The latest unemployment rates tell you what you need to know about these Massachusetts cities’ economies. Lawrence’s topped the list, at 15.8%. Fall River’s wasn’t far behind, clocking in at 15.5%. Its South Coast sibling, New Bedford, was at 14.1%.
Once again, the “gateway cities” had some of Massachusetts’ highest jobless rates. The rates in February were also high on Cape Cod and the Vineyard. But those economies will come alive in a couple months, as they always do. The same rebirth won’t happen this spring in many of the states old industrial cities.
This has been a problem in Massachusetts for years, if not decades, amid the slow decline of our once powerful manufacturing industry. Mayors of these cities have long pressed state officials for solutions.
Well, there’s at least one possible fix on the way now. The state Department of Housing and Community Development is putting the finishing touches on a tax credit program for projects in these mid-sized cities that would bring new market-rate housing into the mix.
State and federal agencies have plenty of ways to spur the creation of affordable housing. But many city officials don’t want affordable housing to be the sole driving force behind downtown construction. It’s not easy to build a strong economy on a population that doesn’t have much in the way of expendable income.
Industry experts say there is no tax credit geared for creating homes for the middle class. There are programs that help renovate specific kinds of properties, such as historic buildings or polluted sites. But none are specific to market-rate housing.
That’s going to change with the launch of the Housing Development Incentive Program this spring. As one of his first actions the new undersecretary of housing and community development, Aaron Gornstein, is ensuring this program is ready for developers by June.
The Legislature authorized the program in a broad economic development bill. The program, for now, will be capped at $5 million for each fiscal year — a budget that likely could help finance 5 to 10 projects each year.
The program will give a developer a 10% tax credit on eligible rehab work. The credits will be capped at 50 market-rate units and at $1 million per project. Because most of these tax credits are sold off at a slight discount, he says, a typical developer could reap up to roughly $900,000.
The credit would only be available for projects in one of 24 designated mid-sized Massachusetts cities. Some already have relatively healthy economies, others are struggling. Most, if not all, fall under the “gateway cities” umbrella. Most of these cities now face constant cycles of high crime rates, low graduation rates and weak employment opportunities.
The cities have to play a role in this new program. Local property tax exemptions need to be offered and city officials have to approve the best places to put such projects.
Many Developers view this tax credit as an important tool to breathe new life into some of these economically-distressed cities. South Shore Housing will approach officials in Brockton, Taunton, New Bedford and Fall River to see if they have any local properties in mind that would be suitable. South Shore Housing might go it alone, or it could partner with a commercial real estate developer for a mixed-use project.
The credits would be best suited for cities that already have some demand for market-rate housing in their downtown areas. Otherwise, a 10% credit might not be big enough to draw interest from developers.
Some developers believe that the program but it would only work in cities where market-rate housing is viable or close to being viable already. Higher-rent areas, such as Lowell, would be good targets. Regardless of the city, lining up these tax credits could mean a significant amount of work for relatively short dollars.
The most successful proposals would be those that are part of broader redevelopment visions. In some cases, the tax credits could be that one critical piece to get a deal financed, the difference between a loan closing and a loan falling apart.
This program won’t solve all the problems that these cities face. It’s not going to turn them around overnight, by any means. But it could provide an important spark. Who knows? Maybe it won’t be long before the economies in some of these distressed cities are humming once again.