MassHousing completes $10.4 million financing to create new affordable, workforce housing at 25 Sixth Street in Chelsea
MassHousing has closed a total of $10.4 million in affordable housing and labor funding at the nonprofitNeighborhood Developers, Inc. (TND). Funding from MassHousing will enable The Neighborhood Developers to transform a former light industrial site at 25 Sixth Street in Chelsea into 62 new mixed-income rental and homeownership units, located on the MBTA’s Silver Line near Bellingham Square .
As part of the 25 Sixth Street development, TND will create six new home ownership units, which will be affordable to moderate-income first-time home buyers as part of MassHousing. Commonwealth Builder Program. The legislator has engaged $115 million in federal funds from the American Rescue Plan Act (ARPA) to expand the CommonWealth Builder program, and 25 Sixth Street is the first homeownership project in Massachusetts to use ARPA funding .
“COVID-19 has underscored the importance of having a quality, affordable home and the 56 new rental units and six homeownership units that 25 Sixth Street will offer within walking distance of public transit and downtown- city of Chelsea will add housing stability and economic opportunity to this neighborhood for many years to come,” said Housing and Economic Development Secretary Mike Kennealy. “We are thrilled that ARPA funding is supporting these six new affordable homes for first-time buyers through the CommonWealth Builder program, as we work to increase homeownership opportunities, especially for communities in color, across the Commonwealth.”
“The transformation of 25 Sixth Street in Chelsea is a showcase for the mission-driven work of The Neighborhood Developers and for our state’s leadership in deploying federal pandemic assistance to create stronger, more fair,” said Chrystal Kornegay, Executive Director of MassHousing. “This development will create new opportunities for quality home ownership and affordable rental housing, close to public transit and jobs, and provide a platform for economic prosperity.
“TND is pleased to work with MassHousing and the City of Chelsea to bring more affordable housing for sale and for rent to Chelsea. The location of 25 Sixth Street in downtown Chelsea, right next to a Silver Line stop, makes local and regional amenities easily accessible to our future residents,” said Rafael Mares, executive director of The Neighborhood Developers.
TND acquired the 25 Sixth Street parcel just before the pandemic; an empty warehouse stood on the site. When a pandemic-related food pantry overtook the office of The Collaborative, TND has made the warehouse available to the pantry. Thousands of meals were distributed on the site responding to a huge community need. Soon the property will meet another pressing need for more affordable housing. The 25 Sixth Street development involves the creation of 56 new restricted-deed rental units and 6 new condominium condominiums, all of which will be contained within a single mid-rise building.
MassHousing is supporting the rental component of the project by providing TND with a $6.9 million permanent loan, $1.2 million in Agency funding Workforce Housing Initiativeand $932,500 in additional subordinate financing.
The rental finance also involved approximately $13.6 million in tax credits from an allocation of federal and state tax credits for low-income housing by the Massachusetts Department of Housing and Community Development (DHCD), $4.2 million in direct support from DHCD, $1 million from Affordable Housing Trust Fundwhich MassHousing manages on behalf of DHCD, and $1.2 million in local funding from the North Shore HOME Consortium. Bank of Silicon Valley will be the construction lender and the Massachusetts Housing Investment Corporation will be the syndicator of the tax credit.
The Agency also committed $1.38 million in Commonwealth builder funds to support the creation of the project’s six new condominiums. Other sources of financing for the homeownership transaction include a $3 million construction loan from Silicon Valley Bank, $300,000 from the Affordable Housing Trust Fund, $637,000 in financing local from the North Shore HOME Consortium and $50,000 from the Charlesbank Foundation.
Eight of the new rental apartments will be subsidized with federal housing vouchers and limited to households earning up to 30% of the area median income (AMI), 36 apartments will be reserved for households earning up to 60% of the AMI, and there will be 12 labor housing units for households earning up to 90% of the AMI.
There will be 27 one-bedroom rental apartments, 18 two-bedroom apartments and 11 three-bedroom apartments. The building will feature a rooftop terrace courtyard on the second floor.
Three of the condominium condominiums will be deed limited and affordable to households earning up to 80% of the AMI and three home ownership units will be affordable to households earning up to 100% of the FRIEND. The six homeownership opportunities will be restricted to first-time buyers. Condominium units will cost between $240,800 and $393,200.
The CommonWealth Builder program is a landmark initiative to close the racial divide in homeownership in Massachusetts by creating new opportunities for homeownership and wealth creation in communities of color. It is the largest program of its kind at the state level in the country.
Governor Baker and MassHousing launched the CommonWealth Builder program in mid-2019, as a $60 million initiative to build approximately 500 new affordable homes for first-time buyers in communities of color.
The Massachusetts legislature has assigned additional funding of $115 million from ARPA to expand the program. ARPA funds enable MassHousing and its development partners to create more housing, while providing greater subsidy levels to developments serving low-income buyers. Massachusetts is the only state in the nation to use ARPA funding to create new homeownership opportunities that bridge the racial divide in homeownership.
In addition to homeownership production supports, the Legislature also allocated $65 million in ARPA funding for homebuyer supports, including down payment assistance, for homebuyers. first home in disproportionately affected communities. CommonWealth Builder units can be purchased with an enhanced, ARPA-supported DPA.
25 Sixth Street is the first development to receive production funding for home ownership from the CommonWealth Builder using ARPA. Since the program’s inception, MassHousing has closed a total of $11.5 million in CommonWealth Builder funding, to create a total of 91 new homeownership opportunities in communities of color, including 81 new restricted homes in under the CommonWealth Builder program.
25 Sixth Street is also advancing the Baker-Polito administration’s goal of creating at least 1,000 new affordable rental units for middle-income households through MassHousing’s workforce housing initiative. Since launching the initiative in 2016, MassHousing has committed or closed workforce housing funding totaling $149 million, to 72 projects, located in 27 cities and towns, and advanced the development of 5,578 housing units across a range of incomes, including 1,507 middle-income labor units.
MassHousing has financed 13 rental housing communities in Chelsea totaling 1,386 housing units with an aggregate initial loan amount of $132.7 million. The Agency also provided mortgages to 770 Chelsea buyers and homeowners with an initial purchase principal balance of $93.9 million.
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