Orleans Officials Mull Transfer Tax Options

ORLEANS – Voters can expect a proposal for adopting a real estate transfer tax to come before them at the annual town meeting in May. But the specifics still need working out, select board members said earlier this month.

“I think there’s a consensus,” Select Board chair Michael Herman said during the board’s May 13 meeting. “We are going to do something regarding a transfer tax. We don’t know exactly what the details are right now.”

Towns across the commonwealth are being encouraged to prepare articles for their town meetings seeking authority to petition the state legislature to allow them to adopt a surtax on real estate sales. State Sen. Julian Cyr, D-Truro, told the board in February that Gov. Maura Healey’s proposed $4.1 billion housing bill, the Affordable Homes Act, would allow communities to opt into accepting the tax, which could be applied to properties sold at or above a certain amount at a rate of between 0.5 and 2 percent. If adopted, the funding would go to support Orleans’ efforts to create needed housing in town.

The select board on March 13 looked at an article that Chatham prepared for adopting its transfer tax. Chatham’s article called for a 0.5 percent tax on properties sold for $2 million or more, with revenue going to support “affordable and attainable housing.”

“In the Chatham instance it applies to the entire amount, not the amount over the $2 million,” Assistant Town Manager Mark Reil said. “Which I think is what the intentions are and the way to go.”

In preparing an article for the annual town meeting on May 13, the select board would need to decide at what price threshold to apply the tax, as well as the rate. There was also discussion about how the revenue would be managed if the tax is adopted.

A petition is currently before the state legislature requesting that the town’s affordable housing trust fund board be allowed to use its funds to support projects for individuals earning up to 200 percent of the area median income in Barnstable County. But unless that’s approved, the board can only fund projects up to 80 percent of AMI.

The housing needs in Orleans and across the Cape extend well beyond what the state classifies as affordable, and select board members weighed whether a separate trust is needed to give the town the ability to help finance attainable housing projects for members of the local workforce who might not qualify for affordable housing.

“Attainable has no dedicated income stream in the trust now,” said Andrea Reed of the select board.

Herman said approval of the petition currently before the state legislature would give the housing trust more flexibility to support projects up to 200 percent of AMI. But Mark Mathison of the select board said that doesn’t guarantee that revenue from the tax will be spent on attainable housing initiatives. He said many people in town are looking for ways to help address housing needs for “the missing middle.”

“If the voters are going to back this and vote for this and say ‘Oh yeah, here’s a mechanism for getting attainable housing,’ there’s no guarantee of that if it all goes into one trust and the keepers of the trust want to spend it on something else,” he said.

Town Manager Kim Newman said the key in any article that goes to the annual town meeting for a vote is flexibility. While the transfer tax revenue needs to be spent on housing, she said the town needs to craft its article in such a way where the town has options on how to spend it.

Newman said as the housing market continues to change, the need for more workforce housing is a specific one that must be addressed in the years ahead.

“You have to start thinking about that now,” she said. “It’s a big crisis three years from now, four years from now, when you can’t find housing for staff out here.”

Mefford Runyon of the select board voiced support for a 0.5 percent tax levied on properties sold for $1 million or more. But it’s possible that the town’s petition may not even be acted upon. Towns are being asked to petition the legislature as a show of support for the transfer tax, but Herman said the state would ultimately define the terms of the tax and how it would be applied if the housing bond bill passes.

“If it passes and goes, all of this wipes away and all of these home rule petitions go away, because they’re going to be setting the standard for what we’re allowed to do,” he said.

Email Ryan Bray at ryan@capecodchronicle.com