The Commonwealth’s Housing Development Incentive Program, or HDIP, is proving successful in spurring the development of new housing in Gateway Cities. Along with relatively new programs like MassHousing’s workforce housing program, HDIP has been used by several developers to purchase underutilized properties or vacant sites and transform them into mixed-use developments.
The HIDIP was created in 2012 and provides developers with state tax credits of up to 25% of the total development cost. The Commonwealth has devoted up to $10 million per year for the program.
The HDIP underwent some refinements in 2016 and is now more flexible and user friendly to developers, according to Paul McMorrow, Director of Policy and Communications for the Executive Office of Housing and Economic Development. "The Legislature changed the formula," he noted. "There’s more buying power in the program now."
In 2016 the maximum tax credit amount was raised from 10% of a project's TDC to its current 25%. In addition, the HDIP can now be used for new construction or rehab, whereas before it was for rehabilitation of existing historic structures only. Multiple state agencies, including EOHED and MassDevelopment as well as MassHousing are working with developers to revitalize underutilized buildings and turn them into mixed use properties for housing and commercial uses.
Development firm Traggorth Companies received a $474,000 HDIP tax credit to help build 37 Washington Street in Haverhill into 18 units of housing now known as J.M. Lofts. The TDC was $7.4 million. The building was part of what McMorrow describes as a Transformative Development District. An interesting component of the Haverhill project is a new coffee shop on the ground floor called "Battle Grounds Coffee" started by a Navy SEAL Veteran. Traggorth has since purchased a second, adjacent property.
Other successful projects using the HDIP include the Masonic Block project in Malden (69 units, a $23.5 million TDC) and Harbor Place II in Haverhill (30-units of for-sale housing being developed by the Boston Archdiocese's Planning Office for Urban Affairs, or POUA).
The Watson, a 140-unit development in the Gateway City of Quincy currently under construction and being developed by WinnDevelopment, is set to receive $29.9 million in MassHousing financing and has an application for an HDIP tax credit that is under review.
In Brockton, the development company Concord Square Planning and Development is in the process of transforming the old Brockton Furniture building into 50 units of housing very near the MBTA station. It will also contain ground floor commercial space. While not yet in the pipeline of HDIP projects, it is seen as a good candidate for the program. Brockton Mayor Bill Carpenter was quoted in the Brockton Enterprise as saying that "it will be one of the most exciting projects to ever happen in downtown Brockton."
MassHousing is collaborating with EOHED to find development opportunities where MassHousing’s workforce housing program can work in tandem with the HDIP. MassHousing’s workforce housing program can subsidize the construction of units for residents with incomes up to 120% of AMI, while the prime objective of the HDIP is to make market rate housing in Gateway Cities more economically feasible. "In some markets, the MassHousing financing will blend well with HDIP; it will depend on how close market rents are to the workforce housing rent limits," notes McMorrow.
According to EOHED, a total of 433 units were supported by HDIP in 2016 and 1,100 prospective units were in various stages of review. Learn more about the HDIP here.