Chelsea now owns a six-unit apartment building and rents it out. The city bought 55 Heard Street with $2 million from an obscure tax account, set up a separate fund so the rents pay the bills, and handed day-to-day responsibility to the Law Department. City Hall calls it a pilot. If it works, the city has said it wants to do it again.
How the city paid for it
The money came from the overlay reserve, which is not a fund most residents have heard of. Cities set aside a portion of the tax levy each year to cover property tax abatements and exemptions they expect to grant. When more is set aside than is needed, the excess becomes overlay surplus, which the Board of Assessors can release for other uses.
The City Manager asked the Board of Assessors to transfer $2 million from the overlay reserve, and the board approved it on December 16, 2025. The council then appropriated it. No new taxation and no borrowing was involved, which is why the purchase moved as quickly as it did.
Speed was the point. “This is a particularly unique opportunity as the home is in receivership,” Maltez wrote. “If the City does not purchase the property, it will be auctioned and will be purchased by the highest bidder.”
What the building is
Six three-bedroom units. That size is deliberate and it is the scarcest thing in the Chelsea rental market. Family-sized apartments are the units developers build least of, and the ones large households compete hardest for.
The city’s stated plan is to rent them “at rents that are affordable at Area Median Incomes that reflect the needs of our community and prioritize low and very low income families.” Tenants are selected by lottery, with priority for families, residents with disabilities and veterans.
The framing in the letter is a direct response to the council. “The City Council, and our community, was loud and clear that the City must do whatever it can to preserve and protect affordable housing for Chelsea’s families,” Maltez wrote. He described the purchase as a pilot whose lessons “will inform future housing strategies and help the City establish a replicable model for maintaining long-term affordability in Chelsea.”
The mechanism that makes it work
The interesting part is not the purchase. It is the revolving fund.
The council established the 55 Heard Street Revolving Fund, account 4643, under Section 53E½ of Chapter 44 of the General Laws, and assigned it to the Law Department. Rent from the units goes directly into the fund. Property management, routine maintenance, repairs and future capital needs are paid out of it. Spending from the fund is capped at $400,000 in a single fiscal year, and anything above that is credited to the General Fund.
The purpose, in the City Manager’s words, is “to allow the property to operate in a self-sustaining manner without reliance on the General Fund.” Surplus stays in the fund, to be reinvested in the building or, “where feasible, to assist the City in acquiring additional properties that may further advance Chelsea’s affordable housing goals.”
Read that last clause carefully. The structure is designed so that a profitable year at 55 Heard Street can help buy the next building. That is a small, self-funding municipal acquisition program, built without a new appropriation. The council adopted the ordinance amendment adding the fund to the city’s table of authorized revolving funds on January 28, by a roll call of 10 to 0 with Councillor Deron Hines absent.
What to watch
Being a landlord is a different job from being a city, and the risks are the ordinary ones. Six units of rent on a building the city paid $2 million for is a thin margin against a bad year: a roof, a boiler, a long vacancy, a tenant who cannot pay. The $400,000 annual spending cap is generous relative to six units’ operating costs, which suggests the city expects capital work at some point.
There is also the question of who does the work. The fund sits with the Law Department, and the letter anticipates buying property management services rather than doing it in house. How responsive that arrangement is when a tenant calls about heat in February is the practical test, and it is not something the council has asked about in public.
The larger context is that Chelsea is doing this while simultaneously arguing about how much private developers should contribute. In June the council raised the developer buyout fee to $275,000 per affordable unit on a 6-to-5 vote, after the City Manager had proposed cutting it. Buying a six-unit building outright is the same policy goal approached from the opposite direction: instead of requiring someone else to produce affordability, the city produced it itself, once, for $2 million.
Whether that scales is the open question. At $2 million for six units, Chelsea’s affordable housing problem is considerably larger than its overlay surplus. But the city has a model now, a fund to run it through, and a stated intention to use surpluses to buy again.