Shrewsbury officials are discussing the possibility of building new housing on the site of the former Christmas Tree Shop to meet MBTA zoning requirements.

State law requires communities with or near MBTA service to have at least one zoning district where multi-family housing is permitted. Communities who do not comply lose eligibility for certain grants.

Shrewsbury’s director of planning and economic development Christopher McGoldrick said this project will meet the requirements.

"It certainly falls within the spirit of what I think the state was trying to achieve through the MBTA communities,” McGoldrick said. “So, although it is the MBTA community zoning, we will be essentially re-branding it simply as, rather than calling it MBTA communities - we don't have an MBTA station - so it will be our transit-oriented development overlay district."

The Christmas Tree Shop closed last year when the retail chain went out of business. The location, near the intersection of Route 9 and Route 20, is about two miles from the commuter rail station in Westborough.

More details on the project are expected at a public hearing in March.