Mayor Domenic J. Sarno announced today that the city has received final approval from the Commonwealth of Massachusetts, Department of Housing & Community Development, on Springfield’s Market Rate Housing Incentive Zone and Plan. The approval allows developers to take advantage of new incentives to develop new market rate housing in and around downtown. Springfield is the fourth city in the Commonwealth to be approved for the program.
“This program is important to help fill the financial gap in developing new market rate housing units,” said Mayor Sarno. “We’ve been working with the other Gateway Cities to move forward new programs like this and are thrilled the state has provided this program.”
The new program, called the Housing Development Incentive Program (HDIP), allows developers to access a new state investment tax credit of up to 10% on qualifying development costs coupled with a local property tax exemption program. To date, such incentives were only available to commercial development projects.
Other housing incentives have long been dedicated to affordable and income restricted developments, this incentive will be the first for market rate housing developers.
“There are real challenges for developers in dealing with construction costs that are similar to those in Boston but sale and rental prices in weaker markets do not make up the gap,” said Kevin Kennedy, Chief Development officer. “We’re hopeful this will help spark some projects.”
City Council approved the plan unanimously on December 3rd. The city has long aimed to attract new market rate housing downtown, and the issue has been highlighted by several reports including the Urban Land Institute citywide and downtown studies.
The zone includes downtown and parts of both the North End and South End, including census tracts that have some of the lowest median household incomes in the city. The incentive can be used on rehabilitation of existing buildings for purposes of market rate housing, thus it helps in the preservation of existing structures and can be used in concert with historic tax credits. The incentive does not apply to constructing new buildings.
Interested developers will need to first gain city approval on a local property tax exemption in order to qualify for the state incentive. Developers should contact the Office of Planning & Economic Development for more information or visit www.springfieldplanning.org