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Worcester trustees approve loan modification for 49 West Street to shift most units to 60% AMI after cost overruns
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Summary
The Worcester Municipal Affordable Housing Trust Fund on June 11 authorized a loan modification for the Black Equity Group’s 49 West Street rehabilitation, changing unit restrictions from six units at 30% AMI and one at 60% AMI to one at 30% AMI and six at 60% AMI after developers cited substantial unplanned cost increases and financing delays.
The Worcester Municipal Affordable Housing Trust Fund Board of Trustees authorized a loan modification on June 11 to change unit rental restrictions at the Black Equity Group LLC’s 49 West Street project, shifting the previously agreed mix so that one unit will be restricted at 30% AMI and six units at 60% AMI.
City staff introduced the amendment request and the project team — which included Greg Benoit and other Black Equity Group representatives, a lender representative from WCHR (community development lender), and the project’s consultant — told the board the change was necessary to address unanticipated cost increases and financing constraints that threatened the project’s long‑term viability.
Presenters said the project’s timeline was lengthened by a prolonged lender transition, the addition of a participating bank (Baystate) with supplementary legal and personal guarantee requirements, the discovery and necessary remediation for lead hazards to allow occupancy by children under six, and a change that placed the building within a local historic district requiring upgraded materials and additional approvals. Those factors, the team said, produced increased carrying costs, higher closing fees and larger hard and soft costs.
In their presentation the developers quantified several of those increases: an originally projected closing cost around $42,000 under hard‑money financing later rose to more than $118,000 after refinancing and bringing in a participating bank; lead remediation bids totaled about $230,000; contingency funds were reduced (for example, a contingency line moved from roughly $100,000 to $72,000); and overall hard‑ and soft‑cost increases were described as “north of $330,000” collectively. The project team also reported that assumptions about obtaining project‑based Section 8 rental assistance were no longer realistic because vouchers were not available when needed.
The developer presented pro‑forma figures that showed the project’s original rent mix could produce a gross rental income near $64,000 with a negative cash flow (the team cited a projected $33,000 shortfall) before permanent financing. After analyzing tenant mix scenarios and utility allowances, the team reported the proposed swap (one 30% AMI two‑bedroom and the remainder at 60% AMI) would reduce the annual shortfall and yield a modest positive net cash flow (they reported roughly a $5,000 annual net after the change and retaining $150,000 in bonus funding), which the developer said was necessary to qualify for permanent financing and retain fiscal viability.
The Board moved and seconded a motion authorizing the chair to execute a loan modification amendment to the Trust’s January 12, 2024 loan agreement (as amended April 7, 2025) with Black Equity Group LLC to revise unit rental restrictions so that one unit is restricted at no more than 30% AMI and six units at no more than 60% AMI. A roll‑call vote recorded all trustees voting yes; the amendment was approved.
Trust fund staff and the developer noted construction is underway, subcontractors are mobilized, and the team anticipates occupancy or full lease‑up in early next year if current schedules and financing hold. Lender representatives said the major cost and delay drivers were historic‑district review, lead remediation requirements, and participating‑lender legal conditions that were largely outside the developer’s control.
