BOSTON-An agreement was finally reached between the state, the city and the two developers who had vied for the rights to redevelop the remaining parcels at the former Boston State Hospital in the neighborhood of Mattapan. The arrangement signals an end to nearly three decades of development efforts at the 250-acre site.

The new development will yield nearly 500 new housing units on the property and will direct over $150 million of new investment to the area. “Creating more housing is critical to the success of the Massachusetts economy,” says Gov. Mitt Romney. “We are on a mission to double housing starts in the Commonwealth and this new partnership is a great step forward in reaching that goal.”

Under the agreement, Lena Park Community Development Corp. and New Boston Development Partners, LLC under the name of Olmsted Green, have been formally designated by Commissioner David B. Perini of the state Division of Capital Asset Management as the lead developer for 35 acres of the hospital grounds. At the same time, the city has agreed to support legislation to allow Stony Brook, LLC, the second development team, to develop the last 20 acres of the campus. The 20-acre site had originally been slated for a new high school, but Mayor Thomas M. Menino has agreed to waive the city’s right to the site, provided that it is redeveloped primarily for housing.

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