Business groups cheer, progressives knock as Mass. House axes transfer fees on high-end home sales

One Dalton, the ultra-luxury tower when it was under construction in the Back Bay. (Photo by Bruce Mohl/CommonWealth Beacon)

BOSTON — Housing advocates want real estate transfer tax. Gov. Maura Healey wants a bill.

House Democrats yesterday released their take on Healey’s housing bond bill – the Affordable Homes Act – with more spending pledged but a key policy sliced out from the middle. Healey’s pitch for allowing a transfer tax on high-end home sales, championed by Boston and high-cost communities like Nantucket, was not included in the redrafted legislation, setting up a potential dispute if the generally more progressive Senate has an appetite for it.

Asked Monday if she’s willing to sign a bill without the transfer tax, Healey said she was “very glad to see a bill come out from the House, and we look forward to seeing what the Senate does. I’m going to continue to stay in close touch with the Legislature on all of this. We know how important housing is. I hope at the end of the day we get the very best law in place that will do what we’re trying to do, which is to increase production.”

The local-option transfer tax would let communities add a levy of up to 2 percent on the share of any real estate sale above $1 million, or the county’s median home sales price, whichever is greater.

House Speaker Ron Mariano, a Quincy Democrat, earlier this spring, in a talk with business leaders , expressed some openness to the transfer tax, saying “if you believe that the issue of housing affordability is a genuine crisis, then we must explore all options that have the potential to make a real difference.”

But he also waved a cautionary flag that he might not have the votes in the House for such a levy. On Monday, he told reporters the measure “was not as universally appealing as I thought it might be” among representatives.

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

Real estate groups had chafed against the proposed fee structure – particularly the Greater Boston Real Estate Board, whose political action committee in April has its highest spending month in two years, shelling out $4,429 largely on donations to lawmakers.

Greg Vasil, CEO of the organization, said in a statement that the group is “thrilled” to see the House bill include provisions like as-of-right accessory dwelling units while cutting out the transfer tax.

“No one disagrees that Massachusetts needs housing and needs it now,” he said. “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.”

But a new University of Massachusetts Amherst/WCVB poll dropped the same day as Mariano’s housing proposal, showing broad support for an array of housing reforms, including the transfer tax.

It's so inequitable. You'd raise a ton of money in Nantucket and you'd raise next to nothing in Lawrence. It's hard to have an effective housing policy that is going to spur development when there's that much of a difference.

– Massachusetts House Speaker Ron Mariano, a Quincy Democrat

Asked about allowing cities and towns to tax real estate transactions above $1 million to help raise funds for local affordable housing, 62 percent of respondents said they supported the idea either strongly or somewhat – though more supported allowing housing solutions like local rent control options and offering tax breaks to developers to convert empty office buildings into housing.

Jonathan Cohn, policy director of Progressive Massachusetts, cited the poll in critiquing the House’s proposed bond bill. He said axing the transfer tax option was “taking tools off the table.”

“Let’s be clear: members of House leadership are being dishonest when they claim that they oppose a local option real estate transfer fee because it is a ‘piecemeal’ solution that doesn’t help every city and town,” Cohn wrote in a statement. “Such concerns were nowhere to be found during the budget process, when those very same representatives had no problem stuffing the budget full of outsized perks for their own districts.”

Boston is now on its third attempt to get a transfer tax through the Legislature, Mayor Michelle Wu said Monday. The Wu administration was encouraged by early reports that Mariano was open to the pitch, but the mayor re-emphasized her resolve after the proposed housing bill dropped the tax.

“Sometimes there are other factors and other contexts that can complicate this particular situation but we believe this is the right thing to preserve affordable housing and to be able to address our housing crisis,” she said. “It is the number one challenge that is going to strangle our economy and is pushing residents out of the city. And as federal dollars are starting to phase out from pandemic recovery, we need to find a reliable source of funding in order to continue those efforts.”

Doug Howgate, president of the Massachusetts Taxpayers Foundation, said the group will be evaluating the array of proposed incentives to spur housing statewide. “It’s really always about looking at that constellation of different policies that speak to this goal of how do we make sure we’re making it easier to produce housing, both on the financial side but also on the regulatory, legal, and zoning side?”

Though the $6.2 billion redrafted bond bill is set for debate on Wednesday, representatives rarely see an advantage to picking fights with House leadership during open floor debate. The small cohort of lefty legislators occasionally pushes for floor debate to rail against proposals shut down during closed door sessions.

The Senate is still a wild card in the discussion. Sen. Lydia Edwards of East Boston, who co-chairs the Joint Committee on Housing, said the House removing the transfer tax is “all part of the conversation we have here. It’s not over until it’s over, is what I can say. They’re coming up with their solution and we’ll come up with ours.”

She said there was no firm timeline for the Senate’s version of the bill.

Senate President Spilka is keeping her cards close. Her office said in a statement that “housing is one of the most important issues facing Massachusetts, and the Senate President is committed to taking action to make living in Massachusetts more affordable for every resident. The Senate will review the bill once it is passed by the House, and looks forward to proposing its own version.”

When asked about whether the bar for a transfer fee – houses sold for over $1 million – was too low, Spilka told WCVB this month that “that will be a big discussion and debate among the senators,” but the issue hadn’t yet fully been aired out.

Gintautas Dumcius contributed to this report.

This article first appeared on CommonWealth Beacon and is republished here under a Creative Commons license.

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