When developer Joseph J. Corcoran Co. breaks ground on the Residences at East Milton next month, the project won’t just usher in 92 apartments for a town in need of more multifamily housing. The event in Milton will also kick off an unusual experiment for the Healey administration: Will using state money to buy equity in sidelined projects get them off the sidelines?
Lieutenant Governor Kim Driscoll thinks so. She said the administration, working through quasi-public agency MassHousing, is ready to put $50 million, from a housing bond bill last year, to use via the state’s new “Momentum Fund.” Its purpose: to invest enough to help private-sector projects move forward after getting stalled by higher interest rates or construction costs.
MassHousing plans to invest $5 million in the Residences at East Milton, which Corcoran is co-developing with Falconi Properties, and is also offering a $30 million loan for the project, from mortgage lender Berkadia.
The administration announced the $5 million allocation on Wednesday, the first of many to come. In total, the Healey administration expects as many as 1,000 units could be built with the $50 million deployed in the coming months to close the financing gaps on various projects. MassHousing would likely help with loan assistance as well. Eventually, the state would be repaid for the equity investments and loans through a refinancing or a sale. (The city of Boston, meanwhile, is splitting $100 million to spark housing construction between the MassHousing program and Boston Housing Authority work.)
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“We have so many projects that are permitted, ... that are ready to go, but can’t pencil out from a financing perspective,” Driscoll said. “They’re sitting on the bench. This tool, for us, is to get those projects off the bench.”
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Driscoll said she’s hopeful MassHousing can attract pension funds, universities, or philanthropies to invest alongside the state in these projects.
“We want this to be contagious,” Driscoll said. “We want to grow the funding tool.”
To Corcoran president Sean McReynolds, the roughly $50 million East Milton project probably wouldn’t be starting next month without the state support. The project is going up via the state’s Chapter 40B law, which allows denser development in return for a certain amount of affordable units (though this project did receive pushback from neighbors over its size). Twenty-three of the apartments will be income-restricted. The $30 million loan from MassHousing and Berkadia, with funds from mortgage buyer Freddie Mac, will be used to buy out an existing construction loan within three years, and the $5 million in equity will buy out Fidelity Investments for its stake on a similar timetable, he said. Eventually, the state would be paid back, likely in 13 years.
“It’s a huge relief,” McReynolds said. “It provides the project the needed long-term financing. ... Given the turmoil or turbulent times we have with tariffs and interest rates, ... we certainly needed this.”
This is an installment of our weekly Bold Types column about the movers and shakers on Boston’s business scene.
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.
