By Adam Swift
The city council is being asked to consider the adoption of a Housing Development Incentive Zone to help accelerate the development of the Suffolk Downs project and to spur mixed-income housing development in the 40R Smart Growth district along Green Street and Shirley Avenue.
“The Housing Development Incentive Plan, commonly known as HDIP, is a state tool that is available only for Gateway Cities and is a two-pronged tool,” said Director of Planning and Community Development Tom Skwierawski at last week’s city council meeting. “The first is what’s called a local tax increment exemption, and this is on the value created for any newly developed housing project within one of the districts we are talking about here.”
As an example, Skwierawski said that if a parcel of land was worth $100 and a housing developer put in $900 worth of work to that property, the property would then be worth $1,000 and the increment would be the $900 worth of value that was created with that housing development.
“The first prong of this two-prong tool is a local option to give a 10 to 100 percent exemption on that new value created … from a period of five years to 20 years,” said Skwierawski. “Under this plan, any housing development within one of the … districts that is created would be eligible for coming to the council to have the council authorize such an agreement.”
Skwierawski said the second, more significant, component of the HDIP is a state tax credit of up to $2 million of up to 25 percent of the value of the housing development that is created.
“In order to be eligible for that state tax credit, the localities need to authorize a local tax agreement, which again, could be a five-year agreement for 10 percent of the increment created,” Skwierawski said. “Which is for all intents and purposes a marginal amount for what the development could actually bring in tax revenue.”
The plan basically looks at three districts, one is the Suffolk Downs development, and the other two are essentially the combined Green Street and Shirley Avenue districts which was approved as a 40R Smart Growth district by the council about a year ago.
Skwierawski said the city has different goals for each district with the HDIP.
“With Suffolk Downs, the goal is to continue to accelerate development on what is the greatest economic development driver in the city,” he said. “The goal for the Shirley Avenue and the Green Street district is to actually utilize this tool to help spur the use of the 40R, not only to produce more mixed-income housing but also to encourage more usage of our zoning ordinance as opposed to using a variance or using other measures to work around the zoning ordinance.”
Skwierawski said the great thing about participation in the 40R program is that every project built using it brings in $3,000 per unit of housing created into the city, as well as a larger zoning incentive payment that the state will pay back to the city.
“With each and every development project that might be eligible for a local tax increment exemption, we would present that to the council and we would discuss it at a later date,” he said. “But for both Green Street and Shirley Avenue the only way it is eligible is if it uses the 40R. If a 40R project is permitted and built, it’s going to bring money back into the city.”
Each individual tax deal would go before the city council for approval, Skwierawski said.
“This is just to authorize the submission of the plant to the state and to authorize the mayor to be able to exercise agreements if and when the council would approve it at a later date,” he said.
Several councillors asked if the city would be able to negotiate more affordable housing for the housing developments through the HDIP.
Skwierawski said that could theoretically happen, but with Suffolk Downs it could be difficult because the project has already been approved.
“I think with Shirley Avenue and Green Street, there is a greater potential to leverage more affordable development,” he said.
The council voted to move the HDIP proposal to a future meeting of its zoning subcommittee.
Council President Anthony Cogliandro said he had concerns with the HDIP.
“We are trying to hold onto every bit of revenue the city is making to build this high school, and now we are talking about our biggest revenue source, giving them breaks so they can build more,” said Cogliandro. “That is concerning to me with that project as a whole, because if that project fails or we start giving them breaks, how are we going to pay for this? This is very concerning for me, and I understand how this works, but we should be taking every bit of tax revenue we can get.”
