Ahead of Boston transfer tax, bigger battle looms for local government boundaries

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In his annual State of the City Address earlier this year, Boston Mayor Marty Walsh announced an expensive new housing program to thunderous applause.

Walsh has pledged to spend $ 500 million over the next five years on a series of housing programs aimed at creating and maintaining affordable housing, including housing for seniors, low-income Bostonians and average income.

The plan, if implemented, would represent something like a fourfold increase in the city’s spending on housing.

But with that came a big problem: To pay for the program, Walsh relies heavily on Boston’s implementation of a transfer tax on sales of high-end real estate in the city.

And to implement this tax, the city needs state permission – in particular, the state legislature would need to approve a self-reliance petition, passed by Boston City Council and signed by the Mayor Walsh last year.

While the details have yet to be worked out, even a 2% fee applied only to real estate sales over $ 2 million could generate tens of millions of additional revenue per year, according to a city study – in large part thanks to real luxury life. and the high-end commercial real estate market, which has yet to show signs of a significant slowdown.

Other neighboring towns and villages find themselves in similar situations – running out of funds to pay for affordable housing, while watching high-end properties sell for seemingly ever-increasing prices.

And Boston isn’t the first city to try this: Other towns and cities have sent similar self-reliance petitions to Beacon Hill in recent years, often after vigorous local debate, only to see them languish in committees until ‘that they die quiet bureaucratic deaths without legislative legislation. action.

But Boston is the biggest city to try, and now a battle is brewing for something bigger than any transfer tax: the limits and limits on the power of municipalities to govern themselves, construction decades old in Massachusetts known as “Home Rule”.

Affordable housing advocates and activists have joined the Boston Self-Reliance Petition.

Boston City Councilor Lydia Edwards, who first presented the transfer rights petition to city council, argued Boston shouldn’t need permission to raise its own funds to resolve its own problems.

“The fact that our policies depend on someone else in another city, another county, basically determining whether the ideas we come up with can get through, is basically a slap in the face,” Boston City Councilor Lydia Edwards noted at the time. of a rally in favor of the measure earlier this year.

“Every community does not have the same kind of burden – but other communities that do not have the same burden,” from an overheated real estate market and a population that increasingly cannot afford it, said Edwards said.

“Boston should be able to do its own thing.”

And Boston is hardly alone. A half-dozen cities and towns facing similar affordability crises – including Brookline, Concord, Nantucket – are pushing for transfer taxes to also help pay for affordable housing.

And all of them face the same conundrum: that Massachusetts’ Home Rule laws serve in many ways to restrict, rather than hold local governments accountable, especially with respect to local taxation.

“In Massachusetts, where technically people talk about Home Rule, there’s not really much local flexibility without first getting state permission,” says Geoffrey Beckwith of the Massachusetts Municipal Association.

His group doesn’t take a stand on individual autonomy petitions, but he does support greater flexibility in general for cities in Massachusetts, which Beckwith says allows local governments to do what they do best.

“Local leaders are looking for tools to solve local problems,” says Beckwith. “It’s a way to solve problems before they spread and become even more difficult and entrenched. “

The point and the debate surrounding it are not new.

A 2004 report by the Rappaport Institute at Harvard Kennedy School, titled “Dispelling the Myth of Self-Government,” asserted that Massachusetts laws purportedly meant to empower local communities in many cases worked to do the opposite.

“Self-reliance is behind all of Greater Boston’s major concerns,” the article’s authors wrote. “But contrary to the myth of autonomy, local authority is restricted. Localities have little leeway over taxes, fees and borrowing.

But there are also strong voices on the other side of this debate, especially influential groups in the state’s real estate industry, who have consistently opposed local transfer fees.

“Our tradition of self-reliance is kind of in the fabric of Massachusetts,” said Greg Vasil, president and CEO of the Greater Boston Real Estate Board.

“There is this strong tradition of towns and cities that feel and want the ability to govern themselves – and in some ways it creates chaos.”

Vasil agreed there was an affordability crisis in Boston.

But he argued, as have other real estate groups, that a transfer tax will not solve this crisis.

Vasil argued that Boston already requires developers, in many cases, to build affordable housing or contribute to a municipal housing fund; and noted that his group supports the Community Preservation Act, which imposes a 1% property surcharge to pay for various community assets, including affordable housing, in many communities, including Boston.

But Vasil also argued that allowing municipalities to decide for themselves would open the floodgates to a mishmash of new taxes.

“Should our fiscal policy on this subject be delegated to towns and municipalities?” We don’t think so, ”said. Vassil.

But the number of towns and villages pushing for similar measures is increasing.

Ellen Schachter, director of the Office of Housing Stability for Somerville – which has now twice sent a self-reliance petition for a transfer tax to Beacon Hil – helped organize a coalition of cities lobbying the legislature of the ‘State to empower legislation that lets any town or city enact its own transfer tax, within limits, which pass locally.

This, Schachter explained, simply allows communities to solve their own problems – without having to increase the state’s legislative burdens.

“We are not asking [the legislature] to get the funds to make that happen, ”Schachter said. we are not asking you to regulate statewide, we are asking you: “kick us off!” “

“It is not only a need for one or two municipalities, it is a need for a growing number [of communities] around the state, ”Schachter said. “So enabling legislation is really the answer. “

State Representative Mike Connolly, of Somerville, co-sponsored a bill that would do just that – allow any town or city in Massachusetts to implement a limited transfer tax, if it passes the local rally. .

The effort is already meeting strong opposition – in particular from real estate groups.

But Connolly says a message he’s trying to get across to the real estate community is that if they refuse to compromise on this, they might be even less happy with the affordable housing measures ahead.

“One of the things I tell them is that the rent control movement is also growing across the country and also in Massachusetts,” said Connolly, “so it would be in your best interest, real estate community. , to want to come to the table. “

“Because if this housing emergency gets more and more serious, the answer will be even more, you know, serious. “

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