2017-2018 Legislative Session Wrap-Up

View of the Massachusetts State House from the Boston Common, a night shoot

The 2017-2018 Legislative Session drew to a close just after midnight on Wednesday, Aug. 1. The session started with several questions regarding Realtor® priorities and concerns on the table. Unfortunately, the session ended with a few of those issues still left outstanding. The House and Senate will continue to meet in informal sessions, but only noncontroversial items can advance until a new legislature is seated in January 2019. Read on for a recap of where many of our Realtor® issues ended up at the end of the session.  

Housing Production:  

Despite a strong push from an unlikely coalition that included the real estate industry, the Massachusetts Municipal Association, AARP, and numerous business groups, the Housing Choice legislation failed to pass the House and Senate before time ran out on July 31. Originally filed by Governor Charlie Baker and given a favorable report by the Joint Committee on Housing, the bill would have reduced the local voting requirement for zoning changes to support housing production from the current two-thirds supermajority down to a simple majority. There is some hope that the bill may be able to advance during the informal sessions. MAR will continue to work with Governor Baker and the legislature to support the bill.  

Zoning Reform:  

Once again, the House and Senate chose not to advance attempts to rewrite and reform the Massachusetts Zoning Act. The proposed bills would have made it much more difficult and expensive to build housing. While filled with small technical changes that would be bad for housing production, the bills also contained major policy proposals such as mandatory inclusionary zoning, impact fees, and the removal of Approval Not Required subdivisions. These zoning changes would inhibit growth and make any housing produced more expensive.  

Home Energy Scoring:   

Energy efficiency is always a popular topic on Beacon Hill. Realtors® successfully advocated against numerous different proposals that would require a home energy score before an owner could list a home for sale. Such a policy would disrupt the real estate marketplace by complicating and delaying home sales, negatively impacting those who do not have the resources to invest in energy efficiency, and would replace a successful program with a state mandate that would punish many homeowners in the Commonwealth. This session, legislators and Governor Baker filed five separate bills and two amendments that would have implemented a mandatory home energy scoring program. Realtors® advocacy efforts were successful in impeding the program each time.  

Transfer Taxes:  

This session we also saw four bills that sought to allow municipalities to implement transfer taxes on the sale of real estate. One of the bills went so far as to create a framework to allow cities and towns to opt in to the proposed new tax. Once again, Realtors® defeated these proposals that would single out homebuyers and sellers to pay taxes that would benefit the entire community.  With the so-called Millionaires Tax no longer on the ballot, some elected officials will be looking for new ways to create new revenue in Massachusetts. Democratic candidate for governor, Bob Massie, has already identified a real estate transfer tax on developers and investors as one possible way to raise revenue.  

Short-Term Rental Taxes and Regulations:  

The House and Senate passed competing versions of bills that both sought to tax and regulate short-term rentals in Massachusetts. The legislature sent its final version to the governor with just two days left in the session. Governor Baker returned the bill with an amendment, which will be difficult for the House and Senate to take up in informal sessions. The governor’s amendment seeks to create an exemption for homeowners who rent their home for 14 days or less and to remove some personal identifying information from the state-wide registry.  

Paid Family Leave:  

Governor Baker signed a broad bill that will gradually increase the state minimum wage to $15, eliminate Sunday time-and-a-half, mandate paid medical and family leave, and make the sales tax holiday permanent. The bill, known as the “Grand Bargain,” was the result of negotiations between worker advocates and employer groups.  MAR will seek clarification regarding the paid medical and family leave requirements, which become effective in 2021, and how the bill will apply to real estate brokers and salespersons. Realtors® typically operate as independent contractors within their real estate firm and although the new law does include independent contractors, much of the language is unclear and ambiguous. Stay tuned for updates on MAR’s work on this issue.   

Community Preservation Act Surcharge Increase:  

MAR opposed the increased Community Preservation Act (CPA) surcharge on recording fees included in the Senate budget. While MAR supports the spirit, intent and the mission of the act, this proposal would have further exacerbated the inequitable manner of funding the CPA. In effect, purchasers of homes and other properties are paying to fund the CPA, which provides benefits to the entire community. Buyers in those communities who have not adopted the CPA will be paying more to provide municipal benefits to communities who have adopted the CPA. Funding for such a program should come from a statewide source such as any annual state budget surplus.   

Crumbling Foundations:  

MAR supported an amendment added to the Senate budget to establish a commission to study the financial and economic impacts of crumbling concrete foundations due to the presence of pyrrhotite in Massachusetts.Initially thought to only affect homes in Connecticut, Massachusetts homes in Hampden County and Hampshire County are now exhibiting foundation problems attributed to pyrrhotite (an iron sulfide compound) in those concrete foundations. The amendment was ultimately included in the final fiscal year 2019 budget. The budget also allocates funding to create a reimbursement program for foundation testing.   

