State Committee Drops Housing Bank Transfer Fee, But Hope Remains For Long Sought Legislation

The long-sought housing bank legislation had seemed as though it was finally gaining momentum this year with the endorsement of Governor Maura Healey, but the proposal suffered yet another setback in Boston this week. 

The Ways and Means Committee of the Massachusetts State House passed a modified version of Governor Healey’s housing bill which does not include a local option for a transfer fee on real estate transactions to fund affordable housing, a provision Nantucket has pushed for repeatedly for over a decade. 

“It’s such a critical tool,” said former Nantucket Housing Director Tucker Holland, who has been deeply involved with the campaign to pass the transfer fee. “We need to have flexible, reliable funding that can serve a variety of income levels and that’s exactly what the transfer fee does.”

Advocates of the transfer fee, which would allow municipalities to impose a small tax on major real estate transactions to fund affordable and attainable housing, had their hopes raised last fall when Healey unveiled a housing bond bill that included the fee. But Speaker of the House Ron Mariano has long opposed the measure.

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

Healey's bill would allow municipalities and regional affordable housing commissions to adopt a transfer fee of 0.5 percent up to 2.0 percent, paid by the seller of real estate, on the portion of sale proceeds over $1 million or the county median home sales price, whichever is greater. The fee would be required to be used for affordable housing development.

It is a concept first floated by Nantucket more than a decade ago but one that had stalled at the State House in Boston in the face of intense opposition from the Massachusetts Association of Realtors. But just as Nantucket's housing crisis has grown worse, so too have the housing woes of other communities in the state, prompting a growing number of municipalities to seek similar legislation and eventually earning the support of Gov. Healey.

However, Mariano’s allies were able to steer a version of the housing bill through the committee that does not include the transfer fee proposal, but that doesn’t mean it is dead. Nantucket’s representative in the State House, Dylan Fernandes, has proposed an amendment to the bill that would add the local option transfer fee back in. If he doesn’t withdraw his amendment before the House votes, most likely on Wednesday, it would give lawmakers the chance to overrule the Ways and Means Committee and back the transfer fee despite the opposition.

Cape and Islands State Senator Julian Cyr is also working to get the transfer fee included in the version of the bill taken up by the State Senate. If the Senate and House vote for different versions of the bill, they will have to negotiate a compromise before it can go to Healey’s desk to become law.

“We would love to see the transfer fee in the Senate version,” Holland said.

If passed, the transfer fee would be a local option, and towns could decide individually whether to adopt and implement it. Still, Mariano feels even the option is potentially harmful.

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

“That’s completely nonsensical to me,” Holland said. “For the communities that it works for them, why not make it available? It doesn’t cost a penny from the state coffers.”

Powerful forces in the Massachusetts real estate lobby remain staunchly against the transfer fee, making it difficult to garner enough support to pass the provision at the state level. Although Nantucket passes the local option transfer fee as a home rule petition at Town Meeting every year, it cannot go into effect without state approval, and the House has repeatedly stymied Nantucket’s efforts. Holland believes that the $6 billion house bill will still not be enough to solve the state’s housing crisis. He contended that solving the problem on Nantucket alone could cost $500 million, a twelfth of the total funds allocated for the whole state. To end the crisis, Holland believes the legislature will have to turn to the transfer fee.

“If the legislature is really serious about tackling the crisis,” he said, “they’ll give this tool to the municipalities that ask for it.”

In the past, sponsors of amendments to include the transfer fee in housing bills have withdrawn their provisions to avoid the poor optics of a negative vote. But even if the provision doesn’t pass in this session, Holland hopes there is a vote.

“I would like it to pass, obviously, is what I would like,” he said. “[But] I think people should declare really where they are on this issue.”