Senate Debates Housing Bank

Legislation Laid on Table Twice, but Senate Vote Expected Soon;
Robert O'Leary Speaks Out for the Cape and Islands

By IAN FEIN

Special legislation to create a Martha's Vineyard Housing Bank
is nearing a vote in the Massachusetts state senate.

The housing bank bill came to the senate floor each of the last two
weeks, but both times was postponed by parliamentary procedure. The
senate is expected to take up the bill again next week, and supporters
and opponents are headed to the state house on Monday to lobby senators
in anticipation of an upcoming vote.

Cape and Islands Sen. Robert O'Leary sparked a short debate on
Wednesday when he formally introduced the bill to his senate colleagues.

A State House News Service transcript of the senate session captured
the debate. "[Island residents] are simply asking this body to
give them the ability to preserve their community. How can we deny that
request? How can we say you can't have teachers and plumbers
living in your midst?" asked Senator O'Leary. "Their
housing situation is driven by forces beyond their control. These prices
are beyond comprehension. We have to provide them with some
options."

Sen. Richard Tisei of Wakefield, a real estate agent who also owns a
home on Massasoit Road in Edgartown, argued against the housing bank
bill on Wednesday. Despite support from Island real estate agents, the
legislation has drawn opposition from the Massachusetts Association of
Realtors because it proposes a one per cent transfer tax on most real
estate transactions.

"I do love it on Martha's Vineyard, and I want the
Island to stay as nice as it is now," Senator Tisei said.
"You can say this is a tax on the rich, [but] it doesn't
work like that in a real estate transaction. You are just putting
another impediment and making it more difficult [for someone to buy a
home]. Ultimately the buyer will pay."

Modeled after the Martha's Vineyard Land Bank, the housing
bank would generate roughly $2 million per year for affordable housing
projects through a seller-paid transfer fee on Island real estate
transactions. Voters in all six Vineyard towns approved the concept in a
nonbinding ballot initiative last spring, and, if passed by the state
legislature, the proposal would still require another round of support
by Island voters.

With less than two months left in the legislative term, housing bank
advocates are hoping that the senate will act on the bill soon. If both
chambers do not adopt the legislation by July 30, the bill will have to
be reintroduced next fall and return to committees for review.

"We're working hard to get it through the senate, and we
hope to get it through soon," said Martha's Vineyard
Co-operative Bank president Richard Leonard, who is chairman of an
ad-hoc housing bank coalition on the Vineyard. "I'm
optimistic that we'll get the senate's support, and
we're looking forward to having an opportunity in the
house."

Because the state legislature typically eyes local tax initiatives
with caution, Senator O'Leary and other housing bank supporters
have said candidly that the bill faces an uphill battle to passage. But
it received a boost earlier this spring, when, after months of review,
the joint committee on revenue awarded it a favorable recommendation.

Giving the bill more weight on Beacon Hill, the senate ways and
means committee last month also amended the legislation to
simultaneously create a Nantucket Housing Bank, which would mirror the
Vineyard version with only slight modifications. If approved by the
state legislature, the Vineyard and Nantucket housing banks would be
distinctly separate entities, and neither the dissolution nor the
failure to adopt one would affect the other.

Nantucket was added to the Vineyard bill because the revenue
committee found the transfer tax concept more favorable than an earlier
Nantucket proposal, commonly known as the McMansion tax, which would
have raised funds for affordable housing by taxing the construction of
new homes in excess of a certain size.

Though it has not yet come before Nantucket voters, the new housing
bank proposal has received votes of support from a wide array of island
organizations, including the board of selectmen, planning and economic
development commission, builder's association and association of
real estate brokers. Nantucket Housing Office executive director Leedara
Zola said this week that advocates there were glad to be tied together
with the Vineyard.

"When you're in a community at such crisis levels as
Nantucket and the Vineyard are, people understand the problem,"
Ms. Zola said. "There is much to be gained by joining together.
It's nice to have the support of our sister Island, and it's
nice to work together."

Mr. Leonard agreed with Ms. Zola. "Anytime we can work
together on a common problem is great," he said.

To reflect the different real estate markets on the two Islands, the
transfer tax exemption price would be substantially higher on Nantucket
than on the Vineyard. The first $750,000 of a sale price would be exempt
from the one per cent tax on the Vineyard, while the first $2 million
would be exempt on Nantucket. Also, because Nantucket is a single town,
its housing bank would have a single advisory board, instead of the six
on the Vineyard.

The Island partnership is somewhat ironic because the transfer tax
concept actually originated on Nantucket. The Martha's Vineyard
Land Bank, which served as the inspiration for the housing bank, was
modeled after an earlier version on Nantucket. The Nantucket and
Vineyard land banks raise funds for conservation purchases with a two
per cent transfer tax levied on buyers of most real estate transactions.

Both Senators O'Leary and Tisea cited the Island land banks in
their comments on Wednesday. Senator Tisea praised the Martha's
Vineyard Land Bank, but blamed it for the housing crunch.

"There is a two per cent transfer tax on the Vineyard for land
acquisition, and they have been so successful with it that there is no
land left for affordable housing. So the prices, supply and demand, have
shot up through the roof," Senator Tisea said, according to the
transcript. "This bill is the wrong way to go."

Senator O'Leary used the Island land banks to rebut concerns
raised by the statewide realty association and echoed by Senator Tisea
that the Islands transfer tax would spread elsewhere in the state.
Meanwhile, some 70 Vineyard real estate agents yesterday signed a letter
to senators in support of the housing bank, and the Nantucket
Association of Real Estate Brokers sent a similar letter last month.

"Some people in the real estate industry are concerned the tax
will set a precedent and come to shore, so to speak. I can assure you
that that will not happen," Senator O'Leary said on
Wednesday. "The Islands have a history of transfer taxes that have
not come ashore. They have transfer taxes for open space.

"The irony here is the marketplace is pricing out of housing
and shelter the very people [Senator Tisei] suggests we need to
protect," Senator O'Leary said. "The reality is we
need to do something."