(January 30, 2024) The largest affordable housing investment in state history is currently moving through the legislature. Governor Healey and her administration are prioritizing access to housing, as drafted in their Affordable Homes Act. The bill includes an array of pro-affordable development policies alongside $4.12 billion in dedicated state funds.

Nantucket has long played a leading role in the state and national affordable housing response. Last month, state leaders arrived on our shores to learn more about our unique approach. Sen. Lydia Edwards, Chairperson of the Joint Committee on Housing, joined Sen. Julian Cyr for a listening tour across the island. This included a site visit at Wiggles Way, pictured below.

“The goal is to really see housing through a different lens … I think it’s important to realize when you take on a state Senate role — it’s just bigger than Boston. The numbers are different. The infrastructure needs are different,” said Edwards.

A coordinated effort

On January 18th, the Housing Committee heard public testimony on the bill. Hours of public statements, largely in support, are meant to inform the committee’s position on the bill. A notable shift has appeared in the approach to affordable housing, namely that it deserves municipal and state policy change and funds. Many of the bill’s particulars are relevant for Nantucket.

The most significant component of the bill is unlocking the long-sought real estate transfer fee. The bill authorizes municipalities to create a transfer fee of between 0.5% and 2% on real estate transactions. The fee applies to the “portion of the sale over $1 million, or the county median home sales price, whichever is greater.” These funds would be administered by Nantucket’s Affordable Housing Trust (AHT), overseen with approvals from the Select Board.

Local advocates are trying to work with the administration to lower this bar for Nantucket. According to realtor.com, Nantucket’s median sold home price stands at $4.1M. So for example as written, if our median home price is $4.1M and a house sells for $4.3M, the fee would only apply to $200,000. The seasonal communitities designation described below may be able to address this concern.

Broad strokes

Nantucket originally raised the transfer fee on Beacon Hill more than a decade ago, but so far it has failed to gain traction. In many ways we are ahead of the curve on affordable housing policy. Not all communities allow three dwellings in most residential zones, covenant carve outs, employer dormitories, dense downtowns, and detached Accessory Dwelling Units, for example. When the state-wide transfer fee was proposed, Nantucket was among the first of several communities- including Boston, Somerville, Provincetown, Concord, Arlington, Cambridge, and Chatham- who filed bills to impose the policy.

The seasonal communities designation will create new opportunities to flex the bill’s language to our needs. Building affordable housing looks, of course, different in Boston vs. Nantucket. We have significant barriers to affordable housing including large minimum lot sizes, Historical District Commission rules, limited sewer lines, decreasing land availability via erosion and conservation, limited public transportation, etc.

Included in this designation is a possible property tax exemption for year-round rented properties. “A city or town… may exempt from property taxation, under chapter 59, a dwelling unit that is rented on a yearly basis, and occupied year-round, for an amount not to exceed 150 per cent the fair market rent.”

Other Nantucket-relevant policy changes in the bill include:

• Allowing Accessory Dwelling Units (ADUs) to be built by-right in single family zoning districts in all communities. While Nantucket already permits ADUs in all but one zone, this represents a stronger state role in historically municipal-driven zoning decisions.
• Adding inclusionary zoning to the list of zoning changes municipalities may pass by simple majority. An inculsionary zoning bylaw is proposed at Nantucket’s 2024 Annual Town Meeting.
• Establishing a temporary streamlined process for the disposition of land under the control of state and public agencies for housing purposes.
• Reforming the Commonwealth’s receivership statute to permit courts to allow the sale of vacant properties in receivership to nonprofits for fair market value. Nonprofits can in-turn rehabilitate and sell affordably to income-eligible first-time homebuyers.

Dedicated funding sources

Beyond policy is new state-level funding for affordable development. “Affordable housing” development comes with additional compliance. These new programs come with a learning curve for local developers seeking participation. Without developer buy-in, large amounts of this funding will fail to materialize on Nantucket. New relevant state funding includes:

• $800M for the Affordable Housing Trust Fund, which will provide flexible resources to create or preserve affordable housing for households whose incomes are not more than 110% of Area Median Income (AMI). This is a state administered fund not to be confused with Nantucket’s Affordable Housing Trust (AHT).
• $425M for the Housing Stabilization and Investment Fund to support preservation, new construction, and rehabilitation projects.
• $200M for the Housing Innovations Fund to support innovative and alternative forms of rental housing for people experiencing homelessness, housing for seniors and veterans, and transitional units for persons recovering from substance abuse.
• $175M for the HousingWorks Infrastructure Program to fund municipal infrastructure projects to encourage denser housing development.
• $100M for the Public Housing Mixed-Income Housing Demonstration Program to support Local Housing Authorities (LHAs) who partner with developers to add mixed income developments on LHA land.
• $100M for Middle-Income Housing to support housing development for households earning up to 120% AMI and improve home ownership opportunities.
• Creating a new Homeownership Tax Credit designed to produce homes affordable to first-time homebuyers earning not more than 120% AMI.

This is all to say there are opportunities for the Nantucket community and local builders alike. New tools are unlocking in the affordable housing tool belt. The governor has taken a strong stance on affordable housing and the ball may soon be in our court.