Mass. House speaker casts doubt on real estate transfer fee proposal

Massachusetts House Speaker Ron Mariano said Wednesday that he and other lawmakers are skeptical about letting cities and towns tax the sale of high-end properties to fund affordable housing. His comments cast increased doubt on a proposal the top Democrat suggested he was open to earlier this spring.

The controversial policy idea may be what is holding up the House in taking up Gov. Maura Healey's $4.1 billion housing bond bill, which she filed last October and has said is critical to addressing the shortage of affordable and available homes in Massachusetts.

Mariano said Wednesday that the transfer tax is "not as popular as I thought it might be."

"I've been listening to a lot of members. A lot of comments about the taxation issue, around the transfer tax. And so it's slowed me down a lot," Mariano said. "I'm gonna have to really weigh the measure of where that would, what would happen in the chamber if we brought that up."

The proposal in Healey's bill would clear the way for additional local levies on property sales to be adopted at the local level without any additional approval needed from Beacon Hill. Any city, town or regional affordable housing commission could adopt a real estate transfer fee between 0.5% and 2% on the portions of the 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% of all residential sales."

At least 10 cities and towns — Boston, Somerville, Cambridge, Arlington, Amherst, Chatham, Concord, Provincetown, Truro and Wellfleet — have sent the Legislature home rule petitions seeking permission to launch real estate transfer fees. Supporters say the measure is desperately needed to help more people to be able to afford to live and work in those communities.

In March, Mariano told business leaders he was open to the idea.

"Now, I understand that the idea of a transfer fee is a cause for concern for some of you, but 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,” Mariano said during a Greater Boston Chamber of Commerce forum.

On Wednesday, Mariano said he could see the advantage for certain communities, but didn't think it would work for everyone.

"Once I figured out how it worked, I could see the real benefit to rich communities, and not so many benefits to low-income or middle-income communities," he said.

During a TV interview with Jon Keller of WBZ this month, Mariano expressed doubt about the appetite of the House "to talk about increase revenues at all."

"Some of them work for wealthy towns — the transfer tax, for instance, works great if you live in the Nantucket where you have high value properties, not so good if you live in Lawrence," Mariano said. "And I think they serve at the detriment of creating a universal tax policy in Massachusetts. So I'm not a big fan of any of these, but you know we'll talk to the people who present it, but I have a healthy skepticism on how valuable they are."

The language in Healey's bill is a local-option tax, meaning it would require municipal governments to approve it and the extra levy would only apply within the particular city or town.

Housing advocates who support the proposal say it would be especially helpful in communities with a lot of tourism, such as the Cape and Islands and the Berkshires, where wealthy people buy property without living there year-round, pushing out locals. The tax on the expensive second-home sales would help fund affordable housing for local residents, they say.

Mariano said, "Yes, it would be a local option. But the amount of money you could generate in Nantucket would be twice the money you could generate in Lawrence. The discrepancies are so great that I don't know if it's a solution."

In addition to the transfer tax proposal, Healey's $4.1 billion bond bill includes 27 other policy riders and targeted investments 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.

Combined with housing-related tax credits that became law last year, 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.

Healey and her team are on the road pitching the governor's housing agenda this month, speaking with business leaders, municipal officials, hospital executives, veterans and homelessness advocacy groups, as the Legislature contemplates the proposal she put in front of them seven months ago.

Mariano previously said the House would take up the bill "shortly after" they completed their budget debate, which wrapped up three weeks ago. The House is tackling an information technology bond bill Wednesday and a major health care bill Thursday.

Asked Wednesday about a timeline for action on the housing bond, he responded, "Well, we're working on it now. I would think we would take it up — we have a few other things in mind before that. But it's coming. We intend to do it."

Michael P. Norton contributed reporting