NEW CONSTRUCTION: Charlestown lofts project ready to be developed

After a 17-year tussle over permits, Boston developer Michael Rauseo is finally moving forward with a project to transform a century-old warehouse in Charlestown into 124 loft-style apartments.

Rauseo, owner of the Suffolk Cos., said he will start a $40 million renovation of the long-vacant Terminal Storage Building at 267 Medford St. this summer, hoping to get the apartments ready for occupancy by fall 2013.

Even by the standards of Boston, where neighborhood opposition and quirky development rules can add years to a building project, Rauseo’s experience borders on the extreme.

After winning city approval in 1995, he hit a legal snag because of the project’s location near what used to be an active industrial port on the Mystic River; its location just inland from the riverfront put it in a state-defined district known as a “designated port area,’’ where law prevented construction of residences.

It took three years to get a state agency to lift restrictions on his property, and that decision was contested by owners of nearby commercial properties, further prolonging the battle. Ultimately the state representative for the area, Eugene O’Flaherty, got legislation passed to eliminate restrictions on the property. Meanwhile Rauseo had a separate battle over the project’s impact on tidelands that didn’t end until a favorable ruling from the Supreme Judicial Court in 2007. “It was an extremely long and arduous permitting process,’’ said Rauseo. “But the project is moving forward and it’s an excellent time to do so.’’

He is among several developers trying to take advantage of a burgeoning market for rental apartments. With vacancy rates low and many people opting to rent instead of buy, apartments are seen as a good investment by developers and lenders that provide financing for such projects.

The building, situated next to Charlestown High, will qualify for tax credits due to its recent inclusion in a federally recognized historic district. The National Park Service granted historical
status to the building and surrounding properties this month. The Terminal Storage Building, built in 1912, is one of three early 20th-century structures that survived from the property’s past as a bustling hub of industry. It is situated at the edge of a series of old commercial wharves that have been mostly replaced by ball fields and the high school. It also is near the former Boston & Lowell rail yard that used to be a major shipping depot at the northern edge of the city.

When renovations are finished, Rauseo’s building will have one level of parking and loft-style apartments on its upper floors. He said the average unit size will be about 800 square feet, and he expects to rent them for $1,800 to $1,900 a month.

“This project will put a very handsome building back into productive use,’’ said Rauseo, noting that the warehouse has been vacant since the mid-1980s, when a toy company moved its operations to Everett. “It’s going to go from an eyesore to an asset for the community around it.’’

A Charlestown neighborhood volunteer said area residents are eager to see the project proceed.

“The community is excited to see an abandoned building renovated and new residents brought in,’’ said Mark Rosenshein, chairman of the development committee for the Charlestown Neighborhood Council.

By Casey Ross Globe Staff / March 24, 2012