On August 13, 2014, Governor Deval Patrick signed H.4377, “An Act To Promote Economic Growth in the Commonwealth.” Among other actions, the bill increases the Housing Development Incentive Program’s (HDIP) annual cap from $5 million to $10 million over the next four years, and allows larger developments to qualify by eliminating the 50 market-rate unit per project cap. The expansion of the HDIP will provide residents of Gateway Cities with increased access to market-rate as well as affordable housing. 

Eligible Gateway Cities that want to create market rate housing can propose HDIP zones where they want to encourage development that can take advantage of the program. Once zones are established, developers and cities can propose projects and tax relief to support specific projects.

“We are excited to partner with local developers and gateway communities to create new housing resources for all income,” said Undersecretary Aaron Gornstein.

Please contact Miryam Bobadilla, Senior Technical Assistance Coordinator, DHCD’s Office of Sustainable Communities, at Miryam.Bobadilla@state.ma.us  or at (617)573-1356, for additional information. 

 

Updates

760 CMR 66.00

HDIP Regulation Requirements pdf format of hdip-regulatoryrequirements.pdf

HDIP Implementation Guidelines pdf format of hdip-implementationguidelines.pdf

Frequently Asked Questions pdf format of faq.pdf

HDIP Application for Certification of HD Project and QSRE doc format of hdipapplication.doc

Tax Increment Exemption Agreement; Ownership doc format of tiea-ownership.doc

Tax Increment Exemption Agreement; Rental doc format of tiea-rental.doc

Tax Increment Exemption Agreement; Mixed Tenure doc format of tiea-mixed.doc

 

Program Description

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.

Eligible Applicants

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.

Eligible Activities

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.

Application Process

All applications will be accepted by DHCD for review and approval on a rolling basis in the following sequence:

  1. HD Zone designation with HD Zone Plan
  2. 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).

Related Links

HDIP - Implementation Assistance Sessions PowerPoint, July 2012 pdf format of hdip-implem-assistance.pdf

M.G.L. Chapter 40V

Certified Housing Development Credit TIR 10-14

HDIP - Description and Design pdf format of hdip-description_design.pdf

List of Gateway Municipalities doc format of listofgateway.doc

HD Zone and Plan approvals

Contact

For additional information, please call the Office of Sustainable Communities at (617) 573-1353.