It took 16 funding sources, nine separate parties putting money in, 13 months of permitting, six formal hearings, 20 community meetings and four reviewing bodies to get 62 apartments built at Broadway and Fourth Street. The project was fully permitted in 2022. Construction did not start until the beginning of 2025.
That gap, nearly three years spent doing nothing but lining up money, is the part of affordable housing that almost never gets explained in public. On Tuesday night it was explained to the Chelsea Planning Board in detail, by the developer building it.
Adam Giordano, director of development at Arx Urban, came at the invitation of the city’s planning department, which said it wants to give the board more grounding in how development actually works. He used his own project, 375 Broadway, known as 4th @ Broadway, as the worked example.
Why it takes 16 sources
Giordano drew a line between housing that is cheap and housing that is what he called capital-A Affordable: income restricted, with a maximum rent, most of it at 60 percent of area median income or below.
He explained area median income in plain terms. Line up every household in the county by what it earns, cross them off from both ends, and the middle is 50 percent of AMI.
Rents set that way do not cover what it costs to build. So the gap is filled by stacking subsidy. “We are cobbling together what is 10 to 20 different sources,” he said, “whereas a typical unrestricted market rate project, they’re able to do it with two to three.”
Each source has its own application cycle, its own timeline and its own conditions. On 375 Broadway there were 16 of them, nine funders, four types of money, and about $43 million of total cost. Publicly reported pieces of that stack include $10.6 million in MassHousing financing, state and federal 9 percent tax credits, state soft debt, workforce housing funds and North Shore HOME funds.
Affordable projects take roughly twice as long as market rate ones, he said. Start to finish is six to seven years, with five to ten people working on them.
What the funders each require
The most useful part of the presentation was the list of things different funders demanded of the same 62 apartments, because each one is reasonable on its own and they pull against each other.
- The state required 40 percent of the homes at or below 60 percent AMI.
- It separately required 13 percent at or below 30 percent AMI.
- A different bucket of money required 19 workforce units at 100 percent AMI.
- Three percent of units are reserved for Department of Mental Health tenants, which Giordano called “an excellent thing to do” while noting it requires resident services that cost money.
- Five units were left at market rate on purpose, so that existing tenants who earn more than the workforce limit would not be forced out of their own building.
On top of that sit the state’s cost discipline and its sequencing. The cap when this project was awarded was under $700,000 per unit. The state also wants a commitment of local money from the city and wants the project fully permitted before it will award funding. Miss the application cycle and the wait is another year.
Then come the things the community and the boards ask for, all of which Giordano was careful to call worthwhile: parking, or less parking depending on who is speaking; bike storage; open space; gathering space; minimum unit sizes; family-sized units; accessible units; a building that looks good and fits the street; all-electric systems, net zero emissions, continuous insulation, high-performance windows, solar.
Every one of those takes space, money or time from the same finite supply. “As you build other things and as you provide all these other great things,” he said, “in essence, you are taking away unit space, and that’s part of the trade-off.”
His summary of how he opens meetings: “Housing is a trade-off, and we’re going to have to work together to build what we want to, but also we need to build what we can build.”
What the developer’s fee is, and why
City staff had asked him to explain the developer fee, which on subsidised projects is not negotiated but set by a state formula. He began reciting it: “5 percent of the acquisition costs plus 10 percent of the first $3 million of costs plus 7.5 percent,” and so on.
The reason for a formula, he said, is that before any funding closes the developer is carrying the whole thing. “We’re fronting all the money and hoping and betting that we can make it work.” The fee keeps the firm’s lights on, its staff paid and its next project capitalised.
Asked by a board member about return on investment, Giordano drew the distinction plainly. Market rate development is measured on return on cost and cash-on-cash return. Affordable housing is not. “We do tend to say, okay, let’s continue building, and it’s going to make less money over time, but it’s a great thing to be doing, and there is profit in it,” enough “to make sure that we can keep going.”
A Yiddish theater, and 19 loft apartments
The building at Broadway and Fourth has a history most people walking past it would not guess. It went up in 1916, after the fire of 1908. From 1916 to 1946 it was the home of the Yiddish Theater. The grand entry marble steps have been kept and will serve as the entrance to the finished building.
In 2006 the upper floors were converted into 19 loft-style apartments with exposed beams. In 2018 the city and MassDevelopment designated the area a Transformative Development Initiative district, which is what opened the site to this kind of project.
The job now underway is two jobs: 43 newly constructed apartments and a rehabilitation of those 19 existing lofts. Giordano said the pairing is part of what made the financing work, because funders value rehabilitating existing housing alongside creating new. A board member said the same thing from the other direction, calling the retention of the original building her favourite part of the project: “One of the real drawbacks of these larger multi-family housing complexes is it’s just changing the landscape quicker than we can realize.”
The finished building will hold 62 homes, 92 percent of them income restricted, with 25 parking spaces, a fitness room, a community room and an outdoor patio, in studios and one, two and three bedrooms. It is about 65 percent through construction, 18 months in, and is expected to open early next year.
Why the board was hearing this at all
The timing was deliberate. Chelsea’s comprehensive master plan had its public hearing earlier in the same meeting, and affordable housing came out of that two-year process as the top priority.
A city planner made the connection explicit. Affordable housing “was like the key thing” to emerge from the planning work, he told the board, “which is why we’re trying to work on an affordable housing overlay to try and streamline some permitting, because we know that that’s a key value of our community.”
He then put the question the presentation was really about: “When we ask for more parking or another community meeting, how does that factor into the feasibility of a project in general? And not to say those things aren’t worthwhile, but it’s a decision that we have to come to together.”
One board member did the arithmetic out loud on the permitting: “This is an affordable, mixed-income housing project that I think we all value greatly, and it’s just, for me, I’m like, damn, that took over a year to get through a permitting process.”
Another suggested a practical fix. If the city knows early that someone has bought a parcel and means to develop it, it should say so publicly before the permitting starts, so the community conversation happens up front rather than through successive unhappy hearings.
What Chelsea did not get an answer on
A board member said the proposals she likes best are the ones creating affordable home ownership, and asked what it takes to make those happen. Giordano could not answer in depth, because his firm has not done one. He pointed across the street to 440 Broadway, the city’s 28-condominium project, as the local example. Staff said they had tried to get that team to attend and they could not make the date.
Giordano was also asked whether Arx Urban is looking at another Chelsea site. “There isn’t a site in Chelsea right now that we found that can make work,” he said, though he added that the city has been “extremely helpful, extremely communicative” compared with other municipalities, and that the firm would look at anything that fits.
Staff said this is meant to be the first of several such sessions on nights when the case list is short. The board asked for the slides, and for a tour of the building.