While Gateway City leaders wait for the economic development bill with cautious optimism, they can celebrate the significant housing investments that legislators passed this session. Most news coverage of the Affordable Homes Act has focused on the $5.1 billion in bond funding for various housing programs contained in the bill. However, those capital authorizations will be constrained by the annual cap on state borrowing. Meanwhile, the least trumpeted element of the bill might just prove to be the most impactful for Gateway Cities: the doubling of the Massachusetts Historic Rehabilitation Tax Credit (MHRTC) to $110 million annually. 

Because there is no limit on how much federal historic tax credit a state can receive, the additional $55 million from the commonwealth should draw significant new federal subsidy into our housing production system. 

If the new state money means we have enough resources to fund the full project pipeline each year, it could also make financing development with the tool more efficient. With a $55 million annual cap, MHRTC has been far oversubscribed. In response, the Secretary of State has doled out the limited funds in installments. Projects received a portion of the credits that they are eligible for each year. The lengthy wait for the MHRTC creates significant carrying costs, negating much of the financial benefit of the credit. Reducing the queue should lower this expense, which will ultimately mean more housing for each state dollar spent.  

In addition to increasing MHRTC by $55 million, earlier this session the legislature also boosted the Housing Development Incentive Program (HDIP) Tax Credit by $20 million and the State Low Income Housing Tax Credit (SLIHTC) by $20 million. Because SLIHTCs can be redeemed annually for five years, this increase means the tax credit market will ultimately need to absorb $100 million more .  

These tax credit programs are fundamental to financing multifamily projects. It will be important for housing leaders to carefully monitor the market to ensure that the state’s investments retain their purchasing power. Here’s the reason: real estate developers don’t actually redeem these credits. They sell them to others looking to reduce their tax liability. Altogether, developers must find investors to purchase an additional $175 million in state tax credits annually. Demand for these credits fluctuates with market conditions. If the economy softens and tax liability is down, and at the same time, there are more tax credits available, developers will get less money for each dollar of tax credit, and the state will see less housing production for each dollar spent. 

Hopefully, the economy stays strong and the market easily absorbs the new state tax credits. But if there are hiccups, we must find solutions quickly to keep housing projects moving so Gateway Cities can help us dig out of a hole that has been decades in the making.

HOUSING & ECONOMIC DEVELOPMENT

New Bedford makes it easier to build ADUs. 

MassHousing launches an innovative new rent reporting and rental assistance pilot program in Brockton, Springfield, and Worcester. 

The remade Worcester City Motel will become a longer-term shelter for families and refugees. 

Affordable housing developers face deepening rental arrears and ballooning expenses.  

Six facts about the post-pandemic commercial real estate market in the US and what they tell us about the future of retail. 

EDUCATION 

Students celebrate the state’s new free community college program. 

Worcester Polytech signs transfer agreements with two more community colleges.  

Declining school enrollment spells trouble for education funding.  

TRANSPORTATION 

MAPC issues a new report evaluating ride share fees and other revenue options for the MBTA. 

A new steel sculpture greets passengers at the Lawrence train station.   

Springfield’s Peter Pan Bus Lines takes over Megabus routes from Boston to New York, Philadelphia, Baltimore and Washington DC, doubling its operations in the Northeast. 

HEALTH 

Brockton Hospital, which has been mostly closed since a 10-alarm fire ripped through the structure in 2023, will re-open this month. And more good news for the City of Champions! Good Sam is sold to Boston Medical Center.  

Haverhill holds out hope that Gov. Healey will save Holy Family.  

COMMUNITIES & PEOPLE 

Karen Bordeleau, a former Providence Journal editor, is named th new executive editor of the New Bedford Light. 

A teen artist adds splashes of color to Fall River’s Flint neighborhood.  

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