Boston approves fee on real estate transactions

If OK’d by Legislature, measure could raise $168m

THE BOSTON CITY COUNCIL on Wednesday approved a fee of up to 2 percent on real estate transactions greater than $2 million, a measure that is expected to raise $168 million a year for affordable housing production.

The new transfer fee, an attempt to capitalize on Boston’s hot real estate market, is expected to be signed by Mayor Martin Walsh and then go as a home rule petition to the Legislature for approval. If approved by the Legislature, the city would have the ability to determine whether to assess a single flat fee on all transactions over $2 million or go with a graduated rate based on the size of the transaction.

The new fee would be split equally between the seller and the buyer, with the money going to the Neighborhood Housing Trust for use in creating and preserving affordable housing.

The initiative was sponsored by Councilors Lydia Edwards and Kim Janey, who acknowledged a lot of horse-trading went into winning support for the measure, which passed 10-3. “We came in at 6 percent. We’re at 2,” Edwards said. “We had a flipper’s fee, now we don’t.”

Edwards said such compromises are “how laws are made.” She said the goal is to put aside more money for affordable housing in a city where income inequality is a serious problem. “We’re not building enough affordable housing, yet this massive wealth is being generated in Boston,” she said.

Demand for affordable housing far exceeds supply. Meiqun Hwang, who was in the audience at the council hearing Wednesday, said through an interpreter that she was displaced from her two-bedroom apartment in 2016 when a developer bought the property and upped her rent from $930 to $1,900 a month. After her departure, the landlord converted many of the units to Airbnb rentals.

Former Chinatown resident Meiqun Hwang (center) was in the audience at the council hearing Wednesday. (Photo by Sarah Betancourt)

Hwang then applied for one of the 95 affordable units at One Greenway 66 Hudson Street, but she didn’t land one because 4,000 other people applied as well. She’s still on a waiting list for affordable housing, and in the meantime is spending 75 percent of her income on an $1,800 apartment in the South End.

Lisa Owens, who heads the affordable housing advocacy group CityLife/Vida Urbana, said the transfer fee could help the city address a displacement and housing affordability crisis. “We know resources the city has to fight displacement are low, so the infusion of monies is just what we need to acquire affordable housing,” she said.

Not everyone is on board with the new tax. District city councilors Frank Baker and Mark Ciommo voted no, along with at-large councilor Althea Garrison.

“Once a camel is under the tent it’s under the tent. I don’t trust the 2 percent,” Baker said, warning that the fee is likely to balloon over the next decade. He said he also worried that the money would not go for actual housing construction.

Greg Vasil, chief executive officer at the Greater Boston Real Estate Board, said his organization opposes transfer taxes. “Downtown commercial properties already pay an appropriate rate of property tax. Hitting people with a transfer tax would cause another cost built into rents,” he said.

Vasil acknowledged the area has an affordable housing problem, but he said the answer is to build better and cheaper. He said Gov. Charlie Baker’s housing legislation, which would require only majority, rather than a two-thirds, votes by municipal zoning boards to win approval for an housing projects.

Meet the Author

Sarah Betancourt

Reporter, CommonWealth

About Sarah Betancourt

Sarah Betancourt is a bilingual journalist reporting across New England. Prior to joining Commonwealth, Sarah was a reporter for The Associated Press in Boston, and a correspondent with The Boston Globe and The Guardian. She has written about immigration, social justice, and health policy for outlets like NBC, The Boston Institute for Nonprofit Journalism, and the New York Law Journal. Sarah has reported stories such as a national look at teacher shortages, how databases are used by police departments to procure information on immigrants, and uncovered the spread of an infectious disease in children at a family detention center. She has covered the State House, local and national politics, crime and general assignment.

Sarah received a 2018 Investigative Reporters and Editors Award for her role in the ProPublica/NPR story, “They Got Hurt at Work and Then They Got Deported,” which explored how Florida employers and insurance companies were getting out of paying workers compensation benefits by using a state law to ensure injured undocumented workers were arrested or deported. Sarah attended Emerson College for a Bachelor’s Degree in Political Communication, and Columbia University for a fellowship and Master’s degree with the Stabile Center for Investigative Journalism.

About Sarah Betancourt

Sarah Betancourt is a bilingual journalist reporting across New England. Prior to joining Commonwealth, Sarah was a reporter for The Associated Press in Boston, and a correspondent with The Boston Globe and The Guardian. She has written about immigration, social justice, and health policy for outlets like NBC, The Boston Institute for Nonprofit Journalism, and the New York Law Journal. Sarah has reported stories such as a national look at teacher shortages, how databases are used by police departments to procure information on immigrants, and uncovered the spread of an infectious disease in children at a family detention center. She has covered the State House, local and national politics, crime and general assignment.

Sarah received a 2018 Investigative Reporters and Editors Award for her role in the ProPublica/NPR story, “They Got Hurt at Work and Then They Got Deported,” which explored how Florida employers and insurance companies were getting out of paying workers compensation benefits by using a state law to ensure injured undocumented workers were arrested or deported. Sarah attended Emerson College for a Bachelor’s Degree in Political Communication, and Columbia University for a fellowship and Master’s degree with the Stabile Center for Investigative Journalism.

According to the city, 54,000 units are income-restricted, which adds up to nearly 20 percent of all housing in the city. Out of that 54,000, two-thirds of the units are affordable to low-income households. About 34,000 households are spending half or more of their incomes on rent.

Boston is not the only community seeking more money for housing. Concord, Brookline, and Somerville have sent home rule petitions to the Legislature, and nearby Watertown and Cambridge are considering transfer taxes. The Legislature is also considering a bill filed by Rep. Mike Connolly of Cambridge that would create a local option transfer fee on high-cost real estate transactions to generate funding for affordable housing.