The cranes dotting the Boston skyline tell only part of the story. Beneath the steel and concrete, a financial calculus is being rewritten. Across the nation, a deep housing shortage meets a punishing macro environment – high interest rates, soaring construction costs, and tightened lending. Deals stall. Blueprints gather dust. But in Massachusetts, a two-year-old public finance experiment is unlocking projects others can’t touch, and its blueprint is gaining national attention.
A new report from the Urban Institute spotlights MassHousing’s Bringing Innovation to Lending and Development program, or BILD. It’s not a massive subsidy. It’s a surgical tool. The quasi-public agency uses state funds to plug specific gaps in a development’s capital stack, acting as both lender and investor. The result? Six projects financed, totaling 605 units, with dozens more in the pipeline. In an era of paralysis, that’s a signal.
The BILD program is a sophisticated and promising model, write the report’s authors, including veteran housing finance expert Laurie Goodman. They argue its structure – a blend of patient public capital and private market discipline – could be replicated far beyond Massachusetts.
Here’s how it works in the trenches. MassHousing received $50 million from the state to start the program. CEO Chrystal Kornegay saw the problem firsthand: “We saw a bunch of deals that have been stalled.” Developers had permits and plans, but the math no longer penciled. The cost of capital had shifted violently. Where a project might once secure financing with 75% debt, that ratio had collapsed to near 60%. The gap was fatal.
BILD attacks this gap from two sides. First, it offers the FORGE loan – a senior mortgage from Berkadia, backed by Freddie Mac, paired with a subordinate loan from MassHousing covering 10% of the debt. MassHousing takes the first-loss position, mitigating risk for Freddie Mac and allowing a larger, single-rate loan for the builder. It’s a facilitation role with public skin in the game.
The second move is the real innovation, what the Urban Institute calls “innovative” and MassHousing’s Mark Attia describes as changing the math equation. Through its $50 million Momentum Fund, the agency provides a preferred equity investment. The kicker? It demands a return of roughly 6%, compared to the 12% or more that traditional equity investors require. That difference saves developers millions over a project’s life, far surpassing the benefit of a simple low-interest construction loan.
The entire solution returns the project to feasibility by low-cost, more patient leverage,” Attia told me. “For the government to participate in this way in domestic public finance is really innovative.”
The terms ensure public benefit. Eligible projects must have at least 50 units, with 20% reserved for those earning up to 80% of the area median income, a commitment lasting 15 years or more. This isn’t charity; it’s strategic investment. The cheaper capital allows buildings to maintain more affordable rents by reducing the overall return targets needed to satisfy investors.
The program’s elegance lies in its market-aware design. “It looks and feels like the private market without a lot of additional regulatory burden,” Attia notes. To date, MassHousing has deployed $31 million in Momentum Fund equity and over $189 million in debt. Projects span from a 40-unit development in Quincy to a 233-unit complex in Grafton.
This model feeds a longstanding Massachusetts priority: mixed-income housing. As the Urban Institute details in a companion report, these projects do more than add affordable units. They cluster households of varying incomes in the same buildings, often in high-opportunity neighborhoods, fostering economic diversity in a way isolated affordable complexes cannot. Between 2021 and 2025, mixed-income projects accounted for 58% of large multifamily developments in the state.
The BILD program’s timing proved prescient, addressing what the Urban Institute calls “the dramatic macroeconomic shifts of the past five years.” Its success is now bolstered by a recent Moody’s upgrade of MassHousing’s issuer rating to Aa2. “The timing of that couldn’t have come better,” Kornegay says, noting it signals a strong credit risk to potential partners.
And scalability is the buzzword. Attia believes the model is exportable. “You could take our three sentences of law and our term sheet, and you could fund such vehicles in other jurisdictions,” he says. For states wrestling with similar impasses, that’s a powerful proposition.
Of course, no single program solves a crisis. Kornegay is clear-eyed. “We know that supply is at the heart of trying to get at that, and that supply is going to largely come from the market.” BILD is one tool in a broader $5.2 billion housing bond bill that also legalizes accessory dwelling units and renovates public housing. “This is going to be lots of years of consistent investment,” she says.
But in the arcane world of housing finance, Massachusetts has drafted a new playbook. It uses public capital not as a blunt instrument, but as a catalytic wedge – filling the precise gaps the market cannot while demanding mixed-income outcomes. In an environment where every basis point matters, that’s a formula worth watching. The Urban Institute has taken note. Other states likely will too.
- High interest rates
- Soaring construction costs
- Tightened lending
- MassHousing’s public finance experiment
- Projects span various sizes
- Mixed-income housing priority
| Program | Funding | Eligible Projects | Investment Return |
|---|---|---|---|
| BILD | $50 million | Minimum 50 units | Approximately 6% |
| Momentum Fund | $31 million deployed | 20% for earnings up to 80% AMI | Competes with 12%+ |
| FORGE Loan | Part of MassHousing loan structure | Supports stalled projects | N/A |
