Great Barrington — Members of the Selectboard and Planning Board Housing Subcommittee are scheduled to formally present the board’s ideas for housing strategies to the Selectboard at a meeting on Monday, February 13.
The Subcommittee is made up of Selectboard Vice-Chair and Subcommittee Chair Leigh Davis, Selectman Garfield Reed, Planning Board Vice-Chair Malcolm Fick, and member Jeremy Higa.
During its past meetings, the Subcommittee discussed various ideas to bolster affordable housing opportunities in town. At its Tuesday, January 24 meeting, Davis discussed with Fick and Higa the idea of the town creating a tax exemption for owners of affordable year-round rental housing. (Reed was not present at the Jan. 24 meeting.)
According to Davis, the tax exemption would be for property owners on the portion of their property that is being rented at or below the affordable housing rates to income-eligible households. Davis said that for the property owner to be eligible for a tax exemption, the housing unit must be leased to a qualified tenant at rent not to exceed federal Housing and Urban Development (HUD) limits for low-income households. This means that the renters’ household income cannot exceed 80 percent of the Area Median Income (AMI). “AMI rents assume that the landlord pays all utilities, and allowance for any utilities paid by tenants must be deducted from these rents,” Davis said. “The exemption would be granted by the principal assessor on a year-to-year basis.”
Davis said that no deed restrictions would be required to take part in the tax exemption program, which would mean that a property owner could have units for low-income tenants in the same building that has units for tenants who have higher incomes. As an example, Davis said that an owner of a duplex could live in one unit and rent out another unit of equal size to an income-eligible household.
Davis said that, with the tax exemption, it would be possible for a property owner to not pay for up to half of their full tax burden. “This program would allow for a small-scale scattered sites approach to housing versus grouping low-income renters in a dense housing development,” Davis said. “It’s always beneficial to have mixed income [tenants] throughout the town and you are not necessarily just grouping [low-income tenants] into a larger housing development. I think it’s a real pro to have a scattered sites approach.”
Davis said that another benefit of the program would be that it could provide a significant cost-saving alternative for the town instead of building new affordable housing. “Creating a new unit of housing could cost the town between $250,000 to $300,000 per unit,” Davis said. “If the town wants to build new [affordable housing] units or start repurposing properties, it can become quite costly. If you think about the money, a [property owner] could get a tax break of $3,000 a year. The alternative would be for the town to cough up $250,000 a unit.”
In investigating the possibility of a tax exemption, Davis said she looked at how Provincetown implemented its tax exemption, which came into effect in 2002. Davis said Provincetown had to go through a multi-step process to implement the tax exemption.
The Selectboard would have to approve the agenda item for the tax exemption to go onto the annual town meeting warrant for residents to approve. If approved, it would then go to local representatives who would have to file a home rule petition in the state legislature. If the legislature approves the home rule petition, it would go to the governor for approval. “It’s not that easy, and it would take a bit of time,” Davis said. “Historically, home rule petitions have stalled in the state legislature. It’s not guaranteed for approval and it could take a couple of years. And one of the reasons why I’m talking about this now is if we can get this on the books and get it to town meeting and then get it approved, at least we’ve begun the process.”
While Davis said that the proposed tax exemption would not shift any potential tax burdens or increase taxes, Higa said, “I don’t know about … It does, in a sense, shift the tax burden [by] a little amount,” Higa said. “So if someone is paying $3,000 less in taxes, that $3,000 has to be picked up by someone else, meaning the rest of the town. But I don’t know if that’s necessarily not a reason to do it. When it comes to comparing what it costs to create units, if we’re going to do that, then we have to be comparing it to what the town has already done in the form of CPA [Community Preservation Act] grants. And if you compare it to those, then this doesn’t necessarily sound cheap. I think the reason is that we have a crisis and we need more housing. And so the more things that we can have to generate affordable housing, the better.”
While Fick said that Davis made a good presentation about the tax exemption idea, he said he had a problem with the idea of putting costs for constructing affordable housing in the presentation. “I don’t think that really applies here,” Fick said. “You’ve listed all these things that cost a lot of money per unit [construction], but in fact, the town has not really spent that money. We have outside [contractors] including Construct Inc. and [Community Development Corporation of South Berkshire]. They’re the ones spending the money, and we’re spending some CPA money to help with those. But it’s really third parties that are spending these [funds].”
