There are plenty of incentives, some tax-related, some not.
Some local incentives that our local developers use are NY Sec. 485-a property tax exemptions, PILOT agreements, sweetheart below-market financing deals through local IDAs, Capital Improvement exemptions from state sales tax, historical rehab credits. Every locality and state will have similar opportunities for large-scale developers.
At a federal level, the LIHTC would be the main driver of what you are referring to here, I think. Also an option, but comes with a lot of red tape associated with it. Accelerated depreciation (available to any business, not just real estate) is also very beneficial for developers.
Anecdotally, I used to work for one of the nation's larger privately-held real estate companies; they do both construction/development and property management. They avoid residential real estate like the plague. My understanding is that the rental protections associated with bad tenants were something they generally did not want to deal with. Much easier to make a 10-year deal with a major non-residential tenant for $20,000/month on a space rather than 20 residential tenants at $1,000/month each. Much easier to collect, much easier to sue, and much easier to manage. I can't speak for other large real estate management companies/developers, but it wouldn't surprise me if they don't really want to be in the residential management space either.