Governor Maura Healey’s administration on Wednesday took its first big swing at tackling the state’s spiraling housing crisis, offering billions of dollars in new money for affordable housing, while proposing two major policy shifts that are likely to provoke stiff opposition from some communities and slices of the real estate industry.
The bill was hailed by housing advocates and business leaders as one of the most ambitious attempts in recent memory to address the state’s housing shortage, and could create more than 40,000 new homes, state officials say. It includes $4.1 billion for public housing and other needs and 28 policy changes, including a tax on high-dollar real estate sales and broad legalization of small housing options known as accessory dwelling units.
“We know that housing is the single biggest challenge facing folks across Massachusetts,” Healey said Wednesday. “This is going to be legislation that will make our state more affordable for everyone. It’s going to help us meet our climate goals. . . . It’s really, really big.”
But many of the plan’s key provisions will be controversial in the eyes of municipal governments that prize local control of zoning, as well as in some corners of the real estate community. And it will need to navigate a gantlet of committees and leaders on Beacon Hill, many of whom have been skeptical of big-ticket housing reform in the past.
One of the bill’s key additions would be an option for cities and towns to enact a local tax on high-dollar real estate sales, also known as a transfer tax, to raise money for affordable housing. Advocates and some local governments have lobbied for a transfer tax for more than a decade to no avail, largely because of opposition from the real estate industry, which argues that such a policy would unfairly punish homeowners and slow the construction of new housing.
Business groups including NAIOP Massachusetts, the Greater Boston Real Estate Board, and the Greater Boston Chamber of Commerce all said Wednesday that they were concerned about what a transfer tax could do to the housing market.
“A million-dollar home used to sound like a lot of money,” said Jim Rooney, president of the Greater Boston Chamber of Commerce. “It’s not anymore. . . . The timing is wrong, given the state of the housing crisis, for a new fee to be part of the equation.”
But studies have found that such a tax would generate millions of new dollars for affordable housing in a given year. In Boston, Mayor Michelle Wu’s administration has said that a 2 percent transfer tax on residential and commercial property sales would have raised nearly $100 million in 2021 alone.
Under the Healey administration’s proposal, municipalities would be able to enact a transfer tax of anywhere between 0.5 and 2 percent on real estate sales over $1 million, or at the median home price in counties where that figure is above $1 million. That fee would only apply to the portion of the sale that exceeded those thresholds.
The bond bill would also include one of the most aggressive changes to statewide zoning rules to date, by allowing so-called accessory dwelling units — sometimes known as tiny homes or “granny flats” — in all single-family zoned lots, without requiring local permitting. Towns could enact some “reasonable restrictions,” such as setbacks from property lines. But they would not be able to throw up obstacles, such as requiring more than one parking spot for those units or limiting who could live in them, as some communities have.
And, there would be no parking requirements at all on units within a half-mile of transit stations.
A number of other states in recent years have broadly legalized accessory units and seen significant housing growth, and advocates here characterized them as “low-hanging fruit” that could quickly add to the housing supply. Having one set of rules across the state — instead of town-by-town — would also streamline their construction, supporters say.
“It’s really following the models of other states that have had successful ADU programs,” said Jesse Kanson-Benanav, executive director of Abundant Housing Massachusetts. “When the state sets the rules, it creates consistency in every city and town and makes it easier to build.”
But many local officials and residents remain highly skeptical of ADUs, seeing them as disruptive to suburban single-family neighborhoods. And some — including the powerful Massachusetts Municipal Association, which has long pushed back against efforts to erode local control of land use — were alarmed that Healey’s proposed change would preempt municipal zoning rules.
“We’re very open to ADUs, but we start this conversation with being opposed to preempting local zoning,” said executive director Adam Chapdelaine. “There are already a good number of communities with existing ADU ordinances, and we’re worried about how a statewide rule would interact with those ordinances.”
The proposed policies are contained in a housing bond bill that is typically used to authorize spending for existing state programs and funds roughly every five years. On occasion, past governors have attached policy changes or additional funding proposals in the bill, but never to the scale of what the Healey administration is trying. The last such bonding measure, in 2018, authorized $1.8 billion for housing programs and contained no major policy changes.
The Healey administration’s bet is that by using the bond bill to push some controversial priorities, the often-skeptical Legislature may be more willing to compromise to ensure continued funding of affordable housing. They also hope some policies that have been voted down in the past may also carry more weight if they bear the governor’s imprimatur.
Joe Boncore, a former state senator from Winthrop who chaired the housing committee when the last bond bill was passed, said that the addition of major policies to the bill is certain to make it more controversial, but that the Legislature may be more willing to consider it because of the severity of the housing crisis. Still, he said, it will take considerable negotiation.
“There is going to be a lot of debate on this bill,” said Boncore. “But there are a lot of committees that need to get their hands on it. It’s safe to say the bill will look different when the governor signs it.”
House Speaker Ron Mariano and Senate President Karen Spilka, who wield considerable influence over which bills make it to the governor’s desk, will review the bill, their spokespeople said.
The last major housing legislation, a package by then-governor Charlie Baker that included a measure to lower the voting threshold in municipalities for some zoning changes, languished in the Legislature for years before passing in 2021. It also included new rules that mandated zoning for multifamily housing throughout much of Greater Boston.
The biggest recipient of new funding from Healey’s proposal would be public housing complexes funded by the state, which have fallen into abject conditions after decades of disinvestment. The bill would allocate $1.6 billion for repairs, redevelopment, and climate-friendly retrofits.
The Greater Boston Interfaith Organization, which has advocated this year for a huge increase in capital funding for public housing, said the $1.6 billion “will make a tangible difference in restoring our housing supply to a dignified state.”
Other significant programs that help fund affordable housing, such as the Affordable Housing Trust Fund, would receive big boosts. And it would create a new fund aimed at jump-starting affordable projects that have been paused due to rising interest rates and other unfavorable economic conditions.
There are also some wins for tenant organizers, including a process that would allow tenants to have their eviction records sealed, with certain stipulations, and the creation of an Office of Fair Housing to enforce fair housing law and combat discrimination.
Lawmakers have until the end of the legislative session in July 2024 to pass a final version of the bill.