On March 28, I testified in support of my bill, H.2724, An Act Relative to the Housing Development Incentive Program (HDIP), which increases the annual cap on this tax incentive program to $50 million in FY24 and $30 million afterwards. As the Founding Chair of the Gateway Cities Legislative Caucus, I have been working with the nonprofit, research think-tank MassINC, mayors and economic development directors from Gateway Cities, housing advocates, and the Patrick, Baker, and now Healey administration, to support and improve the HDIP program since it was established in 2010.
We all know that New Bedford is facing a housing crisis that involves not only rising rents and home prices, but a severe shortage in housing options across all income levels. This housing production problem rests largely on the fact that construction costs in New Bedford rival Boston, but the rents that can be charged (i.e. the “return on investment” that developers can earn in New Bedford) are less than half of a Boston project. Market-rate in New Bedford is equal to or sometimes less than what ‘affordable units’ would go for in the Boston-metro area.
That means developers have a difficult time making the numbers work to invest in New Bedford.
What happens? Our comparatively lower rents entice folks from higher cost of living areas to move into our city, but we have very little to no “middle-income” housing options to offer them. Middle-income housing primarily refers to young professionals and young families who are mid-career and looking for a launching pad. Without other options, the organically affordable rents in our multi-family units draw their attention. Those small landlords see an opportunity, raise their rents or sell their property, and the current tenant, who works locally and has been living there for decades, cannot keep up with the rising rent and has to leave their home.
HDIP works to address this critical lack of middle-income housing by using a tax incentive to make developing market-rate housing in New Bedford more financially viable. It addresses that financing gap by allowing us to do two important things: (1) leverage private investment in our city where financing has been historically difficult to secure, and (2) create mixed-income neighborhoods with a healthier balance of market-rate and workforce housing.
HDIP is not meant to be an affordable housing program. It was designed to meet a different need. HDIP is the only housing development program specifically targeted to meet the financial challenges of housing production in Gateway Cities, whereas there are many affordable housing programs and funding resources already in play and well-established in New Bedford.
Furthermore, the City of New Bedford, in its newly released comprehensive housing plan, will be increasing rental assistance funding and low-income housing tax credits, as well as investing in nonprofits dedicated to affordable housing development and ending homelessness. HDIP can, and often does, work with these affordable housing options within the same project.
Salem has done this quite successfully. To replicate that model will require the city to become an active participant and partner in this discussion, particularly when it comes to exploring inclusionary zoning changes. HDIP is not an immediate solution to our affordable rental shortage, but it will have an important impact in the long term by creating more options for newcomers and easing the pressure on longtime residents.
Housing is a complex issue, one that requires creative and innovative options, but we know that it comes down to creating more housing stock. If we are going to succeed and win this fight, the Housing Development Incentive Program (HDIP) is the best offense.
Antonio F. D. Cabral is a state representative serving the 13th Bristol District.
Thank you to our sponsors
Founding benefactors:
Joan and Irwin Jacobs fund of the Jewish Community Foundation, Mary and Jim Ottaway
Learn more about our community of individual donors
For questions about donations, contact Chrystal Walsh, director of advancement, at cwalsh@newbedfordlight.org.
For questions about sponsoring The Light, contact Peter Andrews, director of business development and community engagement, at pandrews@newbedfordlight.org.
Can someone please tell me why anyone that is described as “middle income” would consider building or buying a home in New Bedford that is going to be designated as a mixed income level neighborhood?
There is no incentive to build a home that would be valued between $300,000 to $400,000 dollars and end up with neighbors who are low to no income, or as many also use the term “affordable housing”? Nobody wants to buy or build a home that will neighbors on section 8, or subsidized housing, why would anyone consider doing that?
As I’ve commented on other housing stories published in the past 6-12 months, I own a single family home in an average neighborhood in New Bedford where the street I live on has about 30% single family, 30% two family homes, and 30% three decker houses, and the last 10% is 2 or 3 lots with 3 or 4 parking garages. It used to be a nice street and area with most people knew their neighbors who had been living here for 20+ years, then it changed when more than 80% of the home owners left the city to live in Dartmouth, Fairhaven, Acushnet, and similar suburbs, and they either kept the home and are renting it to tenants, or they sold the houses to one of several people who own multiple houses, 10 or more and use it to generate income, and many don’t care who they rent to as long as the rent is paid, and that’s how a decent neighborhood in New Bedford becomes a dump that nobody has any interest in living there.
For all the people crying about how there isn’t enough “affordable housing” available, why don’t they sit down do some simple math and see why it’s not here, and it’s not going to be here anytime soon.
Example: I purchase a 3 family house for the sole purpose of generating income. The price on that 3 family house is $400,000 dollars, so I take out a home equity loan on the house I live in for the 20% down payment which comes to $80,000 and I take out a mortgage with my excellent credit and my 30 year loan on the $320,000 with a fixed rate at 6.5% interest, that makes my monthly payment for the interstate only is over $1,733.00 then add the home equity loan payment for the $80,000 down payment is $400 per month for the interest only 15 year loan. Now add in the property taxes at $4,000-$5,000 per year, add in the house insurance at over $4,000 per year, then add in the water/sewer bill for an average 3 family home at roughly $200-$250 per month which brings the total monthly cost to $3,215.00 and I haven’t paid anything towards the principle on the $400,000 in loans to buy the property that’s $320,000 30 year mortgage and interest only payment for the $80,000 borrowed for the down payment.
So with the $3,215.00 per month, I’d have to charge at least $1,400.00 per month for each apartment just to break even when paying the principle on the loans, and that’s not counting any maintenance expenses for the heating system, and plumbing or electrical costs for the front & rear entry lighting, etc.
Now tell me how many people you know can get that loan, and get good clean tenants who pay their rent on time, and don’t cause any problems with neighbors, noise, damages, etc. If you bought that property and you’re not getting $1,800-$2,000 per month, you’ll never make any money.