Noncompete Agreements: 

Massachusetts now has clarification on noncompete agreements. Included in the final economic development bill of the session is a provision that limits non-compete agreements to one year. The new law applies to employees and independent contractors and also allows for legal consultation before signing a non-compete. 

Housing Bond Bill:  

The five-year housing bond bill signed by Governor Baker authorizes $1.8 billion for housing bond accounts. These accounts fund affordable housing, housing for people with disabilities, housing built in transit-oriented locations, and housing for people experiencing homelessness. In addition to funding housing bond accounts, this law extends and expands the authorization of the state low income housing tax credit, the Community Investment Tax Credit, and the state Historic Tax Credit. The bill also extends the Brownfields Tax Credit and the Housing Development Incentive Program. A special thank you to Chairman Kevin Honan and Senator Joseph Boncore for their hard work on this issue.  

Thank you to all of the Realtors® who provided input and expertise on the wide range of issues MAR was involved in this session. 


Government Affairs Second Quarter Update

With just one more month left of the two-year formal legislative session, the Massachusetts legislature is starting to feel the heat with numerous proposals still pending. In addition to a $44 billion budget, the legislature is still conferencing on bills regulating short-term rentals, protecting consumers when data breaches occur, enhancing civics education and media literacy in public schools, and overhauling health care laws. The Massachusetts Senate is also preparing for a change in leadership as Senator Karen Spilka is poised to take over as President of the Senate from Senator Harriette Chandler later this month. Continue reading

Government Affairs First Quarter Update

Massachusetts State House in Boston

The first quarter of 2018 saw housing issues take center stage in state government. The Senate announced its next two leaders, and mandatory energy scoring bills left and came back again all within just a few months. MAR is also excited to announce that Governor Charlie Baker will be the keynote speaker at the 33rd Margaret C. Carlson Realtor® Day on Beacon Hill on June 7. Continue reading

Housing shortage continues to affect Massachusetts economy

free fall of the stock market concept with pen and business chart

The UMass Donahue Institute reports the state’s economy slowed in the first quarter of 2018 and cites the lack of housing as an important factor. As the report states, “the challenge for Massachusetts going forward will be to address the housing, transportation, and infrastructure constraints that make it more difficult for the workers who will be needed to fill these positions to relocate to the state and meet the needs of growing employers. While this challenge is not new, the price of inaction is high and rising.” Continue reading

Action Alert: Oppose Short-Term Rental Tax

Long row of cottages along the beach in Turo along Cape Cod Massachusetts

The House of Representatives is expected to take up a bill on Thursday (delayed due to the storm Wednesday) that seeks to tax, regulate, and potentially restrict short-term rentals in the Commonwealth. MAR opposes this legislation for two main reasons.

1.    The bill would grant cities and towns the explicit authority to restrict a property owner’s right to rent their unit on a short-term basis; and
2.    It would require homeowners to comply with onerous business regulations and administrative burdens that were never intended for the average homeowner.

MAR is supporting two amendments to the bill.

Amendment 6: Would strike a provision that would allow cities and towns to restrict short-term rentals by passing by-laws or ordinances that would include a limit on the number of days an owner may rent out a home or requiring that each home is an owner’s primary residence.

By way of example, a city or town would be able to prohibit homeowners from renting out their property for more than 14 days per year, or from renting out a second home on Cape Cod in order to off-set their mortgage and carrying costs, simply because it is not their primary residence.

In addition, by authorizing cities and towns to impose a business licensing requirement on short-term rentals, H.4314 would impair a fundamental attribute of private property ownership—the right to rent—and convert it to an unlawful business use for which the “privilege” of a license is required.

Amendment 14: Would clarify language to ensure that Realtors® who collect rent and taxes from renters would be able to pass those funds on to the owner, without incurring any tax filing obligations.

What We Need You to Do:

Please contact your State Representative and let him or her know that this bill is bad for homeowners and private property rights in Massachusetts and ask that they support these amendments.

Look up your state representative.

Sample Call Script:

Hello, my name is ______________ and I am a Realtor® and constituent from ______(TOWN)_________.

I’m calling today to talk about H.4314 the short-term rental bill that the House will be considering.

I am opposed to this bill because it seeks to allow communities to restrict a property owner’s right to rent their property simply because it is for a short stay.
This is important to me because this bill would impair a fundamental attribute of private property ownership—the right to rent—and convert it to an unlawful business use for which the “privilege” of a license is required.

The Massachusetts Association of Realtors® is supporting two amendments that would improve this bill. Number 6 filed by Rep. Tackey Chan and Number 14 filed by Rep. Daniel Cahill.

Thank you for taking the time to talk to me today.

Read more information on House Bill H4314.

Government Affairs 2017 Year-End Report

Massachusetts State House - Freedom Trail Site - Boston, Massachusetts, USA

The third Wednesday in January marks the end of formal sessions for the first year of the two-year legislative cycle. The end of the two years usually coincides with a windfall of activity on Beacon Hill. However, this past year went against that trend and ended with a flurry of activity to close out just the first year.

