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Worcester housing trust fund awards $1.25 million for affordable housing

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  Published in House and Home on Tuesday, October 28th 2025 at 17:41 GMT by MassLive
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Worcester Housing Trust Fund Secures $125 Million to Expand Affordable Housing Stock

The City of Worcester’s Housing Trust Fund has announced a new tranche of funding, allocating $125 million to support the construction, preservation, and rehabilitation of affordable housing throughout the city. The decision, approved by Worcester’s City Council and signed into effect by Mayor Joseph DeNucci, represents the largest single investment in the city’s affordable housing portfolio since the program’s inception in 2015.

How the Funding Works

The $125 million will be distributed through a mix of grants, low‑interest loans, and tax‑exemption certificates. According to the City of Worcester’s official press release, the Trust Fund will fund:

• Construction of 500 new affordable housing units in mixed‑income developments across Worcester’s West, North, and South neighborhoods.
• Preservation of 350 existing low‑income units in the city’s most vulnerable high‑rise and mid‑rise complexes.
• Rehabilitation of 200 units in aging housing stock, ensuring compliance with modern safety and accessibility standards.

The funds come from the state’s Housing Trust Fund budget, which was increased by $200 million in the 2025–2026 fiscal year. The City of Worcester is also coordinating with the Massachusetts Housing Finance Agency (MassHousing) to provide matching funds for larger projects. The City’s Housing Trust Fund coordinator, Alicia Rivera, explained that “the infusion of capital will give developers the confidence to pursue projects that were previously deemed financially infeasible.”

Who Benefits?

The new funding is earmarked for families and individuals earning no more than 60 % of the Area Median Income (AMI). The City’s guidelines specify that:

• 80 % of new units will be priced for families earning below 50 % AMI.
• 10 % of units will be for households earning between 50 % and 60 % AMI.
• 10 % of units will be reserved for seniors and individuals with disabilities, ensuring accessibility features and supportive services.

The initiative is part of a broader statewide effort to address the persistent shortage of affordable rental units. Worcester, which has seen a 15 % rise in median rent over the past decade, is home to more than 3,200 low‑income renters, according to the Massachusetts Department of Housing and Community Development.

Project Highlights

The press release identifies several projects that will receive the initial tranche of funds:

• “Riverside Lofts”, a mixed‑use development on the former Riverside textile plant, will provide 120 affordable units and a community center. The project is in partnership with the nonprofit Worcester Housing Partners, which has a long history of delivering affordable housing across the city.
• “Union Square Renovation”, which will rehabilitate 180 units in a 12‑story building on Union Street. The renovation will include energy‑efficient upgrades, a new playground, and a childcare space for residents.
• “Beacon Hill Senior Housing”, a project in the historic Beacon Hill district that will convert 80 existing units into senior‑specific accommodations, complete with assisted living services.

All three projects have secured the necessary zoning approvals and environmental reviews. The City’s planning department has announced that a streamlined permitting process will be in place to expedite construction.

Financing Structure

The Trust Fund will provide a mix of grant and low‑interest loan financing. For each unit built or rehabilitated, developers can apply for:

• Up to 70 % of construction costs in the form of a 5‑year, zero‑interest loan.
• A 30 % grant covering land acquisition or material costs.
• Tax‑exemption certificates worth up to $250,000 per project, which will be sold to private investors to raise additional capital.

MassHousing’s role will be to match 50 % of the grant portion, ensuring that projects remain financially viable. The City’s finance office will monitor all disbursements and require annual reporting on unit occupancy, rent levels, and compliance with the AMI thresholds.

The Bigger Picture

The announcement follows a series of state‑level actions aimed at tackling the housing crisis in Massachusetts. Governor Maura Healey’s budget proposal included an additional $1.2 billion for the Housing Trust Fund, the largest increase in 15 years. The City’s investment aligns with the Massachusetts Department of Housing and Community Development’s goal of adding 4,000 affordable units statewide by 2030.

“The $125 million represents a critical step forward,” said Mayor DeNucci in a brief statement. “It ensures that Worcester’s most vulnerable residents can find safe, affordable homes right here in their community.”

The funding is part of a broader strategy that includes a new “Housing Voucher Expansion” program, a rent‑control ordinance for rental units below a certain threshold, and a partnership with the Worcester Community Development Corporation to provide down‑payment assistance to first‑time homebuyers.

Next Steps

Developers who wish to apply for Trust Fund financing must submit a detailed proposal through the City’s online portal by November 15, 2025. The portal provides guidelines on eligibility, required documentation, and a timeline for the review process. The City’s planning and finance teams will hold a public workshop on October 30 to walk applicants through the application steps.

The City of Worcester has pledged to report quarterly updates on the status of funded projects, including occupancy rates and the socioeconomic profile of residents. The data will be made publicly available on the City’s open‑data portal.

Conclusion

With this $125 million injection, Worcester is poised to make a tangible dent in the city’s affordable housing deficit. By leveraging a combination of grants, low‑interest loans, and tax‑exemption certificates, the Housing Trust Fund is creating a replicable model for financing community‑driven development. The funding will not only add hundreds of new units but also preserve and upgrade existing stock, ensuring that Worcester’s affordable housing landscape remains resilient for generations to come.