Background

In January 2019, Governor Baker filed legislation, An Act Providing for Climate Change Adaptation Infrastructure Investments in the Commonwealth (S.10). His proposal would have increased the Deeds Excise Fee from $4.56 per $1,000 to $6.84 per $1,000 and use the new funding to sustain and implement the Municipal Vulnerability Preparedness (MVP) program and the MA Climate Clearinghouse.

In response to the Governor’s proposal, housing and climate advocacy organizations came together to advocate for major new state investments to protect our families, neighbors and communities from the urgent and immediate affordable housing crisis and the urgent existential threat of climate change. The AHEAD Act (originally named HERO - Housing and Enirvonmental Revenue Options) was initially filed in the 2021-22 legislative session by Representative Elugardo (H.2890) and Senator Eldridge (S.1853).  

The bill continues to be filed by Sen. Eldridge & Rep. Montaño (S1973 & H2894) in order to continue to move this critical legislation forward and secure a sustainable source of revenue to address the affordable housing and climate crises. 

The AHEAD Act would double the current Deeds Excise Fee, which is due upon the sale of real property in Massachusetts from $4.56 per $1,000 to $9.12 per $1,000, in order to bring in an over $300 million in revenue annually. The bill would divide this funding equally (50/50) between climate resilience and affordable housing. It would also create new tax credits to offset any increases for low-income sellers and for sales to a first-time homebuyer.

 

Double the Current Deeds Excise Fee!

Massachusetts has one of the lowest excise rates in the region, and it hasn’t changed for decades. The AHEAD Act brings the Massachusetts excise fee closer to being in alignment with surrounding states, while preserving our competitiveness with multiple of our neighbors still having a much higher rate.

Why is the Deeds Excise Fee the right tool? 

The deeds excise is a fee paid on income generated during a real estate sale. It is both an appropriate and equitable source of revenue to support housing and climate investments. The investments funded by this legislation are needed to protect real estate values and the entire real estate industry from the ravages of unmitigated climate change. And to the degree that rising property values make it harder for working families and seniors to secure housing, this mechanism provides an opportunity to mitigate that harm by creating more affordable housing. 

Affordable: Most homeowners only pay it once or twice in a lifetime and can amortize the cost over the life of a mortgage.  
Equitable: The largest cost is imposed on those buying and/or selling the most expensive properties and investors who buy and/or sell properties frequently, including large scale office, commercial and luxury residential developments.  

Proposed Allocation of New Revenue: 50% for Climate and 50% for Housing

Climate Resilience: ~$150 million/year

The legislation proposes to allocate 50% of the new funding to climate investments by depositing half the new revenue into the Global Warming Solutions Trust Fund. This would allow the Executive Office of Energy and Environmental Affairs (EEA) to allocate dollars across a wide range of climate related investments from those addressing resiliency and adaptation, to those seeking to reduce carbon emissions through energy efficiency and clean energy.  

The AHEAD Act provides flexibility to respond to changing needs over the next 30 years. EEA could choose to transfer some of this money to the Massachusetts Clean Energy Center or other intermediaries responsible for implementing clean energy programs or initiatives. EEA should adhere to the state’s Climate Action Plan and align investments with other funding streams such as utility funded energy efficiency programs, while giving priority to communities disproportionately harmed by . 

Affordable Housing: ~$150 million/year

The 50% portion of new deeds excise revenue set aside for housing would be allocated 60/40 between two existing housing trust funds: 60% dedicated to the state’s Affordable Housing Trust Fund, and 40% to the state’s Housing Preservation and Stabilization Fund (HPSF).

  • Aiding working-class homeowners and renters through the Affordable Housing Trust Fund. The Affordable Housing Trust Fund can be used to create and preserve rental housing, develop ownership housing for people traditionally excluded from those opportunities, provide permanent or transitional housing for homeless families and individuals, and rehabilitate public housing. An annual infusion of $90 million could create or preserve additional housing for 18,000 households over 10 years.

  • Aiding low income renters and the homeless through the Housing Preservation and Stabilization Fund.  This Fund can support extremely low-income households and augment funding for the Mass. Rental Voucher Program (MRVP) for low income renters, helping thousands more families afford stable housing.

Local Option Legislation

The coalition supports incorporating provisions that allow municipalities to pass local real estate transfer fees as a complementary measure. This additional tool to raise revenue empowers communities to meet local needs for affordable housing. To learn more about the Real Estate Transfer fee, visit www.realestatetransferfee.org.

Potential Impacts of the AHEAD Funding 

The AHEAD Coalition believes such investments should be designed to advance racial and geographic equity by focusing on people and places most significantly impacted by the housing crisis and the dangers of climate change. Some of the ways that this funding could be used, include: 

  • Implementing resiliency plans as part of the state’s Municipal Vulnerability Preparedness Program. 

  • Accelerating adoption of clean energy technologies, especially in lower income communities and environmental justice communities. 

  • Electrifying and decarbonizing privately owned residential housing. 

  • Decarbonizing the state’s affordable housing inventory to ensure long-term affordability, comfort, and safety for tenants. 

  • Building new, climate-smart, affordable housing for both renters and first-time homebuyers – potentially adding 18,000 new homes by 2030. 

  • Providing rental assistance through the Massachusetts Rental Voucher Program to help working families and seniors make ends meet. 

  • Supporting innovative community projects that build resiliency, ranging from neighborhood- specific strategies such as increasing tree canopies in areas subject to intense heat, to linking to municipal initiatives, such as Climate Ready Boston. 

  • Launching workforce and small business development programs that help communities of color and other underserved populations access the economic opportunities associated with these investments and the transformation of our economy.