Gateway City leaders enthusiastically applauded the smart economic development investments Governor Baker signed into law last week at the State House. This session’s economic development package authorized an unusually large infusion of capital spending, including $500 million for the MassWorks grant, $45 million for the Brownfields Redevelopment Fund, and $45 million for the Transformative Development Initiative. These significant sums demonstrate how committed the Baker administration is to Gateway City revitalization.
But the big ticket pieces might not represent the most significant achievement for Gateway Cities in the bill. Quietly tucked into the omnibus legislation is a pilot program developed by Ted Carman and Eleanor White. Over the past year, the two long-time Massachusetts housing leaders worked together tirelessly on a plan to solve the state’s housing challenge by making far more Gateway City developments economically feasible through a “Workforce Housing Production Trust Fund.”
The novelty is this new trust fund provides an avenue for the state to recoup the large infusion of patient equity it provides to Gateway City projects. In exchange for funding equal to twice the Housing Development Incentive Program (HDIP) tax credit, the state can capture 25 percent of the project’s annual cash flow and 25 percent of the developer’s profit at sale or refinancing, up to the full amount of state funding provided.
Senator Donoghue and Senator Chandler saw the logic in this proposal and encouraged the Senate President to champion the concept. When the Senate’s economic development bill made its way over to the House, Rep. Cabral convinced his House colleagues on the conference committee to give the Carman-White idea a try. The final bill included funding for a $25 million pilot. Rather than veto the allocation, the Baker administration wisely accepted the legislature’s innovative contribution to the economic development bill.
The potential to have up to 50 percent of construction costs covered by state equity will drive many developers to take a fresh look at Gateway City projects. This could create pressure to redevelop buildings that don’t make all that much sense, but the Transformative Development Initiative
provides an excellent hedge against that risk. MassDevelopment’s work identifying districts, inventorying properties that represent opportunities for catalytic redevelopment, and building community support and momentum provides a strong framework for selecting smart investments. Think of this new trust fund as filling in one of the last missing pieces-a strong tool to get more housing developers and private capital in the mix.
Ted Carman and Eleanor White had convincing analysis to show the state will earn a real return through higher tax revenue that comes with job growth spurred by housing production. If this program proves to be as powerful we think it could be, they will deserve enormous gratitude. But history should also recall the leadership that Gateway City legislators provided advocating for this game-changer at the hectic conclusion of a busy session.
– Winthrop Roosevelt
Housing and Economic Development
Governor Baker signs the economic development bill into law.
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