A new bill that would give municipalities across the state the ability to institute a real estate transfer fee tax to fund affordable housing is gaining traction at the State House.
State Rep. Dylan Fernandes, D-Falmouth, is part of a coalition, made up of state and local elected officials and housing advocates, in support of the proposed transfer fee legislation.
If passed, the legislation would allow municipalities to levy a fee of up to 2 percent on large real estate transactions to fund workforce and affordable housing.
In January 2019, Fernandes filed a bill that would let towns impose a 2 percent fee on real estate transactions over $1 million. He found out that other state legislators filed similar transfer fee bills, and has been working with them to come up with comparable legislation that all parties could agree on.
“This gets at this massive issue on the Cape and Islands. Police officers, firefighters, and teachers can’t afford to live here, but also make too much money for ‘capital A’ affordable housing,” Fernandes told The Times in a phone conversation Tuesday. “This would be a way to equitably raise the revenue to provide affordable and workforce housing for people.”
The bill the coalition is backing is a local option, giving towns and cities the ability to vote at annual town meetings if they want to impose the tax. Voters would also choose how much of a fee they would want to levy, and decide at what price. Fernandes said this gives cities and towns more control, and it would allow a town like Nantucket, that has a 0.5 percent transfer fee for home sales over $2 million, to continue its home rule petition.
Somerville and Concord have approved similar transfer fee legislation. In December, the Boston City Council and Mayor Marty Walsh approved a 2 percent transfer fee on properties over $2 million. The proposed tax will now head to the state legislature for approval.
“This is voted on at town meeting, and they get to set their parameters on this,” Fernandes said. “We would give a lot of local control to decide what’s best for them.”
Revenue from the tax would be used for affordable and workforce housing. Affordable housing would be defined as housing 85 percent of the area median income (AMI), and workforce housing would be defined as 185 percent of AMI.
According to Fernandes, this would give towns on the Cape and Islands, which are high-cost areas, the ability to set their own parameters.
Fernandes also pointed to the Martha’s Vineyard Land Bank and the Nantucket Land Bank as examples of successful transfer-fee legislation. Both Land Banks impose a 2 percent fee on all real estate transactions.
Fernandes said this legislation is still in the beginning stages, and has a “long way to go,” and towns should continue to focus on other ways to tackle affordable housing issues.
“Right now on the Cape and Islands and [Martha’s Vineyard], in particular, we are reaching a really critical point, where the Island is becoming totally unsustainable in terms of housing,” Fernandes said. “This legislation would allow the town to create revenue on its own terms with community support.”