State Defeats Housing Bank

House of Representatives Votes Against Real Estate Sales Tax to Fund Affordable Housing; Campaign Future Is Unclear

By IAN FEIN

The Massachusetts house of representatives dealt a crippling blow to Vineyard affordable housing advocates last week, voting 91-64 on Thursday to defeat legislation that proposed creating a public housing bank on the Island.

The vote was especially stinging because the proposal - which would have taxed real estate transactions to fund affordable housing initiatives - was already effectively dead for the year. Even if the house had approved the bill last week, it would have been subject to a gubernatorial pocket veto with no chance for an override.

Vineyard Haven resident Abbe Burt, who worked as a full-time administrative assistant for the ad-hoc Island housing bank coalition last year, called the house vote disappointing and discouraging.

"It hurts my faith in state government, after all the time and effort and hard work that went into this," said Ms. Burt, who along with a group of other advocates spent two years working on the proposal. "Maybe I'm naive, but I'm disappointed that this became a political thing up in Boston, instead of them letting us here on the Vineyard decide our own fate."

She said the coalition spent roughly $120,000 on lobbying and consulting fees this year in an effort to win approval for the legislation.

Modeled after the Island land banks, the housing bank would have generated funding for affordable housing projects by taxing real estate sellers one per cent of their transaction price. The first $750,000 of the purchase price would have been exempt; advocates estimated the transfer tax would have generated more than $2 million per year.

Despite support from Island real estate agents, the transfer tax structure faced strong resistance from the Massachusetts Association of Realtors and some state lawmakers. Opponents said the real estate surcharge would have placed an unfair impediment on home ownership, and could have spread elsewhere in the commonwealth.

The housing bank concept was approved in nonbinding form by all six towns in spring 2005 and, if enacted by the state, would have required another round of support from voters.

The formal two-year legislative session ended last night on Beacon Hill, and Ms. Burt was less than optimistic about their prospects of resubmitting the bill this winter. Though coalition members have not yet met to discuss last week's vote, she said it is unlikely that the proposed legislation has much of a future.

"[The house vote] doesn't bode well," Ms. Burt said yesterday. "It's not like we can go and pop it back in again. Even if it were finally approved, which I doubt, that would still be two more years out."

Ms. Burt also noted the expense of refiling the bill. Coalition chairman Richard Leonard, who is also president of the Martha's Vineyard Co-operative Bank, said yesterday that the expenditures were worth the risk.

"If there is nothing ventured, there is nothing gained - you have to make the effort," he said. "I also think we were very successful in raising awareness at the state house of the challenge we face here, which will be helpful as we seek state support for future Vineyard housing initiatives."

Mr. Leonard would not speculate on the next step, and said he had not given it much consideration because he believed up until the house vote on Thursday that the bill would prevail. He also noted all of the progress that the housing bank concept made on Beacon Hill this year.

The state senate in late June approved an earlier version of the bill, which would have also created a sister housing bank on Nantucket. The senate ways and means committee added Nantucket to the bill earlier this spring, but the house ways and means committee stripped Nantucket from the legislation only hours before the bill was defeated on the house floor.

Rep. Eric T. Turkington of Falmouth, whose district includes both Islands, said yesterday that the legislation went much farther than either he or Cape and Islands Sen. Robert O'Leary originally expected. Senator O'Leary and Representative Turkington filed the bill together last October, and told Vineyard housing advocates that it faced an uphill battle to passage.

"Given the process around here, it actually moved a great distance," Mr. Turkington said. "This had a fairly remarkable trajectory for what was in many observers' eyes essentially a new tax."

During debate on the house floor last week, Rep. Jeffrey David Perry, a Republican from Sandwich, called the housing bank proposal a regressive and discriminatory tax, according to a State House News Service transcript. He and other lawmakers opposing the bill also said the housing situation on the Vineyard was not unique enough to warrant special legislation.

Rep. John J. Binienda, a Democrat from Worcester and co-chairman of the joint committee on revenue, which held a public hearing on the bill this winter, argued that the Vineyard predicament is more acute than elsewhere in the commonwealth. He noted that housing prices on the Island are 80 per cent above the state average, while incomes are 30 per cent below.

Mr. Leonard yesterday repeated his earlier claims that the Vineyard and Nantucket housing situations are more challenging than anywhere else in the commonwealth, and that the transfer tax structure has a proven track record on the Islands.

"Just as land bank was a unique solution that has worked for over 20 years on the Vineyard and Nantucket, we are firm believers in the [housing bank] being an appropriate solution that would not have spread to the rest of the commonwealth," he said.

Both Mr. Leonard and Ms. Burt also noted that - through the efforts of the housing coalition - all six Vineyard towns have now adopted the Community Preservation Act, which raises funds for affordable housing, open space and historic preservation through a three per cent property tax surcharge and matching state funds. Ms. Burt said since the housing bank is off the table for now, it is incumbent upon towns to devote most of their community preservation funds toward affordable housing.

"Now it's even more critically important that housing gets the lion's share of that money," she said. "People shouldn't forget that it was the housing groups which spearheaded and funded and ran that campaign."