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State Senate passes $5.2 billion housing bill, rejects real estate transfer tax

Massachusetts State Senator Lydia Edwards said the housing bond bill passed by the Senate on Monday will begin a “correction” to Massachusetts' housing shortage. (Staff photo by Stuart Cahill/Boston Herald)

The Massachusetts Senate has advanced its version of a $5.2 billion housing bond bill, excluding a controversial real estate transfer tax, supported by the governor and several Massachusetts cities and towns.

The housing bond bill, based on a proposal from the Healey administration in October, is designed to address Massachusetts' housing shortage with affordable housing funds, tax credits, zoning changes and policy changes. Senate officials said the measure would create 40,000 housing units to address the statewide shortage of 200,000 units projected by the end of the decade.

“It would be naive to think we can do all of this in one bill when we know it's going to take 20 years to build the housing we need,” said Lydia Edwards, chair of the Senate Housing Committee, at a press conference on Monday. “The housing debate and the solutions and tools we need to do it are just beginning again.”

The local option for a real estate transfer tax proposed in Healey's version of the bill would have taxed a portion of real estate sales over $1 million at 0.5 to 2 percent, funneling the revenue directly into affordable housing development.

The fee has now been removed from both the Senate plan and the $6.2 billion House housing bill introduced in early June, dashing most hopes of its inclusion in the bills.

In a speech on Monday, Governor Maura Healey said she was “really pleased” that the bill was moving forward in the Senate, but did not comment directly on the lack of a real estate transfer tax.

“I have to go back and look at what they actually put out and what's happening now as part of a conference process,” Healey said Monday in response to a question about the lack of a transfer fee. “I think it's important to note that we have presented a number of options to the legislature for consideration with the goal of boosting production.”

Several communities, including Boston, have lobbied vigorously for the measure in the state legislature. Mayor Michelle Wu said Monday that the city will “continue to hold on to the fee” as federal funding for key affordable housing projects “dries up.”

“This measure is widely popular across our communities,” Wu said. “We know residents understand that more money is needed for affordable housing. The city's proposal was supported by years of research showing that it would not reduce housing production or impact housing sales or similar transactions.”

Other groups welcomed the Senate's decision to advance the bill without the tax.

The leadership of Associated Industries of Massachusetts argued in a statement Monday that the tax would “disrupt the already difficult housing market” and praised the Senate's focus on “manufacturing and investment” in the bill.

“We strongly encourage senators to emphasize production over regulation as they debate the bill,” said Stephanie Swanson, executive vice president of government affairs at AIM.

“To overcome the housing crisis, Beacon Hill leaders must prioritize policies that lower barriers to housing construction. This, in turn, will help spur home construction at all price points,” Greg Vasil, CEO of the Greater Boston Real Estate Board, said Monday, emphasizing “simplified approval of Accessory Dwelling Units (ADUs).”

Anna Harden

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