Joe Curtatone, mayor of Somerville, is proposing a 1% transfer tax on real estate sales to help pay for new affordable housing units, according to Wicked Local Somerville. Curtatone is quoted, saying:
“We need to be a city that is just as much a home for the people who are working their way up, as it is for those who have already made it,” Curtatone said. “The math is simple. If the region does not build the housing we need and if Somerville does not build the 9,000 units we need, no amount of affordable housing programs alone will be able to keep the cost of the home or rent reasonable for all of us.”
(He also said the requisite, “Somerville will lead the way on affordability,” and he guaranteed that the Green Line extension would be constructed. )
I’m not sure what it means to “move forward” on new laws and regulations in Somerville, but considering that Somerville homeowners pay a 1.5 percent tax for the Community Preservation Act, Curtatone’s plan sounds pretty ambitious.
It’s hard to envision Newton’s leadership proposing such a plan.
It’s hard to imagine Newton residents not objecting strenuously to such a proposal.
I agree Jane, which is why I don’t think our elected officials would propose it.
I got priced out of Somerville and had to buy in Newton.
Making housing more “affordable” by making it more expensive. Brilliant! When do impeachment proceedings begin?
My Father’s side were all born and raised in Somerville and my fondness for the city comes from many pleasant childhood days spent there as well as visiting my Grandparents when older.
The city has always been largely comprised of hard-working middle class “regular folk”. They do not deserve an ill-considered additional tax on their property. As Mike said, making it more expensive to conduct transactions between private parties is not conducive to long-term solutions regarding affordability.
Would the transfer tax be levied on the seller or buyer?
This may or may not be a good idea (not enough known) but give him some credit for seeking solutions.
The “solution” makes the problem worse. Why give him credit?
From economics, we know that the real cost of the tax does not depend on who officially pays it. The sales price will reflect the tax burden.
This is pretty consistent with Curtatone’s vision for the city going back quite a bit. When it came to the Ames Envelope property he was adamant that it not be converted into expensive condos and that it utilize manufacturing in some way. That’s why it now has a food startup space, Greentown Labs and Artisans Asylum, among other things.
Somerville is very different than it was even 10 years ago, with a lot of young, moneyed talent moving in. It’s become the place you go when you can’t afford Cambridge, but still want to feel like you’re in Cambridge. That brings with it higher rents and higher housing prices. This tax seems to be aimed at the higher income folks who are buying in, as well as the real estate investors who want to buy rental properties and take advantage of those rising rents.
It’s a unique time for Somerville so probably a good time to put something like this in place.
I don’t agree that this makes the problem worse. Yes, it adds some small amount of tax burden onto sales of real estate. But Somerville has experienced very large appreciation of real estate assets in recent years. The average gain is in the hundreds of thousands. Taking into account the wider community in MA, it is likely that the sales prices “is what it is”, but Somerville is no longer a cookie cutter community, and some folks are motivated to live there as compared to surrounding communities, so it is possible that this will fee will end up being shared by both buyer and seller (some price increase (buyer cost) with remainder from sales proceeds (seller cost).
But the marginal hit is low. Yes it raises overall cost of real estate potential by that price increase, but when Somerville is seeing 10% increases year to year, that is a marginal hit.
Now the use for that money can do a great deal. That marginal hit on many transactions can move mountains for certain focused affordable housing projects. Combine that will other state and federal incentives and you’ve got yourself a program to preserve affordable and work place housing in a community that used to be known for it.
You can’t look at tax policy in a vacuum folks. The community in question matters. The details matter. Look at what a condo in Somerville was going for 10 years ago. And now.
And for the record, something like this COULD work here. Just price is high. a 1% tax on all real estate transactions above $1.5 million. Many jurisdictions do this. NY communities do it above $1 million I think. It is a tax on the wealthy.
The argument against it is that it punishes those who sell, the older residents especially. But they’ve seen unprecedented gains. In 1992 homes in my neighborhood went for $300k. The same homes are now worth 1.5 million. That isn’t inflation to go up 500%. A one percent tax on the amount is somehow unfair? How about applying that one percent tax to handling our pension liability? Or rebuilding our other schools? Or our roads?
I give Somerville credit, and a tip of the hat.
Wow, I apologize for the many spelling errors. I really need a spell check apparently. And less chubby fingers.
Another point: Since Curtatone became mayor there, Somerville has taken off. He’s doing a lot right, so i wouldn’t dismiss his thinking out of hand.
If an idea doesn’t have a chance of coming to fruition and will only serve to increase tensions between constituencies in a community, why go there?
We have one major school building project just completed, another in process, a third in the pipeline and a significant project to come (the move to Aquinas). The new Angier School is opening up tomorrow. Pretty terrific. A lot of people put a lot of time and energy over many years getting this project to this point. That’s what leadership from all parts of the community looks like.
@Jane: Correct me if I’m wrong but I have the impression that you think I was criticizing Newton’s leadership with my post. I wasn’t. Newton and Somerville are very different communities with different constituencies. I saw that Curtatone proposed the real estate tax and thought it was interesting. Given Newton’s need and desire to create affordable housing, I would think there’s a lot to be gained from seeing–and discussing–what other communities are doing.
Gail – No I actually meant something quite different. From what I know about him, Curtotone has done an excellent job as Mayor, but making a public statement about an idea that unlikely to pass in Somerville (and would never fly in Newton) isn’t leadership in my mind.
The new Angier School opens this morning – a project that’s the result of years of hard work on the part of many civic, community, and city leaders. I assume that there’ll be a significant article about it in the Tab today, but it should be noted that this happened because many leaders in the community were there for the long haul.
@Jane: Two points:
1. You may be underestimating whether or not such a thing could be implemented in Somerville. Back when when I was publisher of the TAB, I was also publisher of the Somerville Journal and I know enough about the city to know that different ideas are adopted in differently in different communities. Perhaps the idea will be modified (maybe sales under $1 million should be exempt?). By your thinking Setti Warren should have withdrawn Austin Street one year ago because at the time, the project clearly did not have the community support it needed. But with compromise, improvements, debate and education, the project was approved.
2. More importantly, I hope you don’t really mean to suggest that leaders should never propose ideas that have no chance of surviving politically. Should Barack Obama never propose new gun regulations or environmental rules just because they won’t pass Congress? Yes, results matter. But a vigorous debate of issues, ideas and solutions matter too.
According to the editor of the Somerville Journal, this idea would require a home rule petition.
As others have pointed out Mayor Curtatone is perhaps the most effective Mayor in the Commonwealth, and has been since succeeding Mike Capuano many years ago. He is focused solely on Somerville and not so much on any follow on political career. He’s not afraid to take risks or to do things that might be needed but could potentially hurt him down the road. He has political capital and is willing to spend it for the good of his City.
The “white elephant” in this thread is that we all know that Newton has a gifted and talented Mayor. However, it seems to me and many others that his focus is well beyond our City, and that this has affected the boldness (or lack thereof) of the leadership we have here. Here, we seem more focused on coalition building, fundraising, and not breaking eggs vs. bold leadership on the serious issues we still face. We’ve made incremental progress..but nothing big/bold/exciting. Unfortunately, this seems to be the best way to advance if your eyes are on higher elected office.
A great leader rallies everyone around a goal, clearly communicates what it is, why it’s important, and how achieving it would benefit all. A great leader spends nearly every waking moment working with his or her community and team to identify real problems, create innovative solutions, and to ensure that appropriate, realistically aggressive plans for being successful are developed, implemented and modified when appropriate. To achieve big results takes nothing short of an extraordinary effort by a broad and diverse set of stakeholders, which necessarily requires leadership spending all of its time and effort making sure – on a consistent basis – that said stakeholders are armed with the resources needed to carry out the task at hand.
Out of curiosity, why is the controlling argument on V14 that our current Mayor is especially gifted and talented?
Actually, it’s unfair to say our mayor has ducked difficult issues.
The budget was a mess when he came on board, [doing Newton North without a debt exclusion to pay for it didn’t help], but tough decisions had to be made to bring things into balance. And although not sexy, his administration has put great effort into making our operations more cost effective.
He took on the tough task of seeking 3 overrides to help fund the fixing of our crumbling elementary schools.. Not a popular action by any stretch, and he spent significant political capital to get them passed. Similarly, he was willing to challenge our unions back in 2012 to forge a groundbreaking approach to inion contracts. And although much more needs be done, he has embarked on a long term plan to whittle down our huge unfunded pension and retiree health programs.
I see that my list is almost exclusively fiscal, but that’s my bent.
I agree with Dan Fahey. When the last teachers’ contract was signed during Mayor Warren’s first term, the mayor reversed a long-time pattern of paying the teachers more than the city could afford. That was huge not just for its financial impact but because it was done through collective bargaining (as opposed to forced changes allowed by Mass. law).
Political aspirations never vacate the entrenched mind.
I like the idea of this type of tax on sales $1.5 million and above but I would prefer to use the funds towards paying our OPEB liabilities. Good idea Mayor Curtatone. Whether it passes or not, it is certainly an idea worth exploring.
Greg – I know Somerville quite well, lived there for years, owned a home, and know several of the neighborhoods very well. This idea came as a public announcement, seemingly out of nowhere. Austin St., on the other hand, was in the works for years and became controversial only in the last leg of the project. President Obama has spoken for years about the need for gun control and was able to take executive action to address one loophole. These positions and actions had significant lead up to them for years. If Curtotone has also done something of substance to move this idea forward, then let’s hear about it.
This reminds me of the time a mayor announced at a School Committee meeting that we were going to build a new high school – no planning, no information about how we were going to pay for it. Just, you know, whatever – we can afford it.
Yes, I’m skeptical about ideas without plans. It could very well be that Curtotone has specific plans for how to implement this idea. What I find fascinating is that Newton residents are so willing to jump on a “good idea” without asking probing questions.
@Jane, what IS a good idea is seeking out good alternative ways of thinking. Curtatone is doing that. And Amy is doing that by thinking of a different angle on Curtatone’s idea. [I actually like her idea better.]
Newton does not have a corner on good ideas. We should be eager to seek out the approaches of others and see where they might be adapted to our city.
I agree we don’t know enough about the transfer tax idea as proposed in Somerville.
@Jane: Mayor Curtatone announced his plans at his inaugural address. I’m not sure it’s fair to depict that as out of nowhere.
There are plenty of reasons why this wouldn’t fly in Newton. But brainstorming on a community blog could be a great path toward developing something similar that would be more akin to what’s workable in Newton.
@Jane – I strongly disagree. Ideas, and discussion of ideas always come before detailed plans.
Maybe it’s a good idea, maybe it’s a bad one. Maybe it’s politically feasible, maybe it’s not. Discussing the idea, and hearing the reactions from a broad range of viewpoints is always incredibly useful, long before anyone invests the time and energy in a detailed plan for anything.
It’s one of the things I most like about Village 14. People throwing out and discussing all sorts of ideas from the practical to the harebrained and listening to the reactions from various quarters.
Most undertakings but the most mundane usually start out as “impossible”, “impractical”, “not feasible” or politically impossible”.
This is an interesting idea, and I am impressed Mayor Curtatone took the bold step of announcing it in his inaugural address. Boston, Cambridge, Somerville and other communities in the greater Boston metropolitan area–including Newton–are all looking for ways to meet the critical need for housing in general and affordable housing in particular. While it might not fly in Newton, I know Joe Curtatone has successfully implemented a number of initiatives in Somerville which the conventional wisdom held could not be done, most notably a performance management process that has changed the culture in city government for the better.
As the new chair of the City Council’s Zoning and Planning Committee, I am already working closely with the planning department and the Mayor on moving forward on zoning reform and some of the other housing initiatives Mayor Warren has proposed, including a stronger inclusionary zoning ordinance that would require that 5% of units in multi-family developments be affordable to middle class households (80-120% of area median income in addition to the 15% of units for under 80% AMI already required, an amended ordinance that would promote the creation of accessory apartments, the creation opf “smart growth” overlay zones, and other proposals for preserving and promoting housing affordability and income diversity in Newton.
I invite the public to come to the first ZAP meeting of the new term, at 7:45 p.m. on Monday, January 11, in Room 205, for a roundtable discussion with the City Council on the city’s housing strategy. The discussion will focus on the results of the November 22nd Housing Locations Workshop and issues and opportunities around the location of new homes in Newton. The City’s consultant team from RKG and Sasaki will facilitate the conversation. I sincerely hope many of you will take time to attend and contribute to this incredibly important conversation. The next Housing Strategy public forum will be on January 25th and will focus on an assessment of existing City policies as they relate to housing (time and location to be determined).
@Jane, it looks like the out of nowhere idea actually was a recommendation from the “Sustainable Neighborhoods Working Group” along with some other recommendations.
Mayor Curtatone, working with others, has been resourceful in coming up with ideas to bring new residents and businesses to Somerville. He pursued and modified a previous idea and built mixed use housing, retail, and restaurants, cleaned up the river area and the T station, while a lot of people thought it would never work, mainly because of other failures including the big box strip mall that went under. But it also sent housing prices higher as people who realized it was a great place to live – just outside of Boston with good public transportation and lots of amenities. I frequent the area and it is always active and busy.
With his proven track record, it is not too much of a stretch to say he knows what he is doing this time too. It’s certainly an interesting idea as a way to create affordable housing. Newtonites are always asking about additional ways to pay for affordable housing – well, Mayor Curtatone has an idea. A guess about whether or not it goes foward should not be a determinant of which ideas should be pursued. Most ideas about how to build affordable housing should not be treated as inherently bad or good, right off the bat, IMO.
I should clarify that the invitation to participate in the roundtable discussion is for the City Councilors. There will be an opportunity for the public to contribute at the housing forum on January 25th, which I hope many of you will attend and contribute to.
Ok, let me just cut to the chase. I really like Mayor Curtotone and think he’s done great things for Somerville, but today shouldn’t have been his day on V14 or in Newton. When I opened up my computer this morning, I had really (honest and truly) expected to read about a pretty special event happening right here in Newton – the completion of a project that’s required years of hard work, and yes, leadership on the part of many people.
While I know V14 is a volunteer organization, all you had to do was post a Huzzah to the people who made it happen, and maybe ask bloggers to mention one person who contributed to the effort and what that person did. Two, maybe three sentences.
Dan, I claim credit for amy’s idea. See my post above. 😉
Look, I think a lot of jurisdictions use this as a tool, especially in communities that have seen skyrocketing real estate costs. It is a tax of sorts, but as it is only paid on sale, it effects a limited group of people, almost all of which in Newton have made substantial gains.
I think the counterargument is the one where folks point out that I am against restrictions on teardowns as it unfairly effects owners of older homes, especially the elderly. To me it is a matter of degree. The older, very dated homes neighborhood are worth $600k to a developer. To a homeowner, who will need to invest $300k to bring the property up to modern standards, the home is worth much less. A 1% tax on sale above 1 million would not hurt the elderly owning smaller homes. Even if it did, a $10K tax on $1,000,001 sale price is far different than reducing a sale proceeds by 10% or more based on limited the market for the home.
I think the tax would be best served as follows. Split it between dealing with OPEB, affordable housing, and road/sidewalk repair. But this type of idea shouldn’t be dismissed out of turn. I’m very aware of how much the market has increased in Newton and the very active development of luxury housing. By making the fee be for deals above a certain amount (on the full amount of the sale, not just the amount above the 1.5 million), the fee is paid by the luxury homeowners and developers. If there is a downward push on prices for those types of homes in Newton by 1%, is there a net negative to the community? If we focus those tax proceeds on the issues of the day, can we not make a difference in those issues?
Jane and others, why CAN’T this work in Newton. I’d support it. I’d vote for folks who support it. If we do this and avoid an override, or do this and developer affordable housing, or our treescape, why can’t it work?
Folks doubted that CPA would pass. And then a coalition between historic resources, affordable housing, open-space/recreation advocates got it done. And it is based on the CPA trust fund (at least the reimbursement portion from the State) which isbased on a surcharge placed on all real estate transactions at the state’s Registries of Deeds. This is the same basic idea.
This could also be accomplished by a surcharge on property taxes on accessed property above a certain amount too. Far more controversial I’d think.
I can’t speak for the other folks who post here but I had no information to post about the topic. I had no idea Angier? was opening today.
If you’d like to see any specific topic covered here on Village 14 send an email to the folks listed on the About page with the pertinent details. Better yet, write up a post yourself and email it along.
I don’t think anyone’s purposely snubbing anyone.
So congratulations to everyone involved in the Angier reconstruction project. Sounds like it all went smoothly, according to plan, and on schedule. Good job!
@Jane – including a photo is always even better, though not necessary.
Jane, as for the school opening, we often have multiple threads going at once. Ask Greg/Gail to start one on the school. But this thread should go on, and all of us can multi-task, can’t we.
I’ll post on the school thread too. Promise.
@Fig: Never claimed the idea as mine and wouldn’t have. Just like the idea of trying to make a dent in that nasty OPEB liability that continues to hang over our heads. I inquired with our astute Assessors about placing a 1% surcharge on properties that sold at or above $1.5 million (per Fig’s suggestion) and by their calculations, the City would have netted – $2,477,066 in 2013 with 116 properties; $2,808,615 in 2014 with 133 properties and an estimated $3,403,582 in 2015 (numbers still coming in for 2015 sales) with 161 properties.
I think this is a great idea (not mine) worthy of more exploration and further discourse.
@fig, Sorry I missed your initial suggestion in the earlier post. But I’ll still give Amy some credit for picking up on it!
@Jane: oops – I forgot to add:
KUDOS and CONGRATULATIONS to ALL who worked on the brand new Angier School, with particular thanks to Mayor Warren, the Aldermen/City Councilors, the School Committee, the Design Team, Building Commissioner Josh Morse and the many teachers, administrators and families for their commitment and efforts!
Amy:
I was only teasing regarding it being “my” idea. Really. I give you fully credit for even considering the idea, and if you run with it, I’d be thrilled.
It has been done in other jurisdictions for quite some time. NY has something like this in many communities. I have no idea as to the process to put the actual tax/fee in place, but I’d be fine with a targeted and focused use for the funds. I might expand it a bit more that you, but perhaps that would weaken the effect the tax would have. I think it would have less objection from the voters if there was a clear use for the funds.
Look, I’m not wealthy by Newton standards, but I’m very aware that our community is going to need new sources of revenue soon. I’m ok with paying my fair share. If my house ever is worth as much as 1.5 million and I sell, I’d be ok with the tax. Really.
Worried about hurting the upcoming real estate market? Make it effective as of 2017.
Worried about hurting seniors? The safe harbor for the 1.5 million dollar home is a good protection.
One other point, the new construction/gut rehabs of homes do a number on our streets. I’d be fine with raising the building permit fees on projects greater than $500,000.
To the Newton Village Alliance folks, this type of fee based proposal might not get you exactly what you want in terms of teardowns and McMansions, but it does have the power to at least curb some of the excess. You could mandate different fee structures if the building exceeds setbacks or size limitations by a certain amount. It isn’t perfect, but it might curb some of the abuses (or at least raise needed funds for the city). Part of those funds could be used for restoring the tree canopy around town for instance. (imagine if even an extra $500,000 a year was dedicated towards new trees).
@Fig: I was also thinking on how this could also help regarding the teardown issue. I have reached out to State Reps. Kay Khan and Ruth Balser to see what their take on this is. Again – this is something definitely worth exploring!
I worry that there continues to be a mentality here of “not invented here.” I think we should be aggressively seeking
…Best practices wherever they are.
Curatone ia an awesome Mayor, always a leader with a vision!! He is someone I’d support for Congress.