An architect's rendering shows what Charlestown's Bunker Hill Housing project will look like once it's fully redeveloped by the Boston Housing Authority and Leggat McCall Properties. Image courtesy of Stantec
Boston Mayor Michelle Wu Tuesday announced that a planned city investment fund for housing developments will grow in size.
The “Housing Accelerator Fund,” seeded with $110 million from the city’s cash reserves, will get matching dollars from the $50 million state Momentum Fund, administered by MassHousing That fund was set up in Gov. Maura Healey’s $5 billion housing bond bill that passed the state Legislature this summer. It’s intended to help bridge funding gaps faced by mixed-income housing developments thanks to elevated interest rates and ballooning construction costs across the region.
“There’s no shortage of interest in investing in our city, but for the last several years the financing environment has been incredibly challenging,” Wu told a crowd at the Boston Housing Authority’s Bunker Hill Housing complex. “We’re looking to build new approaches and use every possible tool.”
Leggat McCall Properties and the BHA are redeveloping the Bunker Hill complex from around 1,000 public housing units to nearly 3,000 public housing, market-rate and affordable units.
The first new building in that project is expected to open in early 2025, Leggat McCall Senior Vice President Adelaide Grady told the crowd. Its second building, a 9-story, 266-unit structure currently known as “building F,” will be the first recipient of money from Boston’s Housing Accelerator Fund, officials said Tuesday.
Wu said she plans to file the ordinance establishing the fund with the Boston City Council on Dec. 2. Wu initially announced her intent to form the fund during a Greater Boston Chamber of Commerce speech earlier this fall.
The Housing Accelerator Fund will take equity positions in projects where at least 20 percent of the development is set aside for affordable housing and that are ready to begin construction, Wu said. Projects will also need to “prioritize sustainability, community impact and diversity in leadership,” she added, although it will offer “more appealing” rates of return than the 15 percent typically sought by equity partners in today’s marketplace.
Profits from the city’s fund will be reinvested in more housing projects, Wu said.
“Not only will this mean new homes to help ease the housing crisis that’s the top issue nation wide right now, it’ll help increase the city’s tax base,” she said.
The mayor also thanked commercial developer trade group NAIOP-Massachusetts for helping come up with the idea.
“NAIOP is grateful to the city of Boston for recognition of these challenges and the mayor’s commitment today to assist projects with this innovative funding structure,” NAIOP CEO Tamara Small said during Tuesday’s announcement celebration. “It’s critical that thousands of units in the pipeline come to fruition and we get get more shovels in the ground for the good of our cities residents, business and our future.”
Numerous Boston city councilors praised the Housing Accelerator Fund during Tuesday’s event, but several, including Councilor Brian Worrell, have called for the city to invest money in home ownership developments, in addition to rentals, despite most banks’ reluctance to lend for them, citing the increased risk condominium projects pose.
