A contract transacts business Nov. 15, 2017, at Cambridge’s Inspectional Services Department. (Photo: Marc Levy)

Support for a real estate transfer tax that would pay for affordable housing, vouchers to bridge the high cost of Cambridge rents and an easier permitting process to build homes was heard Monday from city councillors.

Reflecting public comment, some members of the council had reservations about the transfer fee as potentially punishing homeowners. That lingered even after councillor Patty Nolan explained that the policy order recommended only that the state Legislature allow cities to enact transfer fees if and how they chose.

“This legislation does nothing to enact a tax of any kind in Cambridge. What it would allow is local control from municipalities across the state to decide whether to implement a transfer fee that reflects the reality of the markets within their own city,” Nolan said. “The local option would allow us and any other city to set a fee anywhere from half a percent to 2 percent of the sale price. And it’s only for sales over a million dollars or the county median sales price, whichever is greater.”

Even $1 million can seem like a low bar in Cambridge, where property values have soared over the decades and long-term residents may be house-rich but cash-poor.

There are ways to address that, backers said. In neighboring Somerville, a proposed transfer fee home rule petition exempts all owner-occupant sellers and all buyers who live in the homes they buy, leaving only investors, developers and absentee landlords to face fees of up to 1 percent on each side of a property transaction.

Because the council has been calling since at least 2016 for a transfer tax – in which a fee is assessed on a property sale, with the money going to the Affordable Housing Trust – longer-serving councillors had experience with the issues. Vice mayor Marc McGovern noted that during a previous attempt staff provided information on the amount of money raised on commercial transactions, as opposed to residential.

“The commercial side was the huge bulk of it. There’s a way to not even have to include residential at all,” McGovern said. “For us the commercial transactions are so significant that instead of doing a 0.5 percent [for commercial and residential], you do a 0.6 percent and exclude residential across the board.”

Or house flippers who’ve owned for less than three years could be the only residential target of a transfer tax. “There’s a lot of different ways we can get there that will generate millions of more dollars for affordable housing,” McGovern said.

Councillors Joan Pickett and Paul Toner voted no on the order after further deliberation, but with councillor Burhan Azeem absent, the other six members of the council voted yes.

Faster, cheaper builder permits

Another order asked staff to review the process for getting construction permits and find ways it could be streamlined – potentially lowering costs all along the way, including for the end buyer and renters.

Toner wanted contractors, architects and developers named in the order as stakeholders to consult with. “They are the ones who have some of the most urgent issues and complaints about roadblocks and things that slow things down,” Toner said. “It’d be good to have people who are actually involved in the building process as part of the conversation as well.”

And if that were so, councillor Jivan Sobrinho-Wheeler said, trade unions and tenant groups should be included as well. The order passed 8-0 as amended.

Housing vouchers

Housing vouchers funded by the city needed discussion as well, councillors said. The order written by councillor Sumbul Siddiqui noted the need to help fill a gap described in the city’s Envision report from 2019: that home values and rents nearly doubled between 2000 and 2015, “requiring a household income of $100,000 to rent a one-bedroom apartment, although the median household income in Cambridge is $75,000, and prices have only risen since the time the report was published.”

The city manager’s housing liaison, Community Development Department and Cambridge Housing Authority could start discussions, the order said, with the matter eventually being remanded to the council’s Housing Committee for deliberation.

Pickett urged the city to look at existing revenue sources as potential funding for the vouchers as a “much faster basis [for people] to get into affordable housing than waiting for housing to be built.”

The policy order passed 8-0 after with some minor amendments to its wording.