Why Real Estate Transfer Fees Make Sense

February 5, 2020

SCC CEO Danny LeBlanc on the Real Estate Transfer Fee:

On Tuesday January 14 the Joint Committee on Housing of the State Legislature held a hearing on over 20 pieces of housing legislation filed for this session.  Anticipating a large turnout the hearing was originally planned for Gardner Auditorium but was moved to Hearing Rooms A1&A2 due to a plumbing problem in Gardner.  Tenants, advocates and public officials packed A1-A2 for hours to plead with legislators for various forms of relief to the extraordinary housing cost pressures faced by so many of our family, friends and neighbors.  Among those were two initiatives that Somerville has led: the right for cities and towns to levy transfer fees on real estate transactions and the right of tenants to have the first option to purchase their building at fair market value if/when it goes up for sale. SCC and our Affordable Housing Organizing Committee (AHOC) have been hard at work in recent years in support of both measures. I’ll address Transfer Fee legislation here and the Right to Purchase legislation in a follow up piece.

Somerville went through a very thorough deliberation and public process regarding transfer fees in 2017 and 2018, including the establishment of a Mayoral Task Force to study the question. As part of the study and deliberation, the City commissioned an economic analysis of real estate transactions in Somerville from 2010-2016 conducted by RKG Associates.

Among other things, that study revealed that average home values in Somerville had increased 10.5% per year every year from 2010 through 2016. 

The craziness of our housing market dictates the reality of life for many of us and, unfortunately, divides our city, state and nation into winners and losers. In Somerville, if you happened to have owned your home by 2009, the value of your home has doubled – whether you’ve been able to make any improvements or not. But if you didn’t already own your home, good luck trying to find a place you can afford to buy or rent in Somerville – that plight is increasingly akin to finding a needle in a haystack!

As a community Somerville has determined that we want to exempt owner-occupant sellers and buyers from real estate transfer fees in the interest of promoting owner-occupant investment in Somerville.  But we have at the same time determined that it is reasonable to levy transfer fees on non-owner occupants in the interest of supporting the development and preservation of more affordable housing for our residents. We quite simply believe that those benefiting mightily from our overheated housing market can make a modest contribution back when they sell their properties to help those struggling to stay in or find housing they can afford.

The Somerville City Council and Mayor Curtatone have filed Somerville’s Home Rule petition to the State Legislature to enact a Transfer Fee, H.2423.  In addition, Rep. Mike Connolly has filed Enablement Legislation to allow all communities in the Commonwealth to adopt transfer fees if they so choose.  The bill was cosponsored by the entire Somerville Legislative delegation as well as many other legislators.  It has now been combined with other Transfer Fee Enablement bills in the interest of getting a bill passed this session.  You can find a fact sheet on this combined legislation below.

We owe it to all our current residents, as well as to our daughters and sons and others who want to make Somerville their home in the future, to push for passage of Somerville’s right to enact a real estate transfer fee.  And then we need to put that money to work to create more affordable housing opportunities, across a range of incomes of folks who can’t afford market prices in Somerville.  It’s among the only ways we can achieve and sustain the richly diverse community we all say we treasure.

20191220-retf-factsheet.pdf165 KB