Case Study

The Westcott in Swampscott

Mixed Financing Underlies a Building for Everyone

7 min read

A rendering of the Westcott mixed-income development in Swampscott, MA.

It would be nice if affordable multifamily housing could be financed all in one shot, but it never is. So, we get a Twister board full of tax credits, bridge financing, gap financing, construction to permanent lending, soft seconds and the developer’s always-deferred fees.

Still, Westcott in the Boston suburb of Swampscott, MA stands out. Not only does it have 14 separate financing sources, but it also manages to use or “twin” both four percent and nine percent Low Income Housing Tax Credits in the same deal through a two-part condominium structure. American Rescue Plan (ARPA) funds are in there as well, and there’s even $1 million in the 114-unit project because the building checked the Transit-Oriented Development (TOD) box with a train station less than a quarter of a mile away that brings commuters to North Station in under 25 minutes.

This wide array of sources is helping to finance what is becoming more and more an industry standard – the Everyone Building, a democratic mixed-income variety of very low-income, low-income, workforce housing and market-rate residents all in the same building and perhaps even on the same floor, with no sequestering by income.

Adam Stein, executive vice president of Boston-based WinnDevelopment, the developer of the Westcott, says that’s “definitely something we’re pursuing as a philosophy. We think mixed-income housing with a strong workforce component is the right approach for locations where you have income disparities, rent-burdened families and labor shortages, which feels like almost everywhere. In a desirable coastal town like Swampscott, where you have high housing costs and a strong middle-income presence, they’re experiencing housing shortages just like Boston, New York or other cities.”

“Mixed-income housing is healthy. It hits several income brackets, allows for long-term stability and makes for “a democratic” living situation. Driving by and touring this community, Westcott will present as market-rate housing, you won’t see a difference in unit size or finish between affordable, workforce or market-rate units, they’re all similar,” he says. “And they’re scattered throughout the building uniformly by matrix. The affordable units are not situated on the lower level facing the back of the property. Quite the opposite. We have representation by the pro rata of the number of units in the deal.”

“From the Town perspective, this is a win/win. It allows the municipality to meet their housing production goals and increase their subsidized housing inventory, which is important in Massachusetts, and they are partners in delivering new, high quality, mixed-income housing.”

Stein says this is Winn’s third similar ground-up new construction project using this model in the 115- to 125-unit range.

The first two projects were in Quincy and Lowell in Massachusetts, and another is currently under construction in Shrewsbury. Also in the hopper are projects in Salem and Braintree.

Boosting the Housing Stock
“The mix of incomes and unit types will add more options to the town’s housing stock, including workforce housing, and create a community that will appeal to a broad mix of young professionals, commuters, downsizing households and families that want to remain in Swampscott,” says Stein.

The income mix is 16 apartments for households earning up to 30 percent of the area median income (AMI); 62 apartments for households earning up to 60 percent AMI; 16 middle-income or workforce housing apartments for those earning up to 110 percent AMI; and 20 units available at market rates.

The $69.1 million project is under construction now and completion is set for next year.

WinnDevelopment announced that among those 14 financing sources “local and state agencies and Bank of America delivered financing for the project.” The Massachusetts Executive Office of Housing and Livable Communities provided LIHTCs and ARPA funds, while MassHousing provided bridge, permanent and workforce housing financing. Bank of America provided the tax credit equity and the construction financing for the project. It was also the syndicator on the deal.

 “Locally, the Swampscott Affordable Housing Trust and the North Shore HOME Consortium also both committed funds to the development.”

Westcott “will bring 114 new apartment homes to Swampscott that will be available to residents with a broad range of incomes,” says MassHousing CEO Chrystal Kornegay. In addition to the train station, “Westcott will be within walking distance of a Metropolitan Bus Transit Authority bus service, making it a true TOD community that is going to provide housing stability and economic opportunities to the households who settle there.”

Stein credits MassHousing’s workforce housing program as making deals like Westcott possible. “That resource has allowed developers like Winn to deliver this truly mixed-income project. Hats off to MassHousing for focusing on this extremely important initiative,” he says.

Winn has a long history in developing mixed-income housing, Stein notes, but it has typically included affordable housing and market-rate, with a larger percentage of affordable units than market-rate.

“Now we can provide a tranche of 80 percent AMI to 120 percent AMI households, which in Swampscott ranges from $65,000 to $95,000 for a one-person annual household income. Those are your young professionals, teachers, police officers and your crucial workforce with good incomes that land between affordable housing options and high-end housing. They are the middle-income or workforce households that are typically priced out of market-rate housing,” he says.

“The industry has done a good job at providing affordable housing, and a good job providing market-rate housing, but what about all the people that provide services?” he says. “And create the traffic and the commute. You can’t go to the pizza place, fix your car or send your kids to school if there’s no one working there. That’s unfortunately what’s happening everywhere.”

Workforce Program a Key
“The Workforce program has allowed these deals to move forward. And we’re so fortunate to live and work in a state like Massachusetts with smart, effective leadership that sees this problem and has come up with a viable solution to meet the challenge.”

The Westcott, built on a 1.3-acre industrial lot, will have three studio units, 71 one-bedroom apartments, 28 two-bedrooms and 12 three-bedrooms. There will be 131 parking spaces there.

Besides proximity to rail and bus, Westcott will offer commuter passes, a transit screen showing the status of transportation lines, indoor and outdoor bicycle storage areas, shared rental bikes and rental cars, and shuttle services.

Amenities, according to WinnDevelopment, will include indoor and outdoor gathering spaces; a rooftop deck with grilling stations, café and lounge seating; a fitness center with cardio, strength training and interactive fitness training; a resident lounge with catering kitchen; private workspaces; and package lockers.

Cranshaw Construction of Newton, MA, is the project’s general contractor. The Architectural Team of Chelsea, MA, is the architect. Robinson & Cole of Boston served as counsel on the transaction. Peter Freeman and Smolak & Vaughan LLP of North Andover, MA, served as counsel on permitting. When completed, the new apartment community will be managed by WinnResidential.

The property is being built to Passive House standards, he says. That standard is “the most rigorous high-performance green building standard in the industry right now, which means the community will minimize fossil fuels, will be extremely efficient and will use significantly less energy than typical apartment buildings.”

Sources of fundsAmount
Federal Nine Percent LIHTCs1M x 10 years
Federal Four Percent LIHTCs1.5M x 10 years
Sources Listed Below Are For Both Projects
State LIHTCs3M x 5 years
Construction Loan – Bank of America42M
Tax-Exempt Bridge Loan – MassHousing12.5M
1st Mortgages – MassHousing14,130,000
Contributed Developer Equity650K
ARPA Funds Loaned7,000,000
Workforce Housing Loaned – MassHousing
80 percent AMI to 120 percent AMI
EOHLC Loaned Funds (AHT, HSF, HOME)6,000,000
EOHLC TOD Funds loaned in coordination
with MHP
Local Funds Loaned (N Shore Consortium
and Swampscott Affordable Housing Trust)
Mark Fogarty has covered housing and mortgages for more than 30 years. A former editor at National Mortgage News, he has written extensively about tax credits.