A bill before the state legislature that has drawn Islander support makes a new attempt to secure a fee on high-end real estate sales in order to turn the tide on the region’s housing crisis.
About a dozen residents Wednesday threw their weight behind the bill filed by the Island’s state Sen. Julian Cyr earlier this year. If passed, it would allow seasonal communities in the state to assess a 1-2 per cent fee on most real estate transactions over $1 million, with the money going towards housing initiatives.
The Vineyard, Nantucket and several other communities in the state have been pushing for a housing transfer fee for years, but it has continued to meet resistance at the State House, partially from the real estate lobby in Greater Boston.
Last year, Gov. Maura Healey included a transfer fee in a large housing bill that was similar to the Vineyard’s parallel housing bank push, but both failed to make it through the legislature. Seeing that resistance, Senator Cyr, a Democrat from the Outer Cape, said he crafted the new bill to be only applicable to resort communities where there is desperate need.
The hope is that the more tailored version would draw less pushback on Beacon Hill, finally giving the Vineyard and seasonal communities a much needed funding source to deal with lack of year-round housing.
“It’s one more strategy for how we can secure a revenue source to stem the housing crisis that confronts Martha’s Vineyard and the whole region,” Senator Cyr said in an interview.
During Wednesday’s hearing with the legislature’s joint committee on housing, Islanders painted a bleak picture for middle class and low income residents on the Vineyard, saying they are increasingly being pushed out of housing opportunities, leaving few people to take service, medical and public safety jobs.
Though the state has given towns more options to combat the housing crisis through the Affordable Homes Act last year, the lack of funding to implement those strategies has hampered the Vineyard.
“This bill would give us a sustained revenue stream to preserve existing homes, convert short-term rentals to year-round use and build affordable housing where appropriate, while protecting our fragile environment and sole source aquifer,” said Philippe Jordi, the CEO of Island Housing Trust, a prominent nonprofit housing developer on the Island.
“Please give us the ability to help ourselves,” he said.
During the hearing, some stark numbers were laid before the legislators. The median home price on the Island has reached $1.5 million, a 120 per cent increase over the last decade. At the same time, 40 per cent of Island households are putting more than half of their income toward housing, and one in five members of the year-round population is going to the Island food pantry each year.
Residents talked about deeply-rooted families moving off-Island because they couldn’t find a place to live, and essential services having unfilled jobs because no prospective applicants could afford the Island’s housing costs.
Noli Taylor, the co-executive director of Island Grown Initiative, a nonprofit that runs the Vineyard’s food pantry, said Islanders from all walks of life are asking for help.
“Thousands of our neighbors are having to choose between putting food on the table or a roof over their heads, and that is an impossible choice to have to make,” she said.
Nowhere was the workforce issue more urgent than in Aquinnah, where the police force is down to a single officer who is set to retire next year. Chief Randhi Belain pleaded with the committee to pass the bill.
“This would tremendously help us to be able to tell an applicant that you potentially could be able to afford housing here, whereas right now it’s unfeasible,” he said.
Dukes County Sheriff Robert Ogden made similar calls for action, as did Elsie Taveras, a doctor and the chief community health and equity officer with Massachusetts General Brigham, which owns Martha’s Vineyard Hospital and Nantucket Cottage Hospital.
“Our 2025 community health needs assessments show severe housing shortages on both Islands,” Dr. Taveras said. “Even those who are housed often live in overcrowded, unsafe or unpermitted conditions, some without running water or cooking facilities. Nine-month leases are common, forcing residents to leave so landlords can rent at incredibly high summer rates that we all have heard about.”
Under the bill, towns would have to vote to adopt the transfer fee, which would be paid for by the buyer when closing on a home. The rate could be between .5 per cent and 2 per cent and would be only applicable to the portion of a sale price above the exemption threshold – another key difference from the past attempts to pass the bill.
For instance, if the transfer fee was set at 1 per cent of a $1 million exemption, a home sold at $1.5 million would be $500,000 above the threshold and result in a $5,000 fee for housing.
The housing fee funds could be used for affordable or attainable housing, which would allow towns to reach the “missing middle” income earners on the Vineyard who don’t qualify for affordable housing, but don’t make enough to buy their own places on the Island.
Towns could set a higher real estate price threshold and there would be several other exemptions for homebuyers, including for first-time homebuyers who plan to live at the property.
Supporters said there is precedent for transfer fees on the Vineyard; the Martha’s Vineyard Land Bank is currently one of only a handful of similar organizations that is supported by fees assessed on property sales.
Laura Silber, the Martha’s Vineyard Commission’s housing planner, said the bill could be useful for the Island, and mirrored similar efforts in other resort communities across the country, such as Aspen and the Hamptons.
“We have seen very successful examples in high-priced resort communities where the luxury transfer fee effectively harnesses the problem to help fund the solution,” she said.
There is still hesitancy from some realtors about the new proposal. Betsy Hanson, the CEO of the Cape Cod and Islands Association of Realtors, said in an interview that her organization is against the bill.
The association is opposed to transfer fees in general, saying past studies have shown that they can affect home prices and can fail to raise enough to deal with the problem.
“You’re looking at a lot of fees that are baked into the sales transaction,” Ms. Hanson said, before asking towns to consider other measures first.
Not all realtors were in agreement, though.
Jim Feiner, a Chilmark realtor, told lawmakers at Wednesday’s hearing that he and other Vineyard real estate professionals were firmly behind a transfer fee, saying it was needed to prevent the hollowing out of the community.
“Martha’s Vineyard is eroding, and I’m not talking about the beaches and the shoreline, but the community and the people,” he said. “We’ve been watching our friends and our workforce and our vital workers depart slowly but steadily, and now faster.”
Other critics felt that the focus should be on driving down the costs for residents, not adding fees.
“Senator Cyr should redirect his focus on driving down costs for all residents, not take from Peter to pay Paul,” said Paul Craney, the executive director of the Massachusetts Fiscal Alliance, a vocal statewide conservative group. “Raising taxes does not make something more affordable.”
Senator Cyr has also put forward another bill that would give seasonal communities a host of other options to make housing easier for residents. The bill would give municipalities the right of first refusal on foreclosure properties to use them for housing, the ability to set higher tax rates for homes that sit vacant for most of the year, and the opportunity to raise the meals tax from .75 per cent to 1.5 per cent, with the extra money to go toward year-round housing.
The bill also could allow the conversion of hotels and motels into year-round housing, as well as zoning changes that would allow small-scale, year-round housing by right. It also would allow towns the ability to require large developers to either include a small percentage of year-round units in new projects or pay a per-unit fee toward a municipal year-round housing fund.
Much of the second bill is aimed at expanding the seasonal communities designation that was passed by the legislature last year, and acknowledges that places such as the Cape and Islands and the Berkshires have different circumstances that other parts of the commonwealth.
It also seeks to clean up any technical issues that came from the bill that was passed last year, Senator Cyr said.
While the senator said many of the tools in the second bill are great and he wanted to see towns use them, he emphasized the need for the transfer fee above all else so there is sustainable funding for housing.
“Without a stable and robust revenue source, it will be difficult [to realize] the scope and scale of what [the seasonal communities designation] was intended to do,” Mr. Cyr said.
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