House advances Boston real estate transfer tax

A proposed tax in Boston hit the House floor Monday in a late-session advancement for the controversial idea of imposing a new charge — up to 2% — on real estate transactions over $2 million in the state's most populous city.

The House gave the bill a vote of initial approval after a positive report from the House Steering, Policy and Scheduling Committee chaired by Boston Rep. Kevin Honan.

The bill aims to direct new revenue to affordable housing, while opponents have said there are other funding sources available and the cost of an extra charge on transfers would be passed on to tenants.

The Boston City Council and Mayor Michelle Wu approved the legislation back in March before it was filed in the Legislature by Rep. Brandy Fluker Oakley. The Revenue Committee, chaired by Rep. Mark Cusack of Braintree and Sen. Adam Hinds of Pittsfield, extended their consideration of the measure all the way to July 31 before awarding it a favorable report.

Opposition from any one lawmaker grows in importance after July 31. Both branches are set to meet for the rest of the term in informal sessions, where a lone lawmaker can object to a bill's consideration on the floor.

The Revenue Committee's reports on several local transfer tax proposals have featured dissenting votes from Sen. Ryan Fattman of Sutton, according to the House calendar, and a Boston senator was cool to the transfer tax idea at a hearing in June.

Sen. Nick Collins of South Boston characterized the proposal as a "tax increase" in his testimony to the Revenue Committee in June, while adding that he supported the "spirit of the bill" and the "intentions of the funds," which the city would direct toward affordable housing.

During a year when calls for tax relief have echoed around the state, Collins cautioned against "taking a step in the wrong direction of tax increases, instead of prioritizing our spending or seeing what we have room to do with in terms of revenue generation that's already the authority of municipalities."

Asked Monday about his feelings on the bill's advancement, Collins told the News Service that "really my priority is to focus legislative efforts, at the state level, to help the City of Boston fix the crisis at Melnea Cass and Mass. Ave. Everything else is secondary at this point."

The bill now moves to the House Committee On Bills In The Third Reading. If chairwoman Rep. Denise Garlick of Needham moves the bill out of that panel, another favorable House vote would send it to the Senate.

At the Revenue Committee hearing, Wu cited housing costs as the "number one challenge and stress that our residents raise with me" and said the proposed tax would "make a huge impact."

"Based on numbers from 2021, this would generate up to $100 million in local revenue to tackle our housing crisis, and would have only affected about 700 property sales in the entire city out of nearly 10,000 transactions, so about 7% affected," Wu said. " ... This is not about increasing upfront costs, this is not about adding to the burden as developers are looking to cobble together the permitting costs and getting through the process. This is adding a very small transaction fee at the point of sale, when the resources are there, to be able to make a huge impact across our city."

Other transfer tax bills are pending at early stages of the legislative process, like Somerville's and Brookline's, which were both favorably reported by the Revenue Committee and are currently in a holding pattern on the House calendar. The Senate gave initial approval in March to a Concord transfer tax bill, which has sat since then in the Senate Third Reading Committee.