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 areas. The program provides two tax incentives to developers 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 an executed Housing Development Tax Increment Exemption (TIE) Agreement between a developer and a Gateway City 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 project for no less than five years and no more than 20 years, and (2) award state Housing Development (HD) Tax Credits of up to $2 million to the developer of a 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.
HDIP Implementation Guidelines updated 10/1/14
HDIP Frequently Asked Questions updated 10/1/14
HDIP - Program Overview updated 10/1/14
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.
Developers, both for-profit and nonprofit, with proposed market-rate housing projects located in designated areas in Gateway Cities.
Amount of State HD Tax Credit
The HDIP has an annual cap of $10 million. Developers may apply to DHCD for HD Tax Credits of up to $2 million for QSREs of the market rate units.
Substantial rehabilitation of a property that will result in multi-unit housing development, containing a minimum of 80% market rate units. There are no restrictions on the size of projects. A proposed 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. Eligible construction activities include:
- Major redevelopment, repair and renovation of properties
- Limited new construction such as construction of upper stories, expansion of a building’s footprint, and redevelopment of a site after demolition
Eligible development costs include both hard and soft construction costs associated with the development of the market rate units. Acquisition costs are ineligible expenses.
Gateway Cities that want to participate in the HDIP must propose HD Zones where they want to encourage redevelopment and revitalization, and prepare HD Zone Plans for promoting market rate housing development in these designated areas for DHCD approval. In addition, DHCD must also approve executed TIE Agreements between individual developers and cities as well as applications from individual developers for HD Tax Credits.
Applications will be accepted by DHCD for approval on a rolling basis in the following sequence:
- Designation of HD Zone and HD Zone Plan
- Certification of proposed HD Project and QSREs
- Preliminary Certification
- Conditional Certification with an executed TIE Agreement and request for HD Tax Credits
- Final Certification with QSREs
For specific application information, please refer to the HDIP Implementation Regulations, the HDIP Implementation Guidelines (see updates above) and the program materials below.
- Tax Increment Exemption Agreement; Ownership
- Tax Increment Exemption Agreement; Rental
- Tax Increment Exemption Agreement; Mixed Tenure
- HDIP Application for Certification of HD Project and QSRE
Sample HD Zone and Zone Plan
- Brockton - Application with Zone Plan file size 2MB
- Holyoke - Application with Zone Plan file size 3MB
- Leominster - Application with Zone Plan file size 3MB
- Lynn - Application file size 3MB
- Malden - Application with Zone Plan file size 8MB
- New Bedford - Application with Zone Plan file size 6MB
- Pittsfield - Application with Zone Plan file size 2MB
For additional information, please contact Bill Reyelt, Principle Planner, Smart Growth Programs, at (617) 573-1355 or at William.Reyelt@state.ma.us or Rebecca Frawley Wachtel, HOME Director, at (617) 573-1318 or at Rebecca.Frawley@state.ma.us.