By Michael F. McDonough
The convening of the 190th General Court of the Commonwealth of Massachusetts provides a good time to review some of the legislative priorities of the Massachusetts Association of Realtors® (“MAR”). Once again, Realtors® will be focused on legislation that impacts the housing industry. The following are some of MAR’s specific legislative recommendations for the 2017-2018 session.
FIRST TIME HOMEBUYER ACCOUNTS:
The rising costs of housing and crippling student loan debt appear to be impacting younger generations and their housing choices.
This makes saving for a down payment and closing costs very challenging. Over the past few months, the Massachusetts Association of Realtors® has been working with Senator Julian Cyr (D-Truro) to develop new legislation that would create a First-Time Home Buyer Savings Account Program in Massachusetts. This new legislative proposal is one way to help overcome the challenge of saving for a down payment.
This legislation use a small state tax incentive to encourage future homebuyers to save for the purchase of a home. Specifically, this program would allow future home buyers to deposit up to $5,000 per year into a First-Time Home Buyer Savings Account and then claim that contribution as a deduction on their state income tax.
The rise of student loan debt means homebuyers need this type of assistance now more than ever. Per the 2016 Massachusetts Profile of Home buyers and Sellers, the share of first-time homebuyers in Massachusetts has dropped to a low of 35 percent—the lowest share of first-time buyers since the Profile began collecting Massachusetts data in 2003.
THE HOME BILL:
Due to the short supply of housing in Massachusetts, potential homeowners continue to face increasing housing costs. One of the many issues driving the reduced housing stock is the presence of barriers to production, many of which are found in current zoning laws. MAR, in conjunction with the Greater Boston Real Estate Board, has filed legislation addressing these barriers. Some of the key provisions are outlined here.
Multifamily construction is important as a means to provide affordable housing in the Commonwealth. State law does not require cities and towns to permit multifamily development by right in some residential zoning districts. In the absence of a mandate, few cities and towns permit multifamily development by right in any zoning district. This section of the bill promotes multifamily construction by requiring that municipalities permit multifamily development by right in one or more zoning districts that are suitable for multifamily residential development and cover not less than 1.5% of the community’s developable land area.
Accessory dwelling units provide units that can be integrated into existing single family neighborhoods to provide low priced housing alternatives that have little or no negative impact on the character of the neighborhood. Current state law does not require that zoning ordinances and bylaws permit accessory dwelling units in residential zoning districts, whether by right or with a special permit. These sections of the legislation promote affordable in-fill housing by requiring that accessory dwelling units be permitted by right in all single-family residential zoning districts. It also prohibits zoning ordinances and by-laws from unreasonably regulating the location, dimensions, or design of an accessory dwelling unit on a lot.
In another section, the HOME Bill seeks to encourage cluster development. In comparison to a conventional subdivision, cluster developments benefit communities by preserving land for open space and recreation, reducing infrastructure costs, and protecting environmentally sensitive land. This section promotes smart growth by requiring that cluster development be allowed by right in residential zoning districts, at the density permitted in the underlying zoning district. The section also prohibits cities and towns from requiring a “proof permit” plan in connection with a cluster development application.
Two other costly barriers to housing production that the HOME Bill seeks to correct are overly restrictive local Title V and wetland regulations. The patchwork of local Title V regulations is one of the costliest barriers to housing production in areas not served by public sewer and wastewater treatment systems. Additionally, local wetland regulations that are more restrictive than state laws and regulations undermine uniformity and also may have no scientific basis. The result is duplicative application, review, and appeal processes. Both of these concerns represent significant and costly barriers to affordable housing and other development in Massachusetts.
MORTGAGE CANCELLATION DEBT RELIEF:
The general tax rule that applies to debt forgiven is that the amount forgiven, sometimes referred to as phantom income, is treated as taxable income to the borrower. MAR supports legislation that would allow homeowners to complete loan modifications, short sales and foreclosures for which they have debt forgiven without making them liable to pay state taxes on the that debt. This bill would mirror the federal law, the Mortgage Debt Relief Act of 2007, to allow taxpayers to apply for this exclusion on their state tax return as well.
Each session proposals are filed that would either allow a community to create a transfer tax on the sale of property in that community or authorize a statewide transfer tax to fund specific projects. The imposition of this type of new sales tax on homes could have serious implications for the Massachusetts economy and set the wrong precedent for the Commonwealth’s tax policies. Transfer taxes would increase the bottom-line price of many homes by thousands of dollars. These bills single out home buyers and sellers and subjecting them to this new tax only further exemplifies the inequitable nature of this taxing scheme.
For the second straight session, there is a proposal to require sellers or their agents to perform a Mass Save energy audit prior to listing a home for sale and disclose to any prospective buyer the information in the energy audit at the time of the listing. Additionally, the bill commissions the design and implementation of an energy scoring and labeling system. Over and above having an enormous impact on an individual’s right to freely transfer land, such requirements would negatively affect the real estate industry in the Commonwealth. Massachusetts is home to some of the oldest housing stocks in the country and mandatory energy scoring of such older homes would significantly stigmatize and potentially devalue an individual’s largest investment. MAR hopes to work with the legislature and other stakeholders to encourage all homeowners to make energy efficient upgrades to their homes- not just those who decide to sell their home.
Co-chair of REBA’s legislation section, Mike McDonagh is the general counsel and director of government gffairs at the Massachusetts Association of Realtors, where he is responsible for overseeing MAR’s legal affairs and risk management programs for the membership. As government affairs director he is in charge of MAR’s legislative efforts. Mike can be reached by email at email@example.com.