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The state made its largest financial commitment to date towards the Green Line extension project Wednesday, signing off on a $393 million contract to fund phase two of the project: the construction of three new stations.

The contract covers the construction of a new Lechmere Station in Cambridge and the extension of the line to Somerville's Union Square neighborhood and to Washington Street near the McGrath Highway.

As part of a settlement the state made with the Conservation Law Foundation in 2006, the extension is required to be built by Dec. 31, 2014, though state officials and advocates have long known the deadline would be missed. Somerville Mayor Joe Curtatone says the funding finally gives the city certainty that while behind schedule, the extension is coming.

"We've gone through a lot of trials and tribulations over many, many years, for decades, over whether the Green Line would actually happen, and it's happening," Curtatone said.

Construction on the three new stations should begin next spring and the MBTA expects it to be completed in 2017.

Beyond these stations, the state plans to extend the line through Somerville along Broadway to the Tufts University campus in Medford, adding another four stops.

Curtatone says the funding of these first few stations will help improve Somerville's economy.

"We intend to create 30,000 new jobs, 6,000 new additional units of housing," he said. "And have a major shift of our mode trips from just the automobile to include bicycle and walking and rail transit."

The first phase of the extension project, which included the renovation of bridges and underpasses to accommodate trolleys, began last year. The MBTA says it will have to come back to the state to secure funding for the final two phases.

With reporting by the State House News Service and the WBUR Newsroom.

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