If Gov. Maura Healey wants to make the most of landmark zoning reforms and the grand project to transform the MBTA commuter rail system, an infusion of housing production funds is needed.
In the budget she is due to present this week, we strongly urge the governor to at least triple the size of the state Housing Development Incentive Program, often known by its abbreviation “HDIP.”
Tripling the size of any state spending program sounds like a large ask, but in truth, it would only require an additional $20 million – the program has hummed along, successful but extremely oversubscribed, for years under Gov. Charlie Baker with a budget of $10 million.
But why HDIP? In short, it’s possibly the most impactful type of state development funding in Massachusetts’ arsenal. Since 2014, the program has created over 2,500 homes by filling in gaps in Gateway Cities developments’ financing packages that would otherwise be nearly impossible to close.
Building housing in these 26 ex-industrial hubs across the state is tough. Years of failed dreams and neglect have left many vacant or underused commercial properties with knotty ownership structures, environmental contamination or beloved but tough-to-redevelop historic structures. Normally, these are the kinds of sites that private developers shy from given the expense and time to get them shovel-ready. But they also often sit at important locations – next to train stations, in the heart of commercial districts – and leaving them to rot can scare away developers and tenants, alike.
The HDIP program’s small size has left some developers warry of planning projects in Massachusetts Gateway Cities, lest they have to wait for years to win dollars, only to see their planning approvals lapse or have lenders and investors pull out in search of buildings that will be completed sooner.
Add in Gateway Cities’ historical propensity for fewer peaks and deeper and longer troughs in each market cycle, and it’s no wonder that the last 10 years actually saw 50 percent fewer units built in these communities than in the first decade of the 20th century.
An HDIP package worth a modest $30 million per year can be a powerful tool to build the transit- and walking-focused homes we desperately need. The MassINC think-tank has predicted the additional money will unlock over $4 billion in private investment and create 12,000 new homes over the next 10 years.
But why stop there? Why not grow the program further to help eliminate the backlog of projects waiting for HDIP money even faster? With Federal Reserve policymakers clearly signaling their intent to keep raising interest rates and hold them at a high level for some time, the kind of low-cost financing Gateway Cities developments have relied on for a decade is clearly a thing of the past. In this new normal, more support will be needed to jump-start development in these communities and help them and the commonwealth reach their full potentials.
Letters to the editor of 350 words or fewer responding to this editorial or other content in Banker & Tradesman may be submitted via email at editorial@thewarrengroup.com with the subject line “Letter to the Editor,” or mailed to the offices of The Warren Group. Submission is not a guarantee of publication.
