The rents in her project, which may range between $1,000 and $2,000, would be below those of more central neighborhoods. And that, Gallo said, will make it less attractive to investors, because it could take them longer to get their money back.

The developer just received approval from Boston officials to build a $14 million, 64-unit apartment complex in the Ashmont section of Dorchester, a neighborhood that has heated up recently for its proximity to a busy Red Line station.

Beverly Gallo is trying to help Mayor Martin J. Walsh make good on a pledge to build more apartments out in city neighborhoods that middle-income residents can afford. She just has to figure out how to pay for it.


“If I say I have this great project in Downtown Crossing, I wouldn’t even have to finish my sentence before people get their checkbooks out,” said Gallo, principal at Peregrine Urban Initiative, a subsidiary of the Rhode Island firm behind the project. “If I have this great project in Ashmont or Dorchester, there’s this pause.”

Her project is emblematic of the challenge of creating more housing that workers can actually afford, especially in outlying areas. In Boston, Walsh has set a target of 53,000 new units by 2030. Importantly. the mayor wants many of those units to be moderately priced — and he wants the private sector to step in and build them.

Sometimes called “workforce housing,” these units are not as profitable to build or finance as the luxury buildings cropping up in the Seaport, the Fenway, and other central neighborhoods, and have proven tough to finance without some help from the government.

“There are a lot of neighborhoods where the math doesn’t work to build market housing, because the markets aren’t quite strong enough to support the rents there,” said Tim Sullivan, executive director of MassHousing.


The state agency in May rolled out a new $100 million fund to support the construction of workforce housing. The fund provides a subsidy of up to $100,000 a unit, but comes with strings attached: One-fifth of the units must be affordable to tenants who make less than 80 percent of the area’s median income.

The Carruth apartment-condo complex opened in 2008, before the neighborhood became more popular. David L. Ryan/Globe Staff/Globe Staff

Like other outlying neighborhoods with a mass transit line, Ashmont has become newly popular. New restaurants and shops have added bustle to a streetscape once dependent on commuters to and from Ashmont Station.

The first new building of much size was the Carruth, a mix of apartments and condominiums overlooking the MBTA station that Trinity Financial opened in 2008. This month, Trinity broke ground on its second building in the area, the 83-unit Treadmark.

But both those buildings received public subsidies that limit many apartments to low-income tenants. As with the Carruth, Trinity had to “cobble together lots and lots of different” funding sources to make the Treadmark happen, said Kenan Bigby, managing director at Trinity: tax breaks and government funding, investor capital, private debt, and its own money.

By contrast, Peregrine is trying to build market-rate housing. Even with a stronger market throughout Boston, Bigby said, Ashmont might be a tough sell to investors.

“This is still sort of an edge location,” Bigby said, “so I’m assuming they have to be pretty careful and clever about how they piece that project together to be able to serve the population they’re trying to serve.”


An industry veteran who has worked on a variety of housing developments, Gallo said she has looked into programs such as the new MassHousing fund, but would prefer to keep her Ashmont project privately financed.

The Peregrine building would be mostly studio apartments, and Gallo expects the rents to average $2.83 a square foot, or about $1,700 a month for a 600-square-foot unit. The company just finished a development in Roslindale, 43 one and two-bedroom market-rate units that Gallo said is doing well. That project was also privately financed, Gallo said, but was less of a risky proposition to investors because the neighborhood around it was already “up and coming.”

But because Ashmont is a less-tested market, Gallo said, her project here is “a little more scary” and a “little less economically feasible.” That means investors will probably demand higher returns, which would cut into how much Peregrine makes.

Without subsidies, it takes a “visionary developer,” like Peregrine, to win over impatient investors, convincing them to wait longer to get their money back, said Kathy McGilvray, director of investment for the Massachusetts Housing Investment Corporation.

“In real estate, the finance is all about risk and reward,” said McGilvray, whose private nonprofit specializes in financing affordable housing throughout New England. “An investor coming into an unproven market like Dorchester is going to want more return.”

The city has considered offering tax breaks as inducements, said Sheila Dillon, a member of Walsh’s cabinet, but cannot force developers and investors to build in outer neighborhoods like Dorchester. If Gallo is successful with the Ashmont project, Dillon said, then maybe others will be convinced to follow her.


“We know that there are not enough resources to create both affordable and middle-income housing, so we need the market to respond,” said Dillon, director of the Department of Neighborhood Development, the city’s housing agency.

Michelle Landers, executive director of the Urban Land Institute for Boston/New England, suggested the market may be starting to force developers in that direction, as builders are running out of options in the central neighborhoods where much of the new development has occurred.

“Companies that are looking for opportunity are having to look farther out into the neighborhoods,” said Landers. “It’s not like there are a ton of options downtown or in the Back Bay, and they’re simply choosing to explore other markets like Dorchester.”

One longtime Ashmont resident active in community groups believes the neighborhood, already seeing a surge of new residents, should easily support a project such as Peregrine’s.

“Yes, we are here, and we have the stats to show that there’s pent-up market demand for what we have to offer, so give us a try,” Vicki Rugo said.

Storefronts in a building across from the subway station. David L. Ryan/Globe Staff/Globe Staff

Michael Bodley can be reached at michael.bodley@globe.com. Follow him on Twitter @michael_bodley.