Healey backs transfer taxes, accessory dwellings In $4.1B housing bill

Photo | Courtesy of State House News Service Massachusetts Governor Maura Healey

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By Chris Lisinski | State House News Service

The Healey administration wants to give cities and towns like Boston the power to impose a new fee on high-price real estate transactions and steer the revenue into affordable housing development, pitching a local-option transfer tax alongside more than two dozen other measures in a sweeping new housing legislation.

Gov. Maura Healey on Wednesday will unveil a five-year, $4.12 billion housing bond bill that's packed to the gills with funding and policy reforms aimed at spurring much-needed production of new units, upgrading the aging and neglected public housing stock, and converting state land into housing-ready plots.

The policy blueprint comes more than nine months into the governor's term, following a campaign where she promised to address the state's growing housing crisis, and it will land in a Legislature where senators and representatives have long resisted production-minded changes that conflict with varying local zoning rules in place across the state's 351 cities and towns.

Combined with housing-related tax credits that just became law through a new tax relief measure, Healey's office estimated the proposals together could lead to creation of more than 40,000 new housing units, chipping away at a shortage that has previously been estimated at roughly 200,000.

"The cost of housing is the biggest challenge facing the people of Massachusetts. We said from day one of our administration that we were going to prioritize building more housing to make it more affordable across the state," Healey, who plans to roll out the bill at a 9:30 a.m. event in Chelsea, said in a statement. "The Affordable Homes Act delivers on this promise by unlocking $4 billion to support the production, preservation and rehabilitation of more than 65,000 homes statewide. It's the largest housing investment in Massachusetts history. Together, we're going to make our state a place where people can afford to move to and stay to build their future."

In addition to its sizable investments -- including three times as much money for public housing capital improvements as the last housing bond bill -- the legislation will feature 28 policy riders, according to a summary presented to reporters.

That includes language that would clear the way for additional local levies on property sales without any additional approval needed from Beacon Hill, an idea that real estate industry groups have opposed.

Under the proposed local option, any city, town or regional affordable housing commission can adopt a real estate transfer fee between 0.5 percent and 2 percent on the portions of a sale above a certain amount with a vote of their local legislative body. The threshold would be either $1 million or the median single-family home sales price for the county, whichever is greater.

The seller of the property would owe the tax, and proceeds would be deployed toward affordable housing development. Administration officials said that because the money is earmarked specifically for housing, they do not believe the additional fee would hamstring new production.

Healey's office estimated the fee, if adopted, would affect "fewer than 14 percent of all residential sales."

At least 10 cities and towns -- Boston, Somerville, Cambridge, Arlington, Amherst, Chatham, Concord, Provincetown, Truro and Wellfleet -- have already sent the Legislature home rule petitions seeking permission to launch real estate transfer fees. House and Senate Democrats over the years have resisted transfer fees, but the governor's support for the idea changes some of the political dynamics around the proposal.

The governor's housing bond bill also proposes allowing accessory dwelling units, or ADUs, by right in single-family zoning districts in all Massachusetts communities.

ADUs, which are smaller buildings or apartments on the same property as a single-family home, offer additional housing often viable for larger families with adult children or older parents, but they can be difficult to get permitted in some communities.

Officials said that based on adoption rates in New Hampshire and California, the permitting reform could lead to production of as many as 10,000 units in five years.

Healey already secured expansion of two major tax credits designed to encourage production, the Housing Development Incentive Program and Low-Income Housing Tax Credit, through a tax relief bill she signed earlier this month.

Her housing bond bill proposes adding to that with another pair of credits. The bill would create a new Homeowner Production Tax Credit, which aims to incentivize construction of homes targeted at potential middle- and low-income owners. It would also make permanent the Community Investment Tax Credit while boosting its cap on donations from $12 million to $15 million.

Other policy measures include a new simple majority voting threshold for inclusionary zoning ordinances and bylaws at the local level, a streamlined process for dispensing state land toward housing purposes, eviction sealing for tenants years after no-fault evictions, a new designation for "seasonal communities" and a raft of changes for the public housing sector.

On the spending side, the bill would authorize $1.6 billion in capital investments to improve the state's public housing. The system has more than 43,000 units, many of which are in states of disrepair that have prompted urgent calls for new funding.

Healey administration officials said that investment would be the biggest since the public housing system was built and three times as much as in the $1.8 billion housing bond bill former Gov. Charlie Baker signed in 2018.

The bill also calls for $800 million for the Affordable Housing Trust Fund, $425 million for a consolidated Housing Stabilization and Investment Fund, $275 million for sustainable and green housing, $200 million for a "Housing Innovations Fund," $175 million for the HousingWorks Infrastructure Program, $100 million for a mixed-income housing fund, $100 million for a permanent CommonwealthBuilder program, and more.

Healey plans to complement the legislation with a trio of executive orders creating a housing advisory council, standing up a commission to examine streamlining housing production, and calling for a study to identify surplus public land that can be used for housing.