Sweeping Legislation Aims At Increasing Housing Opportunities: Seasonal Communities Designation, Other Provisions Will Help Cape Towns

The sweeping housing legislation signed into law by Gov. Maura Healy last week has significant implications for towns on the Cape, providing tools that, if implemented, could change the region’s affordable and attainable housing landscape.

Provisions of the Affordable Homes Act likely to benefit Lower Cape towns including allowing acquisition of deed restrictions on year-round homes; allowing towns to develop housing for public employees; enabling construction of tiny houses and accessory dwelling units; allowing year-round housing trusts funds; and establishing a seasonal community designation to provide towns that have substantial seasonal variations in housing demand with more tools to address those needs.

The legislation failed to include a real estate transfer tax on the sales of high-end homes, which officials in Chatham and other towns had sought to help raise revenue to address affordable and attainable housing.

“This is a very big deal,” Cape and Islands Senator Julian Cyr, D-Truro, said of the legislation, which he played a major role in crafting. “This law is the most significant thing we’ve done for Cape Cod since the Cape and Islands Water Protection Fund.”

The legislation provides $5.1 billion and 49 policy initiatives that the governor’s office said can build or save 65,000 homes across the state over the next five years. While the wide-sweeping approach presents an opportunity to put a dent in the housing crisis that has left many local residents unable to afford a home — or even a rental — it will take political will and voter support to make it a reality, said Michael Schell, chair of the Chatham Affordable Housing Trust and Select Board.

“I think we’re better off today than we were five or 10 years ago in terms of the town’s belief in the need for affordable and attainable housing,” he said. “We’ve kind of advanced to a middle stage. But to take advantage of everything that is really needed to move forward in an effective way, we need to build some more consensus.”

“All of these tools that are in the bill could for the most part apply to us,” said Orleans Select Board member Michael Herman, who is the board’s liaison to the town’s affordable housing trust board. Orleans has been aggressive in pursuing affordable housing, he noted, with three projects now in various stages.

Nantucket and towns on Martha’s Vineyard will automatically receive the seasonal communities designation; towns in Barnstable County where at least 35 percent of housing units are second homes will also automatically receive the designation. That’s likely to include all of the towns on the Lower and Outer Cape, said Cyr. Nearly 54 percent of homes in Chatham, for instance, are seasonal, according to a recent draft housing needs assessment. The state Executive Office of Housing and Livable Communities will have the authority to make the designation for towns that don’t receive it automatically.

The exact details of what seasonal community designation will mean have yet to be worked out. The law establishes a seasonal communities advisory council which will develop a framework for the tools that will be available to the designated communities, according to the governor’s office. The law sets an aggressive schedule for development of guidelines and regulations for the seasonal community designation, requiring that they be completed by Dec. 15.

Cyr said the designation will “unlock a toolkit that towns can deploy to both build and preserve year-round housing.” Noting the seriousness of the housing crisis on the Cape, many provisions of the legislation, like the seasonal communities designation, were “designed very purposefully to be able to move as quickly as possible in a municipal context,” he said.

“This is just one more positive step forward that opens up more options to us, and recognizes the makeup of our community being seasonal,” said Herman. At the last annual town meeting, voters supported the seasonal designation concept, as well as the real estate transfer tax proposal that did not make the final legislation.

Other provisions also detour around roadblocks that have kept them off the books for years, such as establishing year-round housing trust funds. The state allows towns to establish affordable housing trust funds, but they can only deal with projects that serve residents below a certain income threshold. The year-round housing trust funds allowed in the legislation can subsidize so-called workforce or attainable housing, helping residents who make too much to qualify for income-restricted affordable housing, thus addressing a long-recognized gap between restricted affordable housing and market-rate housing.

“If you’re Chatham or Harwich and you’re trying to subsidize housing for residents who make 150 percent of [area median income], you don’t have a fiscal mechanism to do it” currently, Cyr said. Chatham filed home rule legislation to accomplish the same goal.

“I’m very enthusiastic about what this offers,” Schell commented on the provision.

