The owner of the steam plants that heat and cool much of downtown Boston has teamed up with a prominent local builder on an ambitious plan to both decarbonize a broad swath of office towers and medical buildings and finally redevelop a long-underused stretch of land above the O’Neill Tunnel.
It could be a neat trick, if they pull it off. But first the partners need to navigate the bureaucracy at the Massachusetts Department of Transportation, which controls the property at the heart of this proposal.
The state agency already has several bidders jockeying for one section, a 1.3-acre vacant parcel on Kneeland Street that Vicinity Energy and National Development say is crucial to their plan to convert the main source of the city’s steam to electricity from natural gas.
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Adding that parcel to Vicinity’s adjacent steam plant and the site of MassDOT’s District 6 office building next door would give Vicinity and National roughly 5.5 acres along Kneeland Street. That would be enough developable land to offset the $100 million or so it would cost Vicinity to install electric boilers at its bigger steam plant in Kendall Square, and build a third pipe across the Charles River via the Massachusetts Avenue bridge to bring that extra steam from Cambridge to Boston.
The nearly 90-year-old Kneeland Street steam plant would be torn down to make way for National’s development. Meanwhile, Vicinity’s natural gas-fired power plant at Kendall Square would run during times of peak demand for electricity, while the steam that is currently generated by that power plant would instead be created by boilers powered by electricity. (Vicinity’s third local steam plant, a smaller backup site in the Back Bay, would be unaffected.)
Vicinity’s chief executive, Bill DiCroce, said he came up with this plan in part because the Baker administration has set ambitious goals of converting the heating and cooling of buildings from fossil fuels to electricity, to dramatically reduce carbon emissions in the state. Vicinity’s steam plants serve roughly 65 million square feet of commercial buildings in Boston and Cambridge, the equivalent of more than 30 high-rises the size of the former Hancock Tower.
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“Think of us as the ‘Easy Button’ to electrify 65 million square feet in Boston,” DiCroce said. “The carbon story changes the game.”
This would be the first electricity conversion of a major urban steam system in the United States, said DiCroce, whose Boston company owns steam networks in a more than a dozen cities east of the Mississippi River. A similar conversion effort was unveiled in Vancouver, British Columbia, in March, though the plans in Boston were set in motion before that announcement.
Tearing down Vicinity’s Kneeland Street plant would make room for a large mixed-use development on the southern edge of downtown. National’s vision for the 5.5 acres includes about 400 apartments, with about 160 affordable units, and about 1 million square feet of lab or office space, and a redone Reggie Wong Memorial Park, said National’s managing partner, Brian Kavoogian. For that to happen, National needs the 1.3-acre parcel known as Parcel 25, which is being pursued by five other bidders, a city-owned pumphouse for fire hydrants, the steam plant, and an adjacent site owned by MassDOT and home to its District 6 offices known as Parcel 26.
National and Vicinity had initially been in talks to build a new steam plant, on a third nearby MassDOT site surrounded by highway ramps known as Parcel 27A, to replace the Kneeland plant. But that plant would have been natural gas-fired, too. The latest plan to electrify the Kendall Square steam network provides a way to sharply reduce greenhouse gas emissions caused by running the HVAC systems in downtown towers — and possibly an incentive for Baker administration officials to favor National’s vision.
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The Newton developer led a team that in April submitted a proposal to MassDOT for a much smaller project for Parcel 25. Their bid — one of six for the site — proposed 93 apartments and 330,000 square feet of research space, though Kavoogian said it also mentioned the grand vision for the assemblage of properties along Kneeland Street. Their partners — who include the life-sciences landlord Alexandria Real Estate Equities, Asian Community Development Corp., and local developer L. Duane Jackson — are expected to participate in National’s broader project.
State transportation officials have been trying to redevelop these sites for several years, without much success. The prime location, next to South Station and Interstates 90 and 93, is a big selling point. But the need to accommodate the steam plant in the center of the land complicated matters, and a 2016 previous request for proposals drew no bidders. So MassDOT in February put just Parcel 25 out to bid, with the hopes that a simpler deal would draw more interest. Coincidentally, around the same time National and Vicinity finalized their deal for a broader development along Kneeland Street.
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“If Parcel 25 is done separately, it really foils our plans and eliminates our ability to get rid of the plant,” Kavoogian said. “You need Parcels 25 and 26 together to make the math work . . . A project that starts with the removal of the steam plant gives us a tremendous advantage [in securing support] in the Chinatown and Leather District neighborhoods. No one else can do that.”
MassDOT officials showed no indication that they would stop the bidding to accommodate National and Vicinity, instead saying they are continuing an in-depth review of all six proposals for the long-term leasing and development of Parcel 25.
Kavoogian said he remained hopeful that MassDOT would end the bidding and start fresh, with an eye toward building out the full 5.5 acres.
“They have a decision to make: They can complete the Parcel 25 process and select someone which may or may not be us,” he said, “or they can basically consider all of this new information and decide to take a different course.”
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.