By Julianne Hester

The end of the two-year state legislative session arrived with some notable bills unresolved. One major piece of legislation that ultimately was passed is the $5.16 billion Housing Bond Bill, which has implications across the public affairs and real estate sectors in particular.

First unveiled by the Healey-Driscoll Administration last year, a $4 billion plan was proposed to kickstart the production of homes and ease housing affordability across the Commonwealth. The original proposal included $1.6 billion for the repair, rehabilitation, and modernization of the state’s 43,000 existing public housing units, including funds to decarbonize public housing. It also proposed a real estate transfer tax of 0.5 percent to 2 percent on the portion of property sale over $1 million and allowing by-right accessory dwelling units.

The bill finalized by the legislature differs from the original proposal, eliminating some of the more contentious provisions, such as real estate transfer fees, but still achieves the same goal, to address affordable housing. At an event at 2Life Communities last week in Newton, Governor Healey signed the $5.16 billion bill into law.

Here are the most important provisions from the legislation that will impact the real estate industry.

Accessory Dwelling Units (ADUs)

Perhaps the most notable provision in the bill, it allows for construction of one accessory dwelling unit up to 900 square feet per single-family lot in every community in Massachusetts by right. This provision will allow for the development of ADUs, either attached or detached from a single-family home, without needing a special permit or variance from the homeowner’s community. The most common form of ADUs are in-law apartments, and have been considered among policymakers a sensible tool nationwide to aid the housing crisis without altering a region’s character altering a region’s character.

The Healey-Driscoll Administration estimates that as many as 10,000 ADUs could be added to the Massachusetts housing stock as a result of this bill. While this may not directly impact large developers, there will be additional opportunities for smaller contractors, and potential impacts on smaller multifamily builders. This also creates opportunities for homeowners to become landlords, if they would like to convert part of their property to a rental unit.   

Conversions

While office-to-residential conversions have been an ongoing experiment in Boston, this provision broadens the reach across the state, offering pathways for converting office buildings or other commercial properties into housing. Similar to the provision in Boston, it will provide tax breaks with a credit for up to 10 percent of the development costs for conversions “on main streets or downtown municipal areas” with at least two apartments or condos. This opens the door for not just residential conversions, but mixed-use as well. At least 80 percent of the units should be market rate.

Additionally, the historic rehabilitation tax credit is doubled to $110 million, and there’s a possibility for eligibility as part of Housing Innovation Fund.

Public Housing Projects

For Massachusetts’ 43,000+ public housing units, this bill has provided much needed funding – $2.2 billion, to be exact – toward the restoration and rehabilitation of such residences across the state. This was one of Governor Healey’s major priorities when her version of the Housing Bond Bill was originally proposed and will receive the largest chunk of funds from the bill.

Momentum Fund

Within the real estate industry, it’s no secret that the current economic environment is challenging. The bill will provide a $50 million momentum fund, allocated by Massachusetts Housing Finance Agency, to help developers with approved projects complete financing packages.

Many approved projects have been stalled in recent years, on hold until the financing market improved. This will aid developers in advancing their projects that will bring additional housing to the state.

Other Notable Provisions

While they won’t have a direct impact on our clients, there are two additional provisions outlined in the bill that are notable. The first is that renters can now request that courts seal eviction records, either immediately or after seven years, to aid in future housing applications. This will allow for eviction sealing in cases of no-fault eviction, a dismissed case, or a case that a tenant won, which will remove a major barrier for those with a prior evicting in finding new housing. Additionally, the law bans most home sales from requiring buyers to waive or limit their right to a home inspection, further protecting buyers and renters. With the competitive nature of the Massachusetts housing market over the past few years, many buyers have chosen to forgo an inspection to speed up the process in order to beat other buyers.

The Housing Bond Bill, which is the largest housing investment in Massachusetts’ history, is a noble step in easing the housing crisis in the Commonwealth, but as noted by Governor Healey and the legislature, there’s still work to be done to ensure that all residents have access to quality, affordable housing.