The Walsh administration signaled Thursday that it would be open to a tax on real estate sales in Boston that could raise millions of dollars a year for affordable housing.
But many questions remain, and time is drawing short to push such a proposal forward before the City Council breaks for the year.
Emme Handy, Boston’s chief financial officer, told a panel of city councilors that Mayor Martin J. Walsh “would like to support” a bill that would allow the city to levy a tax on the sale of office and apartment buildings and, potentially, homes. Details still need to be worked out — such as which transactions would be taxed and at what rate — and Walsh is concerned about the potential impact on Boston’s broader housing and office markets.
“From a finance perspective, more resources are always welcome,” Handy said. “The concern is the trickle-down effects.”
Some City Council members have been pushing for a so-called transfer tax on real estate sales, as a way to leverage Boston’s long-running real estate boom into funding for affordable housing. A tax could also potentially discourage speculation buying and property-flipping that they worry is driving up rents.
A report commissioned by the city found that a 1 percent tax on private-market sales would have raised, on average, nearly $84 million a year over the last decade. Revenue from a 5 percent tax would have topped $420 million a year, four times this year’s budget for the city’s primary housing agency.
For now, council members are urging Walsh to support a measure that would simply allow Boston to levy a real estate tax — with details to be hashed out later. If he does, it would then go to Beacon Hill for approval.
“If this passes at the State House, we don’t have a transfer fee. We have the ability to have a transfer fee,” said council member Lydia Edwards, one of the measure’s lead supporters. “This is a tool in the toolbox that we’d like to use one day.”
Somerville, Concord, and Nantucket have already sent similar home rule petitions to state legislators, and Watertown, Arlington, and Cambridge are among the communities that are considering transfer taxes said Ellen Shachter, a Somerville city staffer who’s helping lead a statewide push to enable such fees.
“There’s a lot of momentum,” she said. “But to get this passed we’re going to need a lot of people lined up.”
And, as expected, there are people lined up against it, too. Greg Vasil, chief executive of the Greater Boston Real Estate Board, said after the Thursday meeting that his group opposes any transfer tax. It might be paid by investors and big property owners who buy and sell apartments and office towers, Vasil said, but the fee would translate into higher rents for tenants and businesses that occupy those buildings. Boston needs to tackle its housing crisis, he said, but there are better ways to do it.
“Building owners are just going to look to pass this stuff through,” Vasil said. “That’s not going to help.”
Boston officials will have to decide fast if they want to move forward with a proposal this year.
The City Council holds its last meeting of 2019 next Wednesday, and newly elected members take their seats in January. That means a new bill and new hearings will be required. The state Legislature — which would need to pass any plan the council approves and Walsh signs — breaks for the year in July.
“The ball is really in the administration’s court here,” said council member Michael Flaherty. “If there’s an appetite to get something done, we can work together and do this by Wednesday.”