In short, that was BS. The argument was actually that the "special" ones were reserved for "economic development" and that Davis Square didn't qualify. They ended up granting one a few months later to the Korean restaurant that replaced McDonalds, in Davis Square, so it was a BS argument. I wrote a long comment about this at the time:

http://davis-square.livejournal.com/3314035.html?thread=35879539#t35879539

Another related comment I made in the same thread:

http://davis-square.livejournal.com/3314035.html?thread=35893875#t35893875