Housing Development Incentive Program (HDIP) Updated Analysis of Program Data

Data provided to MassINC by DHCD as result of public records request (Jan. 2023)
February 3, 2023

Bottom Line: HDIP is the state’s most efficient housing development program to date, costing an average of only $23,664 per unit and resulting in the production of 2,687 new units in Gateway City downtowns and transit areas so far. Despite DHCD funding $20 million worth of HDIP requests over the past two years, the pipeline of HDIP requests remains at nearly $40 million dollars, representing at least a four-year wait for any new housing projects. Those projects awaiting funding represent 1,782 shovel-ready units with a total development worth nearly half a billion dollars. Furthermore, MassINC judges that the real demand for the program far exceeds these numbers, since DHCD has not solicited new HDIP projects since August 2021, and economic development directors around the state tell us that they are turning housing developers away because of the backlog.

Policy Recommendation: The Legislature and Governor should clear the project backlog with a one-time allocation of funding, followed by permanently increasing the annual HDIP tax credit cap from its current $10 million to $30 million.

Future Impact: An investment of $30 million per year for the next ten years ($300 million) could produce 12,500 new homes and leverage direct real estate investment of nearly $4 billion in our Gateway Cities, creating walkable and vibrant downtowns across the state.

HDIP is the state’s only housing program designed to overcome development barriers beyond those related to affordability. Its statutory objectives are: “promote 1) increased residential growth, 2) expanded diversity of housing supply, 3) neighborhood stabilization, and 4) economic development within housing development zones in gateway municipalities.”
This support is essential in “weaker-market” communities, particularly those outside I-495, where private housing development is difficult if not impossible to finance with traditional bank loans as a result of high construction costs coupled with low rents.

MassINC has found that communities that have used HDIP for 100% market-rate housing projects to jumpstart their housing markets quickly evolve as those markets strengthen…

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