Boston’s push to tax sales of high-end properties gets mixed reception in Beacon Hill
Boston Mayor Michelle Wu visited the State House on Tuesday to argue for a new 2% tax on most real estate transactions over $2 million, which the city can only implement if the state legislature gives its blessing and the proposal becomes law.
Wu told the Joint Committee on State Legislature Revenue that the tax, which would be paid by sellers and would only apply to funds exceeding $2 million, would affect a small portion of real estate transactions in the city. town.
“Based on 2021 numbers, this would generate up to $100 million in local revenue to address our housing crisis, and would only affect about 700 real estate sales citywide out of nearly 10,000 transactions, so about…7% affected,” Wu said.
The bill had many supporters in local government and local nonprofits, who say the additional funds are needed for programs that help Bostonians obtain and maintain affordable housing. But some players in the real estate industry have argued that this is the wrong way to increase the city’s revenue, that it will curb housing production and have other adverse effects.
Wu preemptively pushed back against the idea that the tax would make it more difficult or desirable for developers to build in Boston.
“It’s not about increasing upfront costs,” she said. “It’s not about adding to the burden, as developers are looking to rack up the authorization costs. … It adds very small transaction fees at the point of sale, when the resources are there, to be able to have a huge impact in our city.
Like Wu, Sheila Dillon, Boston’s housing chief, argued that too many Bostonians are being pushed to the brink by high housing costs. She pointed to a long list of applicants seeking to live in the city’s public housing.
“The Boston Housing Authority list exceeds 40,000 households … and many of those households are families with children in our public schools,” Dillon said. “And every night we have a thousand people living in our shelters or on our streets. And we know that many households that were hanging on…they’ve really suffered the economic consequences of the pandemic, and are no longer able to do that.”
Dillon directly took issue with Gov. Charlie Baker’s suggestion that Boston’s recent injection of federal COVID relief funds should render the proposed tax unnecessary.
“Our housing budget … would double, and that funding would be available to us year after year,” Dillon said. “And while it’s great to have new federal funding, and the governor mentioned this, it’s one-time funding. We need revenue streams available year after year as we plan our way out of this crisis. »
The bill that would cement the proposed transfer tax would exempt real estate transactions between family members. It would also make more older Bostonians eligible for the state’s senior homeowner’s property tax exemption and increase the amount of relief seniors can receive.
State Rep. Brandy Fluker Oakley (D-Boston), the bill’s lead sponsor, said the legislation would help many longtime Bostonians stay in the neighborhoods where they grew up, and communities in color would benefit in particular.
“It would prevent members of communities like mine from being shut out of the housing market and being displaced from neighborhoods where they have lived for decades,” Fluker Oakley said.
These arguments were echoed throughout the hearing by proponents of the bill, including Mark Draisen, the executive director of the Metropolitan Area Planning Council; Lydia Lowe, director of the Chinatown Community Land Trust; and Marley Frédérique, principal organizer of the Boston Tenant Coalition.
Support for the proposal was not unanimous, however.
Patricia Baumer, director of government affairs for the Greater Boston Real Estate Board, said Boston could use the existing Community Preservation Act more aggressively to provide new funding for affordable housing.
This mechanism, which Bostonians voted for in 2016, currently imposes a 1% surtax on residential and commercial property tax bills, with the money allocated for affordable housing, open space and other uses.
Under existing state law, Baumer said, that surtax could be increased to as much as 3%, and Boston could direct more of its existing CPA revenue to affordable housing than it currently does.
“[The CPA] was created because it’s a stable source of revenue, unlike a real estate transfer tax,” Baumer said. “Times are good now, but 2008 wasn’t that far away. The market itself is a very volatile source of income. The market goes up and the market goes down. »
Dawn Ruffini, president of the Massachusetts Association of Realtors, said the proposed transfer tax reflects a fundamental misdiagnosis of what is plaguing the state’s housing market.
“The current housing crisis stems not from a lack of finance, but rather from a lack of housing production,” she said.
Ruffini also predicted that, if Boston’s transfer tax becomes a reality, it will make it harder to find housing in the city and “increase income stratification.” [while] limiting diversity and inclusiveness, thereby reinforcing pre-existing patterns of de facto segregation.
“Transfer taxes will hurt our communities,” she said.
The Legislative Joint Committee on Revenues currently has a June 31 deadline to take any form of action on the bill.