The Housing Development Incentive Program (HDIP), established as M.G.L., Chapter 40V, provides Gateway Cities with a development tool to increase residential growth, expand diversity of housing stock, support economic development, and promote neighborhood stabilization in designated geographic target areas. The program provides two tax incentives to developers (Sponsors) to undertake substantial rehabilitation of properties for lease or sale as multi-unit market rate housing:
- A local-option real estate tax exemption on all or part of the increased property value resulting from improvements (the increment); and
- State tax credits for Qualified Substantial Rehabilitation Expenditures (QSREs) that are awarded through a rolling application process.
DHCD may (1) approve a locally negotiated/executed Housing Development (HD) Tax Increment Exemption Agreement between the Sponsor and Municipality under M.G.L. c. 59 section 5M of no less than 10% and no more than 100% of the increment on market rate units in a Certified HD Project for no less than five years and no more than 20 years, and (2) award state HD Tax Credit to the Sponsor of a Certified HD Project under M.G.L. c. 62 section 6(q) and chapter 63 section 38BB, not to exceed 10% of the QSREs of the market rate units.
All Gateway Cities as defined by Chapter 23A section 3A: a municipality with a population greater than 35,000 and less than 250,000, a median housing income below the state average and a rate of educational attainment of a bachelor’s degree or above that is below the state average. The Gateway Cities are: Barnstable, Brockton, Chelsea, Chicopee, Everett, Fall River, Fitchburg, Haverhill, Holyoke, Lawrence, Leominster, Lowell, Lynn, Malden, Methuen, New Bedford, Pittsfield, Quincy, Revere, Salem, Springfield, Taunton, Westfield, and Worcester.
Developers, both for-profit and nonprofit, with proposed HD Projects in designated target areas in Gateway Cities.
Substantial rehabilitation of an existing property that will result in multi-unit housing development, containing a maximum of 50 market rate units and a minimum of 80% market rate units. A HD Project may be comprised of one or more buildings on one or more contiguous parcels of land, provided they are permitted and financed as a single undertaking. Substantial rehabilitation includes:
- Limited new construction such as construction of upper stories on existing buildings and expansion of the foot print of a portion or all of an existing building(s);
- Rebuilding on a site after demolition of an existing building provided that demolition is undertaken by the same Sponsor as part of the redevelopment of the site and does not commence prior to the date that DHCD approves Preliminary Certification for the HD Project; and
- Construction costs per unit of not less than $30,000.
Note: New construction on an existing vacant site is an ineligible activity.
All applications will be accepted by DHCD for review and approval on a rolling basis in the following sequence:
- HD Zone designation with HD Zone Plan
- Certification of HD Project and QSRE
a. Preliminary Certification
b. Conditional Certification, including executed HD Tax Increment Exemption Agreement and request for HD Tax Credits
c. Final Certification with QSREs
For specific application information, please refer to the HDIP Implementation Regulations, 760 CMR 66.00, the HDIP Implementation Guidelines and the Application for Certification of HD Project and QSREs (see links above).
HD Zone and Plan approvals
- Chelsea - Application with Zone Plan file size 9MB and DHCD Approval Letter
- Holyoke - Application with Zone Plan file size 3MB and DHCD Approval Letter
- Lowell - Application file size 1MB - Zone Plan file size 3MB and DHCD Approval Letter
- Pittsfield - Application with Zone Plan file size 2MB and DHCD Approval Letter
- Springfield - Application with Zone Plan file size 3MB and DHCD Approval Letter
For additional information, please call the Office of Sustainable Communities at (617) 573-1353.