Last week, the Joint Committee on Economic Development and Emerging Technologies reported out the end-of-session economic development bill. The committee’s version builds on Governor Baker’s draft with HDIP and inclusive entrepreneurship additions that are hugely meaningful for Gateway Cities and equitable economic growth writ large.

HDIP
The committee’s bill increases the Housing Development Incentive Program (HDIP) cap to $57 million for FY 23, and to $30 million annually thereafter. The Baker Administration has provided steady leadership on HDIP, seeking to lift the annual cap to $30 million in 2020, and again with the bill they filed in April. However, the increase would not take effect until FY 24 under the Governor’s language. And without a one-time bump, it will take several more years for DHCD to fund the backlog of projects that has accumulated with HDIP currently limited to just $10 million per year.

The economic development committee’s approach recognizes that this delay puts good projects at risk, particularly in these uncertain times. By immediately addressing the backlog, it also appreciates that we urgently want to get developers out looking at new opportunities. Acquiring and holding property while waiting for more credits to become available isn’t economically viable.

If the committee’s HDIP provisions make it into the final bill, Massachusetts will see buildings that have sat blighting communities for decades converted into thousands of desperately needed housing units. This will mean thousands of new patrons for downtown Gateway City small businesses that are hungry for customers. Gateway Cities will have stronger tax bases, making them less reliant on state aid over the long term.

Inclusive Entrepreneurship
With leadership from chair Sen. Eric Lesser, the economic development committee’s bill also provides bold action on inclusive entrepreneurship by inserting all of the provisions contained in An Act to Promote Inclusive Entrepreneurship and Economic Justice (H. 505/S. 270). Filed by Sen. Lesser and Rep. Antonio Cabral at the beginning of the session, the bill recognizes that growth of businesses owned by people of color is vital to the future of Gateway Cities and their regional economies. The provisions support these businesses in a variety of ways.

The most significant is carving out a portion of revenue from online sales tax payments to provide state matching funds for business improvement districts (BIDs) and other forms of district management in Gateway City downtowns and commercial areas. These organizations play a vital role with marketing and placemaking, and they help ensure that small businesses can access capital and technical assistance tailored to their needs.

The economic development package now proceeds to the bonding committee, where it will receive a hearing on Friday. Much discussion will focus on whether the legislature should include ARPA spending in this package. (Governor Baker’s version spent down the state’s remaining ARPA dollars. The economic development committee removed ARPA entirely). We recognize that time is of the essence when it comes to allocating these dollars. However, we don’t want the meaningful economic policy that this bill contains to be lost in the debate on ARPA.

Finally getting HDIP appropriately sized will have major long-term ramifications, as will efforts to address large racial and ethnic disparities in small business ownership. If anything, we need more attention to this issue at the end of this legislative session.

With more than $10 billion from ARPA and the federal bipartisan infrastructure bill flooding into the state, Massachusetts has a once-in-a-generation opportunity to help entrepreneurs of color access broadband, clean energy, and other emerging markets. At our leadership forum on July 12th, MassINC will release new research pointing to various ways the state can help Gateway Cities connect minority-owned businesses with these contracting opportunities.