The third quarter of 2017 welcomes the General Court back from a brief summer break. At this point in the year, the annual budget has been mostly resolved and public hearings are continuing for the thousands of bills that were filed for this session. Here are a few of the highlights from the Realtor® perspective.
The second quarter of 2017 has been busy for MAR Government Affairs. After a slow start, the legislature briefly picked up the pace before closing out the quarter focused almost entirely on the issues of marijuana and the state budget.
The budgeting process for fiscal year 2018 drew the interest of Realtors® when the Senate included two concerning provisions in its annual budget. First, the Senate included a section that would have expanded the room occupancy tax that hotels charge guests, to the rental of private homes for less than 90 days. Under this proposal, homeowners would be required to comply with onerous business regulations and administrative burdens that were never intended for the average homeowner. A home is not a hotel and a homeowner who leases her cottage for a week or even a day would be required to abide by the requirements as detailed in the Senate proposal.
The Senate also included a provision that would have increased the Community Preservation Act surcharge on recording fees from $20 to $45 per document, resulting in an increase of hundreds of dollars. This would have further exacerbated the inequitable manner of funding the CPA with recording fee surcharges. In effect, purchasers of homes and other properties are paying to fund the CPA, which provides benefits to the entire community.
We are happy to report that, because of MAR