Four of the six Island towns will take the first steps next week in deciding the pivotal question of whether to ask the state legislature to allow creation of a Martha’s Vineyard Housing Bank, aimed at stemming the escalating affordable housing crisis on the Island.

Modeled loosely after the Martha’s Vineyard Land Bank, the housing bank would be an all-new regional government entity with broad, autonomous powers to buy and sell real estate, grant loans, take on debt and issue bonds. Funding for the bank would come from a two per cent transfer fee on most real estate transactions over $1 million, paid by the buyer.

Developed and written by a coalition of Islanders and their attorney over the past year and a half, the housing bank proposal has been the subject of a high-profile campaign in recent months and weeks via public forums, government meetings and social media platforms.

And while previous housing bank proposals on the Vineyard have sputtered for various reasons, this time around the proposal has seen a groundswell of passionate community support from clergy groups, business leaders, younger voters and the NAACP, among others. All have been spurred by increasing alarm as the housing crisis pervades nearly every aspect of Island life.

Critics of the proposal have been less vocal but no less committed to their belief that the Island is already under extreme pressure from development and the housing bank could open a Pandora’s Box of unintended consequences. The finance committees in Tisbury and Edgartown have voted not to recommend passage and the Oak Bluffs finance committee declined to take a position. The West Tisbury finance committee has recommended passage.

On all sides there is tension and deep-seated worry about the future.

If it is approved by at least four towns, a bill to create the housing bank would go to the state legislature as a home rule petition. There it would become one piece of a much larger and dynamic political puzzle involving real estate transfer fees around the commonwealth.

Cities and towns from Boston to western Massachusetts to the Cape and Islands are grappling with their own versions of the housing crisis. There are currently 12 bills pending on Beacon Hill, including one from Nantucket. All are different, according to Cape and Islands state Sen. Julian Cyr, who supports the housing bank concept for the Vineyard.

The housing bank question appears as a 2,000-word article on every annual town meeting warrant this spring. A companion nonbinding question appears on town election ballots. The warrant article references a 27-page draft bill that is filed with the town clerks in every town.

Approval of the question by four towns would only be a first step. If the legislation eventually clears the legislature, it would return for a final vote at town meetings. 

The warrant article and accompanying legislation are complex, but in summary the proposal would:

• Create a seven-member commission, with six members elected from Island towns (one from each town) to serve three-year terms, and one member elected at large to serve a two-year term. 

• Establish appointed town advisory boards in each town, including one representative from the select board, conservation commission, planning board, board of health, zoning board, wastewater committee (if one exists), and two representatives from the town housing committee. The advisory boards would have a two-thirds majority voting power over proposed projects or expenditures of housing bank funds within their towns.

• Create funding for the bank from a two per cent, buyer-paid transfer fee on real estate transactions, with the first $1 million exempt from the fee.

• Set an income cap for applicants seeking funding for housing at 240 per cent of area median income (currently about $250,000 for a family of four).

• Authorize the housing bank to make grants for the acquisition, renovation, or construction of housing, and also provide “loans, bond guarantees, lines of credit, interest subsidies, rental assistance, and other means of financial assistance,” including “shared appreciation equity loans through which the housing bank receives a portion of the appreciation of the applicable property upon resale.” Recipients could include individuals, nonprofit and for-profit organizations including developers. Projects would be subject to year-round occupancy restrictions. The housing bank cannot itself be a developer.

• Set guidelines for considering projects, including master plans, comprehensive wastewater plans and climate action goals.

• Allow elected commissioners to be paid annual stipends up to $2,000, subject to approval by town advisory boards.

• Require that 75 per cent of the funding be allocated to projects on previously developed properties with existing buildings. 

• Require new construction to meet green energy standards, preserve open space and protect natural ecology.

• Create a withdrawal and sunset clause. Any town could withdraw with a majority vote taken by ballot in a town election. And the housing bank would expire after 30 years, unless at least four member towns vote to extend it.

In an interview this week, Laura Silber, the paid coordinator for the housing bank coalition, reflected on the campaign.

“In every sense of the word it’s a true grass-roots effort,” she said. “It’s been this really inclusive process . . . from the beginning the goal was to engage with town government on every level and help bridge the conversation.”

She acknowledged that the proposal is complicated, and said the article and draft legislation were written with assistance from the coalition’s legal counsel Eric Reustle, an attorney with Krokidas & Bluestein in Boston. “They do municipal law. We worked with him for months on drafting and redrafting 
. . . we had to look at state-level legislation and make sure it agreed, make sure it would allow for the needs of the Island. It’s been a lot of back and forth,” Ms. Silber said.

But she said the months-long effort has been worthwhile, with many revisions made based on community feedback. “I think what we are sending to the legislature is better because of what we have been doing and been through,” she said.

She emphasized that passage of the proposal at town meeting would only be a start.

“It’s not over,” Ms. Silber said. “This is the beginning of a long process. The votes next week are not about adopting a housing bank, the votes are to send this to the state house. We are at least a year away from anything happening.”

Speaking to the Gazette by phone, Senator Cyr echoed the theme.

“I would encourage Islanders, if they support the idea of having an Islandwide housing bank and having a real estate transfer fee to fund it, I would encourage them to vote,” Mr. Cyr said. “In the process certain details are going to change. So don’t sweat the details. Because the details are going to change.”

At the state level, Mr. Cyr painted a picture of an ever-changing environment around the transfer fee issue.

“I’m pretty convinced the transfer fees are going to happen,” he said. “But none of these bills are going to pass individually,” he added.

Mr. Cyr said he has long been a booster for the idea of a housing bank on the Vineyard. “It’s something I’ve long fought for. It makes abundant sense for the Vineyard, and I’m delighted to see these warrant articles advancing,” the senator said. “We are uncertain if and when a transfer fee will pass at the state level, so just having a framework in place for having a housing bank makes sense . . . We are identifying a revenue source to solve the current housing crisis and it’s directly related to the housing crisis.”

Leslie Baynes, a member of the Edgartown finance committee who led the committee to a unanimous vote to not recommend the housing bank, had a different view.

“The complexity of it, that’s part of my issue,” Mr. Baynes said. “We’re signing off on something we haven’t read or even understand if we did read it  . . .  this is buyer beware.” He continued:

“We really are going to delegate the spending of a billion dollars to an unknown entity? . . . We can’t even get along with our existing [regional] formulas.”

On Tuesday it will be time for voters to decide.

Ms. Silber said the coalition has been working to engage with younger voters.

“Our hope is we’re going to see a lot of new voters at these meetings, people who’ve never attended town meetings,” she said. “But it’s not just younger voters . . . it’s the whole Island.”