When Alexander Train walks around Chelsea, he sees a city becoming unaffordable for its residents. At a commuter rail station one May morning, the Chelsea community development director points down the block to a housing complex with hundreds of apartments with granite kitchen counters and stainless steel appliances fetching over $2,500 in monthly rent — expensive for the historically working class city.

“Over the last ten years, there's been about three times the amount of luxury housing built compared to affordable housing,” he said.

Train’s goal is to reverse that trend in Chelsea and build more mixed-income housing complexes to ensure there are affordable apartments for current residents to stay in the area. But in other Massachusetts towns and cities, officials say more expensive housing is exactly what they need to revitalize their downtowns and boost their local economies.

“We need folks to come into Fitchburg that have higher incomes,” said Liz Murphy, the Central Massachusetts city’s community development director. “We struggle to have those higher-end units for [them].”

Fitchburg and Chelsea’s conflicting priorities illustrate the complex challenges state officials face as they search for solutions to a housing shortage that has caused prices to surge and people to relocate to other states. There is no one-size-fits-all approach to development.

This has prompted Gov. Maura Healey’s administration to stress that Massachusetts needs all types of housing — both affordable and market rate. Officials are trying to tailor policy and state financing for housing development to meet communities’ different needs.

Still, housing advocates caution that with state housing resources finite, using a higher percentage of taxpayer money to incentivize the development of apartments and homes for wealthier people raises equity concerns when that funding could instead go toward rental assistance and more housing for lower-income residents.

There’s also the risk that any additional construction of high-end housing fuels a runaway train of increasing home prices in more Massachusetts cities.

Different cities. Different housing markets.

“Location, location, location” is a phrase real estate insiders use often, and it helps explain why communities’ housing needs can be so conflicting.

Boston’s housing market has had a radiating impact on nearby cities for years. As housing prices in the state’s largest city continue to increase, renters have increasingly flocked to nearby communities like Chelsea, where apartments have historically been less expensive. Developers have followed, building new apartment complexes and raising rent to meet the growing demand.

The increasingly hot housing market in Chelsea squeezes out the lower-income people that have traditionally made the city a working-class community. Median rents and homelessness in Chelsea are at record highs, and city officials say over half of renters are cost-burdened, paying more than a third of their income on housing and utilities.

A similar dynamic is playing out in cities like Lynn, Somerville and Worcester, where longtime residents are increasingly moving out because they can no longer afford housing.

Worcester native Mallory Shelly, whose mother, sister and brother have all left the city in search of less expensive housing, said the influx of higher-end development feels invasive.

“The rich people are taking over,” Shelly said as she walked around the city’s downtown and Canal District, where thousands of high-priced luxury housing units have been built in recent years. “It feels like a parasite.”

Mallory Shelly Worcester
Mallory Shelly stands in front of a luxury housing complex in Worcester. She's spent nearly her entire life in the city and watched it become more expensive.
Sam Turken GBH News

By comparison, smaller post-industrial cities that are farther away from Boston haven’t experienced these same forces. Once factories shut down in the 1900s, Fitchburg and Holyoke became economically depressed as businesses closed and people moved away.

Today, both cities have begun to rebound, but they still have vacant properties and office space that can be converted into housing. Liz Murphy, Fitchburg’s community development director, said although her city can use more affordable apartments, there’s already a concentration of them around downtown. She wants to see new housing in that area for people with higher incomes who are moving into Fitchburg.

“[Those families] support our economy, and our local economy provides local jobs to folks that are already in the community,” Murphy said.

Complications due to the distinct housing needs

Recent disagreement over an obscure state housing financing program exemplifies the challenges that come with trying to tailor state policy to meet cities’ distinct needs.

Massachusetts’ 26 post-industrial Gateway Cities are eligible for housing construction funding via the Housing Development Incentive Program. The program provides tax incentives to developers who build market-rate units.

When developers build housing, they usually take out loans for construction and repay the debt with future rental income. But average rents in some Gateway Cities tend to be lower, which squeezes developers’ profits, leaving them less willing to take on certain projects. The HDIP subsidy is meant to make up for that and fuel more investment in Gateway Cities.

In an effort to boost housing production, Healey has proposed expanding the HDIP program by lifting its $10 million annual cap to $57 million in the first year and $30 million in subsequent years. The proposal, which state lawmakers are still considering, has set off a statewide debate over whether the HDIP program should be altered to also finance affordable housing development.

Leaders of most Gateway Cities and some developers reject any type of modification that would force HDIP projects to include affordable apartments, arguing that it could stifle housing production because income-restricted units are often more expensive to finance.

“If you think there’s a public good to having 26 thriving downtowns across the commonwealth — and not just Boston, Cambridge and Somerville — then HDIP’s a very modest investment to make that happen,” said Andre Leroux, a director with the nonpartisan think tank MassINC.

Downtown Fitchburg
Fitchburg officials want to convert vacant space around downtown into luxury market-rate housing.
Sam Turken GBH News

But Alexander Train, the development director for Chelsea, believes the HDIP program does need to be reformed. Without the affordability modification, he said HDIP does nothing to help Gateway Cities like Chelsea, and the state as a whole, address the dearth of income-restricted apartments.

Train and Judith Liben, a housing attorney with the Massachusetts Law Reform Institute, noted that HDIP often subsidizes the development of luxury apartments — in some cases, HDIP-financed apartments rent for more than $4,500 a month.

Train noted that when HDIP buildings come online and charge higher rents in a city, landlords of nearby existing apartments raise their rents in response.

“Worcester is the poster child,” Liben said, noting that Massachusetts’ second-largest city has become a primary recipient of HDIP funds after struggling to attract development for years. “It’s not just Worcester, but Worcester is extreme.”

Worcester officials have agreed housing prices are rising, and say they’re taking steps to create more affordable housing.

Still, housing advocates add that using state money to facilitate the construction of market-rate homes is inherently inequitable. According to the National Low Income Housing Coalition, Massachusetts needs more than 175,000 housing units for its lowest-income residents. Activists and some local officials argue that when the state subsidizes market-rate housing development for wealthier people, there’s less funding available to help build more affordable housing.

“We simply cannot afford to spend $30 million of our annual State housing dollars, equal to one-fifth of the current year’s housing capital budget, on market-rate housing,” Worcester City Councilor Etel Hawhiaj tweeted earlier in June.

Worcester Luxury Housing
More high-priced luxury housing is under construction around Worcester.
Sam Turken GBH News

In an interview, Lt. Gov. Kim Driscoll acknowledged the concerns about building more market-rate housing. She said the state already allocates hundreds of millions dollars annually to support more affordable housing development and rental assistance.

Still, in order to best meet communities’ different housing needs and address Massachusetts’ housing crisis, Driscoll said the state must find a right balance between the construction of more market-rate and affordable housing.

“We don't have enough housing to meet the demand,” she said. “That is requiring us to really be a lot more thoughtful about the strategies we can put in place in all of our communities to build the type of housing we need.”