Governor files housing bond bill including long-sought Cape & Islands priorities
Proposal allows for local option transfer fee championed by Senator Cyr
(BOSTON – October 18, 2023) This morning, Massachusetts Governor Maura Healey unveiled the Affordable Homes Act, proposing unprecedented investments and actions to address the Commonwealth’s housing crisis. The $4 billion package includes a local option transfer fee to support affordable housing projects, a provision long-sought by Cape Codders and Islanders. Among other game-changing measures, the bill would also create a Seasonal Communities Designation and Seasonal Communities Local Option Property Tax Exemption to support municipalities that economically depend on seasonal tourism. The Affordable Homes Act would also reform certain zoning policies, such as eases requirements for the use of Accessory Dwelling Units (ADUs).
“On Cape Cod, Martha’s Vineyard, and Nantucket, the housing crisis has caused our region to become profoundly unaffordable,” said Senator Julian Cyr (D-Truro). “The Healey-Driscoll Administration’s Affordable Homes Act is a huge step forward in our long-sought efforts to implement a local option transfer fee on luxury real estate, in addition to other creative initiatives such as seasonal designations for communities impacted by tourism and Accessory Dwelling Unit permitting by right.”
Working people across all sectors are struggling to stay in Massachusetts, and prospective residents are turning down opportunities to work here because they cannot find housing. A local option real estate transfer fee is an artful solution to create a revenue source to subsidize the building of workforce and affordable housing. The Governor’s proposal allows municipalities and regional affordable housing commissions to adopt a transfer fee between 0.5% and 2.0%, that would be paid by the seller of real property on the portion of sale proceeds over $1M or the county median home sales price, whichever is greater (adjusted for inflation). Revenue from this fee, in turn, would need to be used for affordable housing purposes.
"With 20-plus years of experience as a realtor on Nantucket, I have seen first-hand the staggering impacts of the housing crisis on the Island,” said Brian Sullivan, longtime Nantucket Real Estate Broker and Board Member of Nantucket Affordable Housing. “As a seasonal community, we need unique and innovative tools to sustain our year-round community, and a transfer fee gives us those tools."
The housing crisis is particularly severe on Cape Cod, Martha’s Vineyard, and Nantucket. According to the Massachusetts Association of Realtors, between 2016 and 2022, the price of a single-family home in Barnstable County increased by 83%; and when comparing December 2016 to December 2022, the total single-family home inventory decreased by 76%. On Nantucket, where the median sales price was $3.4 million in 2022, there has since been a 150% increase in the median sales price and a 53% decrease in inventory comparing the same time periods.
“This is a lifeline for communities where first-responders, healthcare workers, teachers, seniors and young people are simply priced out,” said Tucker Holland, Housing Director for Nantucket. “On the islands, we have seen generational families forced to leave their homes and fire fighters commute four hours to their jobs – this will help to keep people in the communities they love.”
A real estate transfer fee has long been sought by municipalities to help address the strain on affordable housing. Nearly 20 municipalities have filed transfer fee home rule petitions across Massachusetts, including Provincetown, Aquinnah, Chilmark, Edgartown, Nantucket, Oak Bluffs, Tisbury, Truro, Chatham, Wellfleet, and West Tisbury on the Cape and Islands. Senator Cyr has also introduced a bill to establish a statewide local option transfer fee.
"Thank you to the governor and the administration for their bold steps today: particularly for recognizing the unique challenges facing seasonal communities as we struggle to keep our year-round communities from being pushed out by escalating real estate prices, and for recognizing the transfer fee as a key piece for funding the solutions,” said Laura Silber, Island Housing Planner for the Martha’s Vineyard Commission. “Thank you to Senator Cyr and Representative Fernandes for their robust advocacy and partnership on advancing these policy efforts at state level. The Martha’s Vineyard Commission looks forward to working with the administration, our district legislative delegation, and our neighbor Island of Nantucket to refine the details of these critically important tools for maximum benefit to the Island community. "
The Cape and Islands’ affordable housing crisis threatens the viability of local businesses and endangers public safety. Persistent unaffordability and unavailability are leaving communities unable to adequately staff positions such as first responders and medical professionals. The Governor’s proposal recognizes the special housing challenges faced by areas like the Cape and Islands that depend on seasonal tourism and experience wide fluctuations in population and employment throughout the year. These communities not only have an increased need for locally based workers during the tourism season, but also lose much of their year-round housing stock to short-term rentals and vacation homes. The bill establishes a Seasonal Communities Designation and creates a framework to determine which communities have substantial seasonal variations in employment and housing needs. The bill also creates a Seasonal Communities Coordinating Council to advise the Executive Office of Housing and Livable Communities on regulations that will govern the designation of cities and towns as seasonal communities. Additionally, the legislation establishes a seasonal communities local option property tax exemption for the development of year-round rental units.
“I am incredibly impressed with the thoughtful and strategic approach by the Healey administration to develop the Affordable Homes Act,” said Alisa Magnatta, CEO of Housing Assistance Corporation. “These historic investments were decided after months of discussions with stakeholders around the state, understanding that each region is different, with a need for a variety of tools to address our housing crisis. I am grateful they heard our plea for Accessory Dwelling Units by right, an increase in home ownership tax credits, a local option for a property transfer fee for sales over $1 million, and a special designation for seasonal communities. This is our opportunity to stop talking about the problem and to take action that allows our families, our businesses, and our communities across the Cape and Islands region and across Massachusetts to thrive. It all begins with having a place to live and this historical investment will help turn the tide for citizens across the Commonwealth”.
Many housing advocates on the Cape and Islands have called for alternative housing options such as Accessory Dwelling Units (ADUs) that expand housing options quickly in a manner that meets local needs. The bill permits ADUs equal to or less than 900 square feet to be built by-right in single family zoning districts in all communities.
“The Cape Cod Chamber is pleased to see the Healey-Driscoll Administration take bold, decisive action to mitigate the ongoing housing crisis in Massachusetts,” said Paul Niedzwiecki, CEO, Cape Cod Chamber of Commerce. “The Governor’s housing proposal includes policy and funding provisions that specifically address the unique housing challenges of seasonal, tourism-dependent regions like Cape Cod, while also supporting year-round housing production that meets the needs of local employers and the workforce. We look forward to continued partnership with the Governor’s office and our Cape & Islands legislative delegation to ensure this important legislation is passed.”
An overview of the Affordable Homes Act provided by Governor Maura Healey and Lt. Governor Kim Driscoll can be found here.