by Timothy P. Murray, President & CEO, Worcester Regional Chamber of Commerce
Building a multi-unit housing development complex is challenging, whether it is market rate, affordable or mixed-use project. The complexity of these projects is multifaceted. Securing financing from banks and/or investors, assembling local, state, or federal historic or affordable housing tax credits takes time and money upfront. Fundamentally, financing is not much different than when an individual seeks to obtain a car loan or mortgage.
Banks, investors or lenders will only provide financing if the project pencils out – meaning the lender knows that the borrower has the ability to pay back the loan plus interest. Additionally, a developer has to acquire land for construction, prepare and pay for architectural and engineering design plans, and then select a general contractor and sub-contractors. Throughout this process, the developer will be monitoring construction costs and materials while staying informed of state and local building requirements. Lastly, a developer may be required to appear with a land use attorney before a city board or commission, like the Planning Board or Conversation Commission, which costs money, for appropriate legal representation. Notwithstanding these very real challenges, Worcester over the past 20 years has made significant progress in adding new units as the population has grown and kept the percentage of affordable housing above the state requirements of 10%.
In fact, according to the Chamber’s housing tracking analysis of both proposed and housing units under construction, there are 5,591 units of housing that are either under construction or proposed for construction in total. 915 of those units are designated as affordable housing. Of this total 1,682 are currently under construction of which 546 are affordable housing units.
In 2019 the Worcester Regional Chamber of Commerce commissioned a study called, “Worcester for Everyone: A Regional Housing and Economic Development Study”. It was projected Worcester would experience 8% population growth by 2030, which equals 14,751 people and the need for 3,000 new workforce housing units. Important to attracting private sector investments into Worcester, the study identified the creation of new market rate and affordable housing as a 1.5 billion untapped housing market.
To maintain the rapid progress Worcester has made over the past 10 years, continued collaboration and cooperation will be needed between local, state, and federal elected and appointed officials with private sector partners in the housing development sector. Urgency, in decision making, consistent policy making and predictable regulatory enforcement are needed by local and state officials to encourage further housing investment and development. Moreover, with the recent passage of the state housing bond bill expedited decision making at the state level is critical as it relates to projects that have received appropriate local and state approvals but have funding gaps, because of inflationary and construction cost pressures. Approximately 1,000 units, both market rate and affordable in Worcester, fall into this category.
Momentum, collaboration, and urgency will ensure continued progress on the critical need for more housing. Public and private sector partners need to stay focused, and the Chamber will continue to do our part to help make sure this continued focus and collaboration happens.
