Mansion tax could bring millions to ease 'dire' housing crisis
A tax that could raise millions of dollars for workforce and affordable housing on the Cape and Islands has failed to gain momentum on Beacon Hill for decades.
But recent buy-in from bigger cities for the so-called mansion tax is giving some lawmakers optimism that it could pass.
Nantucket, Martha's Vineyard and several Outer Cape towns have submitted varying versions of the transfer fee for property sales over 2-million dollars.
They passed those proposals town meeting votes, but the state legislature needs to approve them for the tax to become law.
Chatham, most recently, wants less than 1% taxed on large property sales.
Select board chair Peter Cocolis was in front of lawmakers this week, saying the funds would go to developing badly needed housing.
"The consequences of this crisis are apparent and they are dire. Our school enrollment dramatically declined over the past year. Year-round employees with decent incomes are being evicted because of rentals that are sold and become seasonal," Cocolis said. "And, most importantly, housing is not only out of the reach of the neediest but of those stably employed with higher incomes."
He was speaking in front of the state Revenue Committee during a hearing Monday.
The Mayor of Sommerville — Joe Curtatone — was also at the hearing, trying to advance a similar bill that would create a transfer fee for Somerville, and raise potentially up to $10 million a year specifically for affordable housing.
Somerville’s proposal would include a 2% tax on property transfers, but would not apply in the owner planned to occupy the property.
Boston is also proposing a similar transfer fee.
Representative Dylan Fernandes from Falmouth says that the two major cities trying to bring these requests forward will only help advance these proposals on the Cape and the Islands.
He has introduced a bill — H2895 — that would authorize any city or town in Massachusetts to impose up to 2% tax on large property sales.
Elizabeth Malia from Boston is also behind the bill’s introduction.
The bill works essentially as a wealth tax for local communities. Generated revenue would go to the development of local housing, whether built by town officials or through a local housing trust.
Fernandes says that the lack of housing is eroding the fabric that make up the Cape and Islands. For instance, he says that on Nantucket — which he says is a bellwether for what’s to come on Cape Cod — not even higher-income residents like doctors are able to buy a home on the island because it’s so expensive.
Doing nothing is no longer an option, Fernandes tells CAI. “The entire livelihood and vibrancy of our community is at stake,” the state representative said. “So asking for multi-multi-millionaires to pay just 2% on their second, third, or fourth multimillion-dollar home, I think that’s a pretty reasonable proposal given what the alternative would be.”
But local and state realtor associations have not supported Fernandes’ bill, nor these individual requests from local communities to set up a transfer fee.
Fernandes says that industry interests are stopping the bill.
Ryan Castle, CEO of the Cape Cod and Islands Association of Realtors, says it isn’t lobbying interests that are stopping these bills. It’s the lawmakers. They have consistently voted the requests down.
The local association, as well as regional realtors associations, say that these requests could ultimately hurt the real estate market, and raise the price for homes.
Castle says that towns should rely on funding from existing tax laws, like Community Preservation Act, to develop housing. Towns raise funding through the Act with a minor addition to real estate taxes.
And he says that loosening local zoning rules would also help develop more affordable and workforce housing.
“There’s no silver bullet,” the realtor association CEO said. “I think it’s unfair to place a discriminatory tax on a few individuals. “
Castle points out that it’s not just realtors that dislike the tax increase.
A vote in front of lawmakers for an amendment to an economic development that would have allowed cities and towns to create their own local real estate transfer fees — 29 reps voted in favor of the amendment and 130 rejected it.