BOSTON — Housing advocates want to carve out a new source of money to help cities and towns cover the cost of new affordable units, but fiscal watchdogs say the move would add to the burden for property owners.
A proposal by Rep. Jay Livingstone, D-Boston, and Sen. William Brownsberger, D-Belmont, would allow communities to add a transfer fee of up to 2% onto property tax bills.
Local governing boards would have to approve the new fee by a two-thirds vote and also receive approval from a majority of the community’s voters in a local referendum.
Livingstone said a dearth of federal and state funding means many communities don't have the money for affordable housing projects.
"This bill would provide municipalities with another source of potential funding to help pay for initiatives such as building new housing or expanding rental vouchers," he said.
The proposal includes exemptions for low-income and elderly property owners, and cities and towns could tack on provisions to lessen the fiscal impact on the community.
Andrew DeFranza, executive director of Beverly-based Harborlight Community Partners, said the fee would draw in much-needed revenue to build housing.
"There's not enough capital in the system to create affordable housing anywhere near the demand," he said. "Anything to create more capital to create more units is a good thing."
But fiscal watchdogs say the proposal creates more taxes that would unfairly burden property owners.
"They just can't keep adding to the taxpayers' burden," said Chip Ford, executive director of Citizens for Limited Taxation. "The Legislature has got to stop scheming for ways to take more money from productive taxpayers, or they're going to see an exodus of people leaving the state. It's the law of diminishing returns."
Few dispute the need for more low-cost housing in Massachusetts, which has some of the highest housing costs and rents in the country.
The Metropolitan Area Planning Council estimates the Greater Boston area needs at least 435,000 new affordable housing units by 2040 to keep pace with demand.
DeFranza said many communities impose restrictive zoning, such as requiring two- and three-acre lots, to block affordable housing from being built.
"Zoning is the dominant problem in Massachusetts," he said. "Cities and towns have fabricated a land shortage in the state by restricting its use though zoning."
Several years ago, lawmakers pitched a proposal to allow communities to adopt "inclusionary zoning," which requires developers to designate units for affordable housing in exchange for local concessions on density and other requirements.
Under the plan, cities and towns would designate areas where "cluster developments" are allowed. But the Legislature rejected the proposal.
Gov. Charlie Baker has filed legislation aimed at boosting the state's housing stock as part of an ambitious plan to add at least 135,000 new homes over the next five to seven years. His plan would allow town governing bodies to change zoning rules with a simple majority vote, removing a current requirement of a two-thirds vote.
Housing is deemed "affordable" when a tenant or homeowner spends no more than 30% of their income on housing costs, according to state housing officials.
To qualify for affordable housing, tenants generally must make less than 80% of the median income, adjusted to the size of their family, in the city or town where they want to live.
A state law approved nearly 50 years ago shifted the burden to communities to ensure at least 10% of local housing is affordable.
The Chapter 40B law aimed to encourage affordable development by reducing zoning roadblocks, but housing advocates say it has done little to solve the problem as communities have found a way around it.
Many communities fall short of the minimum, according to the state Department of Housing and Community Development. Statewide, only about 70 have reached the 10% threshold.
Marblehead, for example, boasts some of the highest incomes on the North Shore, with a median of $115,511 per household, according to the 2010 U.S. Census. But less than 4% of its 8,528 housing units are deemed affordable.
In Hamilton, with a median of $108,558 per household, only 3% of the 2,783 affordable housing units are considered affordable.
Some communities have created affordable housing trusts to cover the cost for new projects, while others have conducted a top-to-bottom reviews of local zoning laws.
"Building the housing we need isn't just good public policy, it's an economic necessity for the state," said Marc Draisen, executive director of the regional planning council. "We must tackle this problem."
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites.