The Housing Development Incentive Program (HDIP), established by M.G.L., Chapter 40V, provides Gateway Cities with a tool to develop market rate housing while increasing residential growth, expanding diversity of housing stock, supporting economic development, and promoting neighborhood stabilization in designated areas. The program provides two tax incentives to developers to undertake new construction or substantial rehabilitation of properties for lease or sale as multi-unit market rate residential 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 Project Expenditures (QPEs) 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 residential 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 25% of the QPEs of the market rate residential units.
HDIP Implementation Guidelines file size 6MB updated 4/7/17
Technical Information Release (TIR) from Department of Revenue October, 2014
All Gateway Cities as defined by Chapter 23A section 3A, which are municipalities with a population greater than 35,000 and less than 250,000, a median household 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 QPEs of the market rate units.
New construction or substantial rehabilitation of a property that will result in multi-unit residential 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:
- New construction
- Substantial redevelopment, repair and renovation of properties
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 development and revitalization, and prepare HD Zone Plans for promoting market rate residential 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 QPEs
- Preliminary Certification
- Conditional Certification with an executed TIE Agreement and request for HD Tax Credits
- Final Certification with QPEs
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 Please note: This TIE has not been updated to reflect changes made to the program after April 7, 2017
- HDIP Application for Certification of HD Project and QSRE Please note: This TIE has not been updated to reflect changes made to the program after April 7, 2017
Sample HD Zone and Zone Plan
Please note: The Applications and Plans included below were developed under an older version of the HDIP statute and regulations. The statute was amended in 2016 and the regulations were amended on April 7, 2017. Therefore, some provisions of the below Applications and Plans may no longer be appropriate.
- Worcester - Application with Zone Plan file size 4MB
- 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.