Chancellor Otto von Bismarck purportedly said, “Lovers of great laws and sausages shouldn’t watch either being made.” If he had observed Governor Maura Healey’s Affordable Homes Act wind its way through Beacon Hill, he also might have advised not to look closely at band-aid solutions for intractable problems. While we can appreciate the state is taking a stab at housing, after the Massachusetts legislature’s amendments to the governor’s proposal, it feels halfhearted with promising ideas left on the cutting room floor. Let us grieve.
In October, Governor Healey proposed a $4 billion bond bill coupled with statutory amendments seeking to create 40,000 new homes. That number is nothing to scoff at, unless, of course, you consider that the state needs 200,000 units in the next five years to keep pace with growth. No one should celebrate driving away from a tire store with one new tire when the full set needs to be replaced. Sure, it helps, but you will not get to where you need to be in the long run.
In early June, the State House of Representatives passed its $6.2 billion version of the act, and on June 24, the Senate Ways and Means Committee voted out its $5.2 billion version. The full Senate is expected to vote on its version before the July 4 recess. Following the recess, there will be a conference, a version of the House/Senate bills will get to the governor, and at the signing ceremony the assembled senior leaders of the Healey administration and legislature will tell you that we will have housing in our time. Here is what they will not tell you.
The local-option real estate transfer fee proposed by Governor Healey and hailed by affordable-housing advocates died first in the House and then again in the Senate. It has been reported that these multiple deaths came at the hands of the Greater Boston Real Estate Board (GBREB) which railed against the transfer fee by text, mail, and on a newly established website telling us we should demand more housing without new taxes. The GBREB will next propose more eggs and milk but absolutely no more chickens and cows.
The governor sought to allow municipalities—allow, not require—to impose a fee of up to two percent on property sales over $1 million to fund affordable housing efforts. There had been debate whether the transfer fee should be paid for by the seller, the buyer, or split, an economically pointless question since the transfer fee would be baked into the purchase price, along with the realtors’ commissions and assorted closing costs. Lost in that debate was the fact that each municipality should be left to assess if its housing needs require taking a smidge from those who can most afford it to aid those that cannot.
The housing market is currently experiencing a form of long COVID. Historically low interest rates reached during COVID have enticed refinanced homeowners not to sell their homes in droves, and current high interest rates have caused potential purchasers and builders not to buy or build, creating a bubble housing market due to the limited supply. The median price for a home in Massachusetts reached an all-time high in May. Nowhere on GBREB’s website will you find an explanation why helping those with housing needs under these circumstances is bad policy or economically unsound. If realtors remain opposed to housing for all, perhaps their “turning the keys over to the new homeowners” advertisements should state the ads are applicable only to market-rate housing.
A worthy amendment to state law, adjusting application of Area Median Income (AMI) for “seasonal” and other communities, also passed away in the House. The state uses AMI to determine who may live in state-supported housing. Because Massachusetts has some of the highest new construction building costs in the nation, a developer seeking to construct workforce housing cannot offer housing to double-income families; these families earn too much under current AMI guidelines to live in funding-assisted housing but not enough to afford the rents a developer in Berkshire County would need to charge to compensate for locally high land and building costs. Developers have told us that the current AMI structure is unworkable and that the proposed amendment was a worthy solution.
Because AMI is calculated by the federal Department of Housing and Urban Development (HUD) without consideration for the state’s perplexing housing-cost inflation, rather than attempt to fix HUD’s Berkshire County AMI miscalculations, the House proposal adjusted applicable AMI for all state projects by providing a bump for “seasonal communities” suffering second-home-owner-related housing-cost inflation. By raising AMI from 100 percent to 175 percent, and up to 200 percent for South County “seasonal communities,” developers could seek state assistance to construct housing with rents higher than the current AMI structure permits. A legislative tweak with a positive housing result. Except it is not to be.
It should be noted that the act does offer housing relief. Among other things, the act will amend state law to permit municipalities to pass by simple majority inclusionary zoning ordinances and bylaws requiring newly constructed market-rate developments to include up to 13 percent affordable-housing units. The act will provide that accessory dwelling units (ADUs) will become by right in single-family zoning areas across the state. And the Senate proposed $800 million for the Affordable Housing Trust Fund for the creation and preservation of affordable housing. All good, but it could have been better.
Since we are contemplating what might have been and what in the future should be, let me add a notion to a housing wish list. If the state can only muster assistance for one-fifth of the units needed in the next five years, we need to look beyond bond bills. Keeping in mind that tax policy is used for both fiscal- and social-engineering purposes, South County towns should consider Home Rule petitions to enact an “empty homes penalty”—a vacancy tax intended to push vacant homes onto the market to increase housing supply. For those that opt to pay a $5,000-a-year tax rather than lease their unused home, the tax dollars could fund local housing initiatives. Others may finally see the wisdom in leasing vacant homes.
The bond authorization about to be law provides spending options for the Healey administration to utilize in the future. Five billion dollars will not suddenly become available, and the state often does not spend the fully authorized amount. Beyond figuring out how to spend the newly authorized funds, the Healey administration should consider how to get the above ideas and others through Beacon Hill next session. We know that the state’s housing needs and (realtor-induced) housing headwinds are not going away. After givings itself pats on the back, the administration should quickly get back to work. When it comes to housing, the state has promises to keep and miles to go before it can sleep.
Survey Monkey Questions
Here is a link to the following Survey Monkey poll:
- Should the local-option real estate transfer fee be restored to the Affordable Homes Act?
- Should South County towns seek by Home Rule petition the ability to assess a vacancy tax?
Survey Monkey Results
A recent column asked the following survey question: “Should Great Barrington settle the Community Impact Fees litigation?”
As of publication, 94.74 percent of respondents said “yes.”
