Senate tax bill spurs mixed-income housing production
The Gateway Cities Journal
This week the Massachusetts Senate revealed its much-anticipated tax relief package. Mirroring language from Governor Healey’s proposal, the bill includes provisions increasing the Housing Development Incentive Program (HDIP) to $57 million in FY 24 to clear a lengthy backlog of pending projects, followed by $30 million annually each year thereafter. MassINC anticipates that this expansion could create up to 12,500 homes in walkable downtowns and transit areas in our Gateway Cities, representing an investment of over $4 billion where it’s most needed.
To help meet the urgent need for more income-restricted units, the Senate bill also increases the annual cap on the state’s Low Income Housing Tax Credit from $40 million to $60 million. Together, these two programs offer a powerful toolkit to foster more mixed-income neighborhoods.
While the House tax plan did not include these changes, House members have long supported increasing the annual HDIP cap. Last July, the body unanimously approved an economic development package with a comparable HDIP increase.
MassINC encourages the House to embrace the Senate housing provisions as the bodies work together on a compromise package. Gateway City leaders have persistently made the case that HDIP is critical to unlocking the potential of Gateway Cities to address the state’s acute housing shortage, communities that want to build dense multifamily housing and rebuild their historic downtowns, but face difficult financing barriers and regulatory challenges.
This week mayors and managers from 23 Gateway Cities sent a letter to legislative leaders asking them to increase HDIP so that they can begin construction on dozens of planned housing developments that cannot obtain private capital without the HDIP incentive. Dozens of economic development organizations and housing developers have made a similar appeal.
The legislature faces a complex task balancing the tradeoffs of the various tax changes that have been put forward to make the Commonwealth more competitive for businesses and more livable for residents. However, the central role that housing production can play in strengthening our commonwealth is not up for debate. Massachusetts has not built sufficient housing to keep pace with the growth of our population for over two decades; Gateway City housing markets have not contributed at their full potential for an even longer span.
Each year that we underproduce, the hole gets deeper and the solutions more costly. A tax relief package with provisions that take a meaningful chunk out of the state’s housing crisis will put all businesses in a better position to grow. Equally important, greater housing production will relieve the stress on residents in all parts of the state. Too many parents lie awake concerned that their children will not be able to afford to stay here, or that they themselves will be pushed out of Massachusetts by rising rents. A tax package that makes a difference on the housing front would be welcome news to all this summer.
