BOSTON — Gov. Maura Healey and Lt. Gov. Kim Driscoll announced a $4 billion housing bill called the Affordable Homes Act on Oct. 18. In addition to new funding for public and affordable housing around the state, the bill contains a provision that Provincetown voters first endorsed in 2010, that Truro voters approved in 2019, and that Wellfleet voters requested in 2021: permission to enact a local fee on the transfer of real estate to fund new housing development.
“We’ve arrived at the moment where we have a governor who understands and appreciates the need to help communities finance affordable, workforce, and community housing,” said Provincetown’s Rep. Sarah Peake. “That is really great news.”
The push for a real estate transfer fee had originated on Nantucket and Martha’s Vineyard, which for decades used transfer fees to finance the purchase of conservation land. The islands are not part of the Cape Cod National Seashore but still have huge swathes of protected open space thanks to purchases by their land banks starting in the 1980s.
“I met with Gov. Charlie Baker in 2016, and when we presented the idea of a transfer fee it took him about 20 seconds to do the math and say, ‘This is a rounding error on these sales,’ ” recalled Nantucket Housing Director Tucker Holland. “I said, ‘Exactly. People negotiate away numbers like this without even thinking about it on transactions of this size.’ ”
But the transfer fee never got off the ground during Baker’s two terms, and none of the home-rule petitions submitted by individual towns ever passed the legislature.
Those proposals varied widely, said Somerville’s Director of Housing Stability Ellen Schacter, who helped lead the Local Option for Housing Affordability Coalition that has been advocating a transfer fee. Some of the home-rule petitions would have imposed the fee on the entire sale price, while others exempted the first quarter- or half-million dollars. Some charged the fee to the seller when the sale concluded, while others charged the buyer. Wellfleet’s proposal charged one percent to the seller and one percent to the buyer.
“For years I’ve been saying that the way we’re going to get this done is on a statewide basis and not piecemeal with different language from town to town to town,” Peake told the Independent. “And finally, here we are.”
Healey’s proposal would create a standard local option that towns could adopt at town meeting or the by city council. Towns could charge the fee only on the portion of the sale price over $1 million or the portion over the county’s median single-family home sale price, whichever is higher.
Only Nantucket and Martha’s Vineyard have median sale prices over $1 million, so for the rest of the state, the $1 million threshold would be the controlling one.
A home that sells for $2 million would pay the fee only on the second million, Holland said. A half-percent fee, the lowest percentage authorized in the governor’s proposal, would be $5,000. A 2-percent fee, the highest percentage the plan allows, would be $20,000.
A half-percent fee on amounts over $2 million — the median sale price in Nantucket — “would have generated around $6 million here if it had been in place in 2022,” Holland said. “It really adds up.”
The Mass. Budget and Policy Center, a progressive think tank, has posted a downloadable calculator that uses property sale records from across the state to calculate how much each town would have netted from a transfer fee if it had been in place in 2021.
The calculator is based on an earlier proposal from housing advocates that did not have an exemption, however, and therefore taxed the full sale price of all properties over $1 million.
Without an exemption, a one-percent transfer fee would have raised $1.2 million in Provincetown in 2021, $581,000 in Truro, and $397,000 in Wellfleet.
Exempting the first million puts a major dent in the potential revenue, Schacter said. But for the Outer Cape towns, putting the transfer fee at 2 percent on the rest of the sale can almost make up the difference, the calculator shows. A 2-percent transfer fee with an exemption would have raised $998,000 in Provincetown, $482,000 in Truro, and $295,000 in Wellfleet.
The governor’s proposal will have a public hearing at the Housing Committee in the House first, said Peake. “The challenge that we have,” she said, “is to ensure that the language the governor put in, or at least some appropriately modified version of it, is included in the bill.”
From there it will go to the House Ways and Means Committee, a floor vote of the full chamber, and then to the state Senate.
If this bill passes, all of the existing home-rule petitions will “go into the great dustbin on Beacon Hill,” Peake said, because the standardized rules in the statewide bill will supersede them.
“I don’t have a crystal ball,” said Peake, “but you have the mayor of Boston, you have the Berkshires delegation, the Cape and Islands. And we have a governor who’s not going to veto it or amend it and water it down. We would have needed a veto-proof 106 votes to get past Gov. Baker, and now we only need 82 to pass the House.”
If the proposal becomes law, towns would have to vote again at their town meetings to adopt the new fee — and to pick a percentage.
Provincetown voted down the real estate transfer fee five times between April 2007 and June 2009 before it narrowly passed at a special town meeting in 2010. A repeal measure was put on the warrant at spring town meeting in 2011 and was defeated.
All seven of those votes were on home-rule petitions that the state was relatively unlikely to approve. If the governor’s local option proposal makes it through the legislature and into law this year, town meetings will find themselves voting on the real thing.