The biggest story of 2017 did not emerge until the end of the year when Senator Stan Rosenberg elected to temporarily step down as President of the Senate. Rosenberg has stepped down while an investigation is conducted into whether he violated any Senate rules in connection with allegations that his husband claimed to hold sway over the Senate and sexually assaulted men with business on Beacon Hill. The Senate elected Senator Harriette Chandler to serve as Acting Senate President during the course of the investigation.  At this point Senators Linda Dorcena Forry of Dorchester, Eileen Donoghue of Lowell, Karen Spilka of Ashland, and Sal DiDomenico of Everett have expressed interest in becoming the next leader of the Senate, though it may be weeks or months before the investigation is complete.

Governor Baker’s Housing Choice Initiative

On December 11, 2017, the Baker-Polito administration announced a comprehensive new initiative to increase housing production across the Commonwealth. The administration’s Housing Choice Initiative creates a new system of incentives and rewards for municipalities that deliver sustainable housing growth, creates a new technical assistance toolbox to empower cities and towns to plan for new housing production, and proposes legislative changes. The legislation, An Act to Promote Housing Choices, promises to deliver effective zoning at the local level. The legislation would reduce the vote threshold for a number of key Realtor® zoning priorities, including accessory dwelling units, multifamily zoning, and cluster development, which are all key components of MAR’s H.O.M.E. Bill. This change would make it much easier to pass these pro-housing zoning changes at the local level.

The administration hopes these changes will encourage and empower municipalities to plan and build the additional housing that the Commonwealth needs to continue to thrive. MAR looks forward to working with Governor Baker, the legislature, and other housing production proponents to meet a goal of producing 135,000 new housing units by 2025.

Speaker DeLeo Fundraiser

            On November 30, 2017, about a dozen Massachusetts Realtors® took advantage of the opportunity to attend a fundraiser supporting Speaker of the House, Robert DeLeo. The Speaker took time to talk with each Realtor® and showed a profound understanding of several key Realtor® issues, including taxes, housing production, and zoning.

40B Hearing

On December 19, 2017, the Joint Committee on Housing held a hearing on legislation seeking to amend Chapter 40B of the Massachusetts General Laws, the state’s Affordable Housing zoning law. Chapter 40B enables local Zoning Boards of Appeals to approve affordable housing developments under flexible rules if at least 20 to 25% of the units have long-term affordability restrictions. Also known as the Comprehensive Permit Law, Chapter 40B was enacted in 1969 to help address the shortage of affordable housing statewide by reducing unnecessary barriers created by local approval processes, local zoning, and other restrictions. Many of the bills heard on December 19, sought to weaken the law by changing the definition of “affordable” or amending the law to make developments more difficult to build. MAR has historically opposed, and continues to oppose, changes to Chapter 40B that would weaken the law’s effect.

Energy Scoring Hearing

            On November 6, 2017, MAR General Counsel Mike McDonagh and MAR Past President Laurie Cadigan testified before the Joint Committee on Telecommunication, Utilities, and Energy. They provided testimony in opposition to a bill that would require homeowners to conduct a MassSave Home Energy Audit and receive a home energy score prior to listing a home for sale. The testimony focused on the disruption such a policy would bring to the housing market, as well as the infringement on private property rights it would have. This bill is very similar to a proposal that Realtors® defeated last session. MAR will continue to work with the committee to encourage homeowners to make energy efficient upgrades to their homes.

Federal Tax Reform

The last big news for Realtors® to close out the year was the passage of federal tax reform. While NAR remains concerned that the overall structure of the final bill diminishes the tax benefits of homeownership and will cause adverse impacts in some markets, the advocacy of Realtors® helped NAR gain some important improvements throughout the legislative process. NAR’s efforts helped save the exclusion for capital gains on the sale of a home and preserved the like-kind exchange for real property. Many agents and brokers who earn income as independent contractors or from pass-through businesses will see a significant deduction on that business income. Be sure to visit NAR’s website for more information: http://narfocus.com/billdatabase/clientfiles/172/19/3062.pdf.

What to expect in 2018

            After what some are calling a slow legislative year in 2017, the House and Senate have many issues that they can direct their attention to in 2018. Housing continues to be an issue that tops the list in both chambers of the legislature and the Governor’s office. MAR will be working to help pass meaningful and effective housing production legislation, while opposing any legislation that impedes new construction.

Another priority issue for Realtors® is a potential change to the Massachusetts tax code. The legislature plans to hold a hearing this month on policies to respond to changes to the tax code at the federal level. One important change at the federal level capped state and local tax (SALT) deductions at $10,000, increasing the liability on higher earners and property owners in Massachusetts and other states with relatively high taxes and property values. We will continue to update MAR members as the Joint Committee on Revenue begins its work.