After Baker plans to raise real estate transfer taxes, Wu digs

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Republican Gov. Charlie Baker has built a reputation for – generally – relying on local leaders to run the business of what they think is best for their communities.

That’s why Baker, now in his final year in office, often signs self-reliance petitions, which call on state lawmakers to pass locally enacted ordinances and amendments that only affect that community. .

But on Thursday, Baker pointed to a notable exception to his approach: his opposition to Mayor Michelle Wu’s real estate transfer tax heading to Beacon Hill.

“As a rule, I don’t support this stuff,” Baker said on GBH’s “Boston Public Radio.” “And I especially wonder why we are doing this at a time when we have billions of dollars at our disposal to spend on housing and the city of Boston has hundreds of millions of dollars to spend on housing.”

The petition, which the city council approved on Wednesday and Wu signed on Friday, seeks to levy a Boston real estate sales tax of more than $2 million. The fee would amount to nearly $100 million a year, which Wu said would fund affordable housing initiatives.

The petition also includes expanded property tax reductions for low-income seniors by rewriting the eligibility criteria in the city’s 41C program, which provides tax assistance to residents over 65 who live in homes that they own. The changes would allow several thousand additional owners to become eligible based on their income.

But Baker opposes the tax on the grounds that the city and state already have substantial cash to support housing efforts, thanks to Washington’s COVID-19 response, the American Rescue Plan Act.

“We still have billions of dollars of resources available under ARPA that we haven’t spent yet, and we have a large state surplus,” Baker said. “There’s a lot of money to support housing, and the city of Boston got $550 million, I think, in ARPA funding. I think they spent about $150 million on it.

“Those are huge numbers, folks,” he continued. “And the city and the Commonwealth should be putting a lot more into housing initiatives.”

Notably, the petition is just the latest to be sent to the State House. A similar proposal backed by former mayor Martin J. Walsh failed to convince state lawmakers, as did many comparable proposals from communities across the Commonwealth.

But Wu embraces the idea again, with some tweaks.

On Friday, the mayor said it was time for the city to “secure long-term, sustainable funding for affordable housing,” and indirectly chastised Baker.

“Now some might say this is a great time of support from the federal government. We have a unique opportunity to spend this funding,” Wu said before signing the petition. “It’s an opportunity [in which] we will get the most out of every dollar.

The city has already done that, Wu said, pointing to a $40 million investment to create hundreds of affordable units.

Still, these funds will “just begin to alleviate the housing crisis that Boston has faced since long before COVID-19,” Wu said.

“Now is not the time for us to say, ‘We have some hope, so let’s go’, but more than ever to bend down and say, ‘Look at what is possible with what we have. already seen what we can do with these incredible federal funds that will potentially last a year, maybe a little more but not much longer than that,” Wu said. “We can’t wait right now to seize the opportunity to really add very, very small point-of-sale transaction fees… This impact will go far beyond Boston.”

Wu said if Boston had already implemented the tax, the city would have more than doubled its funding for affordable housing last year.

Such a tax would have generated $99.7 million for the city in 2021.

“It’s about making sure we have the funds we need whether or not the federal government invests in us,” said State Senator and City Councilwoman Lydia Edwards. “It’s sad because if we had that money, $100 million, during a pandemic, you can think of the people we could have saved, the homes we could have saved.”

City officials said the law would generate funds for the city’s Neighborhood Housing Trust, which creates and preserves affordable housing, and also fuel programs that would provide stability for older homeowners and low-income renters and residents. disparities in access to housing.

The law would also discourage rapid and repeat property sales, officials argued. Exemptions from the tax would include transfers made between family members, and other exemptions could be added later.

Baker, however, is not the proposal’s only critic.

This week, the Greater Boston Real Estate Board, which has 12,000 members who are professionals in various aspects of the industry, expressed “strong opposition” to the tax.

The GBREB argued in a statement that the state’s existing Community Preservation Act already allows municipalities to increase property tax by up to 3%. In turn, civil servants can choose to use up to 80% of CPA funds for housing matters.

Boston voters adopted a local CPA in 2016. The city now charges a 1% property surcharge.

“We wonder why the City of Boston needs a new taxing authority to pay for affordable housing when they have it now,” the GBREB said in its statement.

GBREB members supported the adoption of the CPA “because it was fair”, the board said.

But the bylaws petition now before lawmakers would designate a select portion of the population to pay for a community-wide issue, the group argued.

In addition, the tax will be levied on the real estate market, which is “very sensitive”, especially in troubled economic times, the organization said.

“The increased tax burden when a house or property changes hands will only increase transaction costs and will most certainly lead to a decrease in residential mobility,” the GBREB said.

Baker, though opposed to Wu’s proposed tax, once pursued a similar funding route.

In 2019, the governor proposed raising real estate transfer taxes to raise money for projects to protect communities from climate change, but state lawmakers never picked up the bill.

Baker on Thursday said his proposal differed from Wu’s in that it sought a slight increase in an existing tax.

“The size of this was radically different…and it was tied to an existing tax that hadn’t been increased since 1986,” Baker said.

Wu’s tax would target high-end sales, with a threshold of $2 million – significantly higher than the average local transaction.

In January, the median selling price of a single-family home in Suffolk County was $675,000, while the median price of a condo was $597,117, according to a report by The Warren Group, a management company. ‘data analysis.

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