With families scrambling for homes and prices at record levels, one might wonder why Massachusetts continues to produce just a fraction of the housing that was built in past decades.
Suburban regulatory barriers own much of the blame but are just part of the problem. While the Gateway Cities that we represent welcome development, land and construction costs have skyrocketed even faster than rents have increased.
Numerous properties in our downtowns and residential neighborhoods continue to sit idle. These empty lots, abandoned businesses, and half-empty office buildings are especially costly to redevelop. It could be environmental contamination, lack of parking, or a quirky older building that is difficult — and cost prohibitive — to reconfigure. In many cases, convoluted transactions have clouded the chain of ownership, requiring years of costly legal proceedings to resolve. Properties may sit for decades in a state of decay, deterring private investment in buildings that would otherwise represent strong candidates for redevelopment.
Fortunately, Massachusetts has a spectacularly successful state program to overcome these obstacles: the Housing Development Incentive Program, which provides a small subsidy to close financing gaps and make redevelopment projects viable.
Since 2014, HDIP has helped create more than 2,500 units of housing and generated over $800 million in private investment. This level of production is especially impressive given that HDIP is capped at $10 million a year, only enough for a handful of projects across the entire state.
In 2020 and again in 2022, Governor Charlie Baker and legislative leaders introduced proposals to triple the size of the program to $30 million per year. The nonpartisan public policy research organization MassINC estimates that this could generate up to 12,000 units and over $4 billion in total housing investment over the next 10 years.
These figures are not hypothetical. Developers have already put forward projects representing 1,782 units worth nearly half a billion dollars. However, they cannot close on construction loans without HDIP credits, and there are not enough to go around.
Time is not on our side. With the Fed continuing to push interest rates higher, soon these projects will disappear. We will be many years into the next housing cycle before redevelopment opportunities like these reemerge.
Increasing housing options for our residents means creating new homes that minimum-wage earners can afford, as well as apartments for young professionals and empty nesters. We’d like our young people who leave our gateway cities and our towns for higher education to be able to come back home to live and work. We pride ourselves on our diversity and providing first chances for immigrants and new families. And we remain committed to increasing our stock of affordable housing. In fact, our cities have built more than one-third of the state’s affordable housing over the past decade.
HDIP is a powerful tool to jump-start additional housing development that contains a mix of market-rate and affordable units based on project agreements negotiated by local government. In this way, HDIP offers a cost-effective path to build much more housing than the government or private sector could do alone. In fact, the program’s modest subsidy unlocks housing units at about one-twelfth the cost of traditional programs. This relaxes pressure on the housing market and makes housing more affordable for everyone in Massachusetts.
By putting vacant buildings back on the tax rolls, HDIP also helps our cities’ finances and promotes a mix of uses that support foot traffic for local businesses. Most of these projects are near transit, which increases ridership and makes operating this infrastructure more cost-effective for the state. They also help reinvigorate our downtowns, making them stronger economic hubs for our regions.
Massachusetts needs an “all of the above” housing strategy to bring jobs to post-industrial communities, keep our young people from moving out of state, provide stable family housing so that our children can learn without disruption, and give our seniors places to downsize. HDIP is a key part of the equation. Let us build the housing that all of Massachusetts needs.
James DiLisio is acting mayor of Attleboro; Robert F. Sullivan is the mayor of Brockton; John L. Vieau is the mayor of Chicopee; Paul Coogan is the mayor of Fall River; Stephen L. DiNatale is the mayor of Fitchburg; Joshua A. Garcia is the mayor of Holyoke; Brian A. DePeña is the mayor of Lawrence; Dean Mazzarella is the mayor of Leominster; Jared Nicholson is the mayor of Lynn; Gary Christenson is the mayor of Malden; Jon Mitchell is the mayor of New Bedford; Edward A. Bettencourt Jr. is the mayor of Peabody; Linda M. Tyer is the mayor of Pittsfield; Brian Arrigo is the mayor of Revere; Shaunna O’Connell is the mayor of Taunton; and Eric D. Batista is the city manager of Worcester.