Housing Choice & HDIP, ASAP
The Gateway Cities Journal
Last Wednesday was a big day on Beacon Hill. Governor Baker gathered leaders from across the state to make a forceful argument for acting promptly on his sensible Housing Choice legislation. The Governor’s bill takes on the housing crunch/road congestion behemoth by making it easier to approve multifamily development, particularly near existing transit stations. Under the legislation, zoning changes and permitting decisions needed to make way for projects that communities desire would require a simple majority vote, rather than the supermajority of town meeting, select board, or council, which most approvals currently call for.
Governor Baker offered similar legislation last session. But his bill didn’t make it over the finish line, at least in part, because many wanted the Legislature to go further. From protecting low and moderate-income residents from rising rents to addressing zoning practices that lead to costly suburban sprawl, groups were pressing for action on a range of concerns, many of which lack support from powerful groups on Beacon Hill. Advocates feared advancing the Governor’s zoning solution would take a valuable bargaining chip off the table in negotiations for a broader reform package.
Growing momentum to “prevent the perfect from becoming the enemy of the good” may carry the Governor’s bill over the finish line sooner rather than later. With its passage, those on all sides will need to come together to make sure that these powerful zoning changes produce as much sustainable and equitable development as possible.
As it happens, MassINC, LOCUS and the Massachusetts Smart Growth Alliance had scheduled a forum at the State House last Wednesday to talk about emerging opportunities to facilitate transformative investment in Gateway Cities. If Housing Choices can get more dense infill and adaptive reuse development to occur near Gateway City train stations, it will go a long way toward efficiently solving the region’s most vexing growth challenges.
While Gateway Cities are certainly far more pro-development than suburbs, a supermajority threshold always creates uncertainty. And this uncertainty equates to added cost. In Gateway City markets where relatively low rents make residential projects difficult to finance, permitting risk can be a deal killer.
Permitting uncertainty is even more problematic when working in Opportunity Zones. Our research shows that this new federal incentive is well-positioned to finance Gateway City TOD projects, but projects must move quickly in order to meet aggressive deadlines to deploy Opportunity Funds.
With a lower threshold, Housing Choice would enable project to move faster by making it easier for proponents to gather the necessary votes. Housing Choice also offers potential for more speed and certainty by lowering the threshold required to put 40R expedited permitting districts in place. (Our latest report shows most Gateway Cities have not approved 40R districts in their station areas).
Housing Choice and Opportunity Zones offer a powerful combination to draw developer interest to Gateway Cities. However, many Gateway City projects will still have a financing gap. This is where the state’s Housing Development Incentive Program (HDIP) can play a major role. A flexible tax credit equal to up to 25 percent of development expenses, HDIP is accumulating an impressive track-record breathing new life into abandoned buildings and long-vacant lots near Gateway City train stations.
In welcoming remarks at last Wednesday’s forum, Lynn Senator Brendan Crighton illustrated what HDIP means for communities. He described a project currently under construction that is expected to provide $5 million in tax payments annually. (Currently, Lynn receives just $3,000 from the long-vacant parcel).
Developer Dave Traggorth shared how HDIP allowed him to produce the J.M Lofts in Haverhill. The adaptive reuse project demonstrated a market for downtown apartments, paving the way for subsequent residential development near the station.
Tim Murray, president of the Worcester chamber, described how HDIP brought TOD to his downtown; a building that once produced rail cars has come back to life as the Edge at Union Station.
MassDevelopment’s Laura Barrett shared how HDIP has drawn developers to TDI districts
around the state. As they gain experience putting the incentive to work in Gateway Cities, these creative real estate leaders are seeking repeat engagements, triggering the flow of reinvestment that the TDI program was created to stimulate.
With very little subsidy from the state, HDIP is producing appealing housing units near transit in downtowns that have little to no existing inventory of market-rate housing: Our research shows each dollar in state HDIP funding has leveraged approximately 12 additional dollars ($11.23 in private investment, and 67 cents in local tax abatement).
Housing Choice and Opportunity Funds could provide the state with even more leverage on its HDIP investment in the future, but the Department of Housing and Community Development must have credits available to deploy. Currently, HDIP is up against an annual cap of just $10 million. This program successfully addresses some of our most intractable problems (getting sustainable growth in locations with existing infrastructure, building the fiscal capacity of low-wealth communities, providing housing to grow the workforce) and provides an extremely generous return on public investment.
We need the Legislature to move forward expeditiously with both Housing Choice and an increase in HDIP.
Housing & Economic Development
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Wayfair finalizes the location of a new major facility in Pittsfield.
The Telegram examines the need for affordable housing in Worcester.
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School officials in Worcester withdraw a controversial sex education curriculum in hopes of better addressing student needs.
Haverhill plans to install three electric-vehicle charging stations operated by ChargePoint in a downtown parking garage.
State transportation officials unveil their redesign for Worcester’s Kelley Square at a public hearing.
A Better City estimates the state is facing an $8.6 billion transportation funding shortfall over the next decade, with $6.5 billion on the highway side and $1.9 billion at the MBTA.
City Councilors propose changes to Lowell‘s boards and commissions, to address concerns around lack of diversity.
A new report suggests Worcester‘s approach to reducing youth violence is working, with gun and knife incidents decreasing by 28 percent and youth arrests declining each year since 2015.
Worcester is considering abandoning recycling bins in favor of clear recycling bags. The idea is to cut down on blown-away recyclables and provide easier verification that only recycled materials are in the bags.Communities & People
Mohamed Machkour, a local entrepreneur and owner of Wicked Big Café, is set to open up Kaldi’s Café in downtown Haverhill this week.