Sun reflecting off the golden dome of the Massachusetts State House

iStock photo

Leaders in the state House of Representatives have released their version of Gov. Maura Healey’s $4.1 billion housing finance and policy bill, and included a major change.

The bill eliminates the Healey administration proposal to let towns and cities levy an additional sales tax on real estate transactions over $1 million, provided the money went to building or subsidizing new affordable homes. The measure attracted support from municipal leaders searching for additional funding to pay for housing, particularly on Cape Cod where even first responders are unable to afford homes in the communities they serve, and staunch opposition from the real estate industry that claimed it would create a barrier to housing development in Greater Boston by raising costs for housing builders, and could further drive down the values of already-troubled office properties by reducing what potential buyers might be willing to pay.

“No one disagrees that Massachusetts needs housing and needs it now. But increasing taxes on a smaller, targeted segment of individuals, as well as struggling businesses, is a misguided approach – especially when it is clear that this tax does not move the needle on production across the Commonwealth. We are thrilled to see the House’s version of the Bond Bill include provisions such as ADUs and remove harmful and ineffective policies like transfer taxes. Massachusetts should focus on producing the hundreds of thousands of homes needed to meet demand, while keeping the state attractive to current and prospective businesses,” Greater Boston Real Estate Board CEO Greg Vasil said in a statement.

The Healey administration estimated it would create around 3,210 new homes over five years out of the roughly 200,000 the state needs to build and the roughly 40,000 the governor’s bill would create, with Greater Boston, Cape Cod and the Islands being the biggest beneficiaries from funds produced by local transfer taxes. However, House Speaker Ron Mariano turned against the concept last month, citing its unpopularity among unspecified House members.

“It’s so inequitable. You’d raise a ton of money in Nantucket and you’d raise next to nothing in Lawrence,” Mariano told reporters in a State House press conference Monday. “It’s hard to have an effective housing policy that is going to spur development when there’s that much of a difference.”

A reporter asked what the harm would be in approving the measure as a local option, which would greenlight it only in communities that actively want to impose the higher fees.

“The harm is that you get a scattered policy that doesn’t help anyone. It only helps the folks with the money,” Mariano replied.

“Piecemealing it one by one by city and town is just not effective real housing policy, and it doesn’t solve the housing crisis that we’re in across the commonwealth,” state Rep. Aaron Michlewitz, the chamber’s top budget-writer, added.

A new UMass Amherst/WCVB poll released Monday showed 3 in 5 Bay Staters backed the idea.

“It’s disappointing the House has decided against allowing communities the option of putting a small fee on luxury home sales to fund affordable housing,” said Mark Martinez, co-chair of the LOHA coalition that brought together the main backers of a transfer fee. “That fee – a local option only on the most expensive transactions – would allow cities and towns who opt in to preserve housing for seniors, help first time home buyers, construct and preserve worker housing for nurses, teachers and first responders and make Massachusetts communities more affordable. More than a dozen cities and towns have said they want to pursue the fee to deal with the housing crisis as they see best. We are optimistic the Senate will let local government have the option of deciding how they want to handle the affordable housing crisis.”

Notably, House leaders’ version of Healey’s housing bill included a provision legalizing accessory dwelling units statewide, a major objective for housing advocates this legislative session.

The bill is expected to head for debate and a vote in the House later this week, with the state Senate then likely to take the matter up and write its own version of the bill, where transfer taxes could be re-added or omitted before the final legislation is worked out behind closed doors in a conference committee.

State House News Service contributed reporting.

House Nixes Transfer Taxes from Housing Bill

by James Sanna time to read: 3 min