BOSTON — A day before Boston Mayor Michelle Wu plans to sign a petition that would add a new tax on real estate sales of $2 million or more in her city to fund affordable housing, Gov. Charlie Baker said he generally does not “support these sorts of things.”
Approved Wednesday by the Boston City Council, Wu’s plan pairs the transfer fee with an increase in the senior property tax exemption, and would only impose the new tax on the value of a property above $2 million, rather than the full amount.
As a home-rule petition, it would need sign-off from the Legislature and Baker before it could take effect. Communities for years have pressed local transfer tax proposals on Beacon Hill, without success.
“As a general rule, I don’t support these sorts of things, and I especially wonder why we’re doing this at a point in time when we have billions of dollars available to us to spend on housing, and the city of Boston has hundreds of millions of dollars available to them to spend on housing,” Baker said during an appearance on GBH’s “Boston Public Radio.”
The governor said resources available under the American Rescue Plan Act and a “significant” state surplus mean there are “huge numbers” of dollars available to pour into housing initiatives.
In his proposal for spending the state’s ARPA money, Baker had sought $300 million for programs for first-time homebuyers, and $250 million for revitalizing downtowns, including by converting commercial space to residential units. The bill lawmakers ultimately passed included $65 million in homeownership assistance and did not feature the downtown redevelopment money.
Baker said it’s “very unusual” for him not to support home-rule petitions backed by local officials.
“This is an exception,” he said.
Senate President Karen Spilka said she didn’t know enough about Wu’s proposal to take a position but was surprised Baker spoke to it.
“I’m surprised he ruled on it, or said that without seeing it. Usually he doesn’t comment on bills until he sees it,” Spilka told the News Service. “I don’t know what the language is and I certainly would want to talk to Mayor Wu about it … So it’s premature for me to say anything about that, honestly.”
Baker in 2019 proposed raising an excise tax on real estate transfers to generate money to help cities and towns adjust to climate change. Asked how that attempt differed from what Boston officials are seeking, Baker said the size of his hike was “dramatically different” — smaller — and it was “tied to an existing tax that had not been raised since 1986.”
Boston is among several municipalities seeking the state’s permission to impose a transfer tax on property sales within their borders.
Last month, the Revenue Committee endorsed local bills proposing transfer fees in Somerville (H 3938), Provincetown (H 3966), Concord (S 2437), Arlington (H 4295), Cambridge (H 4282), Nantucket (H 4201) and Chatham (H 4060), along with another version of a Boston bill (H 2942).
Bills that would allow municipalities wishing to do so to adopt transfer taxes without having to go through the home-rule process on Beacon Hill (H 1377, S 868) remain before the Housing Committee, which extended its deadline to act on them until May 9.
Arguing against making costs even higher for buyers and noting the array of state programs focused on housing, real estate industry officials have for years opposed transfer tax bills, which have been unable to gain sufficient traction in the Democrat-controlled Legislature to become law.
Supporters of the transfer tax plans, meanwhile, say existing programs have not stopped home prices from straining family housing budgets, and that the fee would generate millions to put toward the problem.
“Housing is health, safety, and opportunity — and housing stability must be the foundation for our recovery from the pandemic,” Wu said when she announced her proposal in late January. “As the cost of housing has become more and more out of reach for families, we must take urgent action to keep families in their homes and build a city for everyone.”
Wu plans to sign the petition at a 10:30 a.m. press conference Friday at Foley Senior Residence in Mattapan, where she will be accompanied by Rep. Brandy Fluker Oakley, City Councilor and Sen. Lydia Edwards, and Councilor Kendra Lara.
In testimony to the Boston City Council opposing Wu’s petition, the Greater Boston Real Estate Board described affordable housing as a “community-wide” responsibility that “should be paid for by the entire community,” rather than singling out property owners and sellers, and said that the proposal “fails to recognize that the real estate market is highly sensitive to economic downturns.”
The GBREB also joined with the Massachusetts Association of Realtors in writing to lawmakers earlier this month, arguing that allowing a transfer tax would set a “dangerous precedent” and “violates principles of tax fairness.”
The Local Option for Housing Affordability Coalition, which backs the bills that would allow municipalities to opt-in to a transfer tax, sent its own letter to legislative leadership Wednesday to counter the real estate groups and highlight that each community that wants to adopt such a fee could set its own thresholds and exemptions.
“Many communities are experiencing housing issues that cannot be addressed by any current program,” the coalition wrote. “For example, public safety officials can’t afford to live within the communities they are sworn to protect, and teachers can’t live in the communities where their students are growing up. In Boston, hundreds of luxury condos in neighborhoods across the city sit vacant, owned only for the purposes of investment or flipping for profit.”