Also allowed under the legislation is the acquisition of restrictions limiting homes to year-round occupancy. A petition article to allow Chatham to do that failed at the May annual town meeting. The tool has been used by communities in the west, such as Vail, Colo., to buy deed restrictions to keep housing units in the year-round market, Cyr noted. It’s similar to what the Chatham Affordable Housing Trust did with a home on Crowell Road, Schell noted; subsidize the purchase of a home that then has a deed restriction. While that house will be an income-restricted unit, the legislation would allow the town to do the same with attainable or workforce housing.

“That’s kind of like how I would see it working,” he said.

“What we’re essentially trying to do is replicate what other seasonal destinations have done,” Cyr said, “where they’ve deployed a year-round housing trust with deed restrictions essentially enabling dense housing production for year-round housing.”

Herman said Orleans voters also supported deed restrictions, although the specific form they will take is uncertain.

Towns will also be able to acquire and build housing specifically for municipal workers, including teachers, as well as artist housing. Many local towns have had trouble attracting workers due to the high cost of housing. Herman said he expects Orleans to work to try to secure some of the state funding in the bill to pursue housing for municipal workers.

A number of provisions in the legislation impact zoning, including requiring adoption of bylaws that allow construction of tiny houses and units on undersized lots, specifically for year-round housing. Accessory dwelling units of up to 900 square feet, essentially separate apartments in single-family homes, are also allowed by right under the legislation. Previously, ADUs required a special permit in most towns.

ADUs were once thought to be a way to encourage small, affordable housing units, but their promise never materialized. In the years since Chatham adopted zoning to allow them, only two have been built. Orleans was ahead of the curve, Herman noted, approving ADUs by right and increasing the allowable size to 1,200 square feet. The governor’s office estimated that 8,000 to 10,000 ADUs could be built across the state under the new law.

The law also includes provisions to make it easier to convert vacant or underutilized commercial space into housing, doubles the Historic Rehabilitation tax credit, and increases the residential property tax exemption for year-round homeowners to 50 percent. While several towns have implemented the residential property tax exemption, Chatham has rejected it several times, with some arguing that it is an unfair transfer of tax burden from year-round to second homeowners. Schell said while he sees the residential property tax exemption as “good policy” to help year-round residents better able to afford to stay in their homes, it is also divisive.

“That’s something I think would need more conversation,” he said.

The glaring absence of the real estate transfer tax from the legislation is a disappointment, he added. Chatham has filed special legislation several years running to establish a one-half of 1 percent tax on the sale of homes above $2 million, but the bill has languished in the legislature. The real estate industry has lobbied hard against a transfer tax; Cyr said Cape towns’ low tax rate has been a factor in influencing legislators against a transfer tax.

A transfer tax could be an important source of revenue to help implement many of the legislation’s other provisions, Schell said. Chatham will continue to pursue special legislation, he added.

“We hope in the future that will be an option,” Herman said.

Cyr was enthusiastic about the legislation, which he called “a giant leap forward in providing communities with the tools they need to stem the housing crisis. Now we have to have a conversation about revenue. It basically comes down to a money conversation now.”

It’s clear that Cape Codder who don’t already own a home or stand to inherit one most likely will not be able to buy a house “unless we change course dramatically,” Cyr said. During his eight years as senator, “we have seen a steady erosion of our year-round community. Every year, 100 families leave [Cape Cod] because they can’t afford it.”

“I’m living this,” he added. “I effectively have largely given up hope of being able to purchase a home on the Outer Cape.”

He credited many local officials for providing support for the legislation.

“We’ve really been at this a long, long time,” Cyr said.

Herman thanked Cyr and the Healy administration for ensuring that the region’s concerns were addressed in the new law. “The whole bill gives us a lot more options and opportunities that we’ve been working on in Orleans, but now are recognized on the state level,” he said.

Brewster Select Board member David Whitney said in an email that while the board generally supports the legislation’s provisions, it would be premature to comment since he has not seen the language of the bill or any analysis.

Highlights Of Affordable Homes Act

• Provide a seasonal communities designation in towns where at least 35 percent of housing units are second homes.

• Allows accessory dwelling units on single-family homes by right.

• Allows towns to establish year-round housing trust funds.

• Allows communities to acquire year-round housing occupancy restrictions.

• Towns can develop housing for public employees and artists.

• Requires that towns adopt bylaws allowing construction of tiny houses and units on undersized lots as long as they are designated as year-round housing.