Municipal Officials Stand Behind ‘Transfer Fee’ as Critical Tool for Keeping Region Affordable

Municipal Officials Stand Behind ‘Transfer Fee’ as Critical Tool for Keeping Region Affordable

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Boston – May 9, 2024 – The Metropolitan Mayors Coalition and communities across the Metropolitan Area Planning Council’s (MAPC) region have joined together to renew their support for local-option transfer fees, urging the Legislature to give communities this critical tool to fund affordable housing without delay, by passing the Affordable Homes Act this year.

Transfer fees, which are locally adaptable, would allow cities and towns to collect a fee of between 0.5% and 2% on all real estate transactions over $1 million; the proceeds would be used to directly fund new affordable housing in the community. This tool was first requested by Provincetown in 2010, and more than 40 local officials have recently signed onto a letter requesting permission to use the same tool in their municipalities.

While opponents have said transfer fees would negatively impact housing affordability, the proposal included in the Affordable Homes Act would exempt existing affordable housing from experiencing the new fee. The bill would also allow communities to choose a threshold higher than $1 million for when the fee would apply; for example, Boston’s model only applies to real estate transactions greater than $2 million.

An MAPC analysis of the proposal using Warren Group data from 2022 found that the fee would apply only to a small percentage of residential sales statewide (13.7%). More than half of transactions in which the fee would have been applied were conducted by investors or corporate entities.

Non-investor individuals paying the fee would account for fewer than 6.6 percent of sales statewide. If the fee were used in all communities in 2022, it would have applied to fewer than 6,000 transactions by these individuals, impacting just 0.08% of Massachusetts’ 6.9 million residents. Given the fee is a local option and would not be implemented in all communities, far fewer than 6,000 would pay in the end.

“The truth is that this fee would apply to only a small number of residential sales, and most of those sales are conducted by investors,” said Marc Draisen, Executive Director of MAPC. “Very few residents will pay this fee, while many stand to benefit from the Affordable housing it will make possible. It is a no-brainer example of progressive taxation.”

“It's not in question that the Greater Boston area is experiencing an alarming, and ever expanding, gap between the cost of living here and stagnant wages. We need the Commonwealth's support as we work to bridge this gap and help our residents," said Mayor Katjana Ballantyne of Somerville, who co-chairs the Metro Mayors Housing Task Force. "The flexible-option transfer fee in the Affordable Homes Act would give us a new source of revenue to fund affordable, stable housing. Creating and maintaining affordable housing is an enormously expensive undertaking. Currently available funding sources are simply insufficient to meet the current need.”

“I strongly urge our partners in the State House to include this transfer fee in the final version of the Affordable Homes Act to help our community members continue to call Somerville home,” said Mayor Ballantyne.

“Cambridge is strongly in favor of a local option transfer fee. Our cities and towns are unique and this is a critical tool that allows local leaders to make choices that fit their communities. In Cambridge, we are facing incredibly high costs of housing and a transfer fee would allow us to substantially raise our investment in affordable housing,” said City Manager Yi-An Huang of Cambridge. “This has strong local support and would benefit not just our community, but the entire region.”

“Salem, like communities across our Commonwealth, is facing a housing crisis. For every four low-income families in our city, there is only one deed-restricted affordable home. The distance between the price for a home and the average Salem family’s wages is growing further apart, faster, than ever, and it’s threatening the character of our community,” said Mayor Dominick Pangallo of Salem. “An optional and flexible transfer fee, as proposed in the Affordable Homes Act, is a vital tool to put local resources behind our local needs. Without the resources to meaningfully impact supply, address displacement, and ensure every Massachusetts family has a roof over their head and one that they can afford, no amount of zoning reform or policy changes alone will get the job done. I hope legislators move quickly to pass the Affordable Homes Act in its entirety, including the critical local-option transfer fee proposal.”

“Cities and towns need predictable, sustainable revenues to be able to act when affordable housing opportunities arise, including the reuse of surplus state properties like MCI Concord,” said MAPC past president and legislative committee chair Keith Bergman, a retired municipal manager who also chairs Concord’s Municipal Affordable Housing Trust. “The real estate transfer fee in the Affordable Homes Act—which Concord has sought since 2019-- is a vital tool for the future of our communities.”

MAPC and the Metro Mayors Coalition are proud to support the Affordable Homes Act in full, especially goals around housing production, public housing modernization, decarbonization funding, and policies to establish an Office of Fair Housing, seal eviction records, and allow inclusionary zoning with a simple majority vote. Both MAPC and the Coalition also strongly support adding the Tenant Opportunity to Purchase Act (TOPA) to the bill.

PRESS CONTACT

Tim Viall
Senior Communications Specialist
tviall@mapc.org
C: 508-965-0456