement with DivcoWest, and until it is clear that the City of Somerville has also signed a similar Project Participation Agreement, such that both contributing municipalities are agreeing to their contributions at the same time. It is important to note that the PPA includes a provision stating that if in the future the City chooses not to appropriate the funds necessary to support this agreement, MassDOT shall have the authority to demand payment of these funds through deductions from the Local Aid amount due from the Commonwealth to the City. As members of the City Council know, the extension of the Green Line and the construction of a new Lechmere Station are critical priorities for Cambridge, and will help to support economic development and sustainable mobility. I believe that we have negotiated a groundbreaking agreement that creates a framework for municipal support of this critical infrastructure project, while protecting our financial interests and creating greater accountability for MassDOT and the MBTA. I hope that you will join with me in supporting this contribution and the attached Project Participation Agreement, and grant me the authority to enter into this agreement to secure the future of the Green Line Extension. Very truly yours, ^-c Richard C. Rossi City Manager RCR/mec

Citp of Cambribge AGENDA ITEM #17 IN CITY COUNCIL SEPTEMBER 26, 2016 WHEREAS: The Massachusetts Department of Transportation ("MassDOT") is the sponsor of a project to extend the MBTA's Green Line from its current easterly terminus at Lechmere Station in Cambridge, MA ("Lechmere Station ) to two new termini to be located at Union Square in Somerville, MA and at College Avenue in Medford, MA and to redesign, reconstruct and relocate Lechmere Station within Cambridge (the "Project"); and WHEREAS: MassDOT's role as sponsor of the Project includes, among other responsibilities, the obligation to secure the necessary funding to complete the Project consistent with the permits and approvals that will be required for the Project; and WHEREAS; The Project is currently expected to cost approximately $2.3 billion to complete, inclusive of monies that have been spent to date (the "Estimated Project Cost"), of which approximately $32 Million relates to the expected costs of planning, permitting, designing and constructing the portions of the Project that are located in the City, including costs related to a new Lechmere Station; and WHEREAS: MassDOT has secured funding in the amount of $2.15 billion for planning, permitting, design and construction of the Project from the Federal Transit Administration, the Federal Highway Administration (via the Boston Metropolitan Planning Organization) and the Commonwealth of Massachusetts (the "Secured Funding"); and WHEREAS: MassDOT has determined that it is necessary to identify and secure additional funding in order to complete the Project and is seeking additional parties to participate in the Project through financial contributions for the difference between the Estimated Project Cost and the Secured Funding (the "Project Funding Gap"); and WHEREAS: The City Manager has negotiated an agreement with MassDOT in which the City would participate in the Project by contributing to MassDOT twenty-flve million dollars ($25,000,000) (the "City's Contribution") toward the Project Funding Gap, subject to appropriation of the City Council and the requirements of said agreement (the "MassDOT Agreement"); and WHEREAS: The willingness of the City Manager to enter into the MassDOT Agreement was made with the expectation that Divco West Real Estate Services, LLC, ("Divco") the current owner of North Point, will contribute fifty percent (50%) of the City's Contribution. Divco's agreement to make this contribution was a material inducement for the City to make the City's Contribution to the Project. The City and Divco are negotiating an agreement regarding Divco's contribution and the City Manager has informed the City Council that he expects to finalize and execute such an agreement in the coming days; and

WHEREAS: The City's Contribution is also made with the expectation of one or more other contributions from Commonwealth municipalities including, but not limited to the City of Somerville, pursuant to agreement(s) on substantially similar terms as those set forth in the MassDOT Agreement; and WHEREAS: The City Council has determined that the relocation and operation of the Lechmere Station is of critical importance to the completion of the Project and that such relocation and re-opening of the Lechmere Station is an important public purpose for the City; now therefore be it ORDERED: That the City Council hereby authorizes the City Manager to execute the MassDOT Agreement and to authorize the City Solicitor to hold the MassDOT Agreement in escrow, subject to the fmalization of the City's agreement with Divco and the City s review of the City ofSomerville's agreement with MassDOT regarding Somerville s contribution to the Project and amending the MassDOT Agreement if necessary to ensure that the City's agreement with MassDOT as set forth in the MassDOT Agreement is made on substantially the same terms as Somerville's agreement with MassDOT. In City Council September 26, 2016. Adopted by a yea and nay vote:- Yeas 9; Nays 0; Absent 0. Attest:- Donna P. Lopez, City Clerk. A tme copy; ATTEST:- ^^'K^ y9 Donna P. Lopez City Clerk