Housing Development Incentive Program (HDIP) - Worcester Regional Chamber of Commerce

Housing Development Incentive Program (HDIP)

HDIP provides the Commonwealth’s 26 Gateway Cities with a tool to development market rate housing while increasing residential growth, expanding diversity of housing stock, supporting economic development, and promoting neighborhood stabilization in designated areas.

HDIP has two primary features that are provided to developers.

  • A local-option real estate tax emption on the new value of the property
  • State tax credits for Qualifiers Project Expenditure are awarded through a rolling application process.

Problem

Currently there is not enough funding for HDIP which has resulted in a backlog of tax credits that could be awarded to eligible developers. As of 2022, HDIP has an annual cap of $10 million which has left over $57 million in help up tax credits. The hold up has allowed proposed projects not to start creating further problems in solving the housing crisis.

Another problem is that market rate development in Worcester needs to be subsidized by HDIP because our rents are lower, but our construction costs are similar to the Boston Area.

Every new development in the city of Worcester will require some type of subsidy to accommodate the required affordable housing’s impact on their project budgets. As lenders and equity investors will not fund projects that are not financially feasible.

Solution

At the Worcester Chamber we are in support of the Governor’s plan and are working with other Gateway Cities to expand the HDIP annual cap to $30 Million to bring more investment. economic growth, and housing stock to our communities.

Though our support of expanding the annual cap of HDIP, the program can add sufficient numbers of new units to the state’s housing stock to alleviate the significant gaps in the production of both affordable and market-rate housing in Worcester and Gateway Cities. As well, HDIP projects turn vacant lots and underutilized properties into activated, multi family or mixed use developments.

The program will attract new developers to Gateway Cities, who normally wouldn’t be able to build there as they will be able to use HDIP as a tool to help kickstart projects that would not be feasible without some sort of subsidy or tax break.

Worcester

Worcester has been one of the most active cities utilizing HDIP, as the program has and will create over 1,000 units of housing representing $300 million in investment.

  • Still, market rate development in Worcester needs to be subsidized by HDIP because our rents are lower, but our construction costs are similar to the Boston Area.
  • HDIP is the most effective tax incentive tool for producing multi-family housing on terms that are a win-win for the developer and the community.

Examples of Projects

  • Franklin Street
  • The El at 100 Wall Street
  • Edge at Union Station
  • Kelley Square Lofts
  • Elwood Adams Apartments
  • Chatham Lofts
  • Madison Properties’ two apartment buildings near Polar Park
  • SilverBrick Skyhouse at downtown’s Commerce Building
  • Mission Chapel on Summer Street
  • Alta Seven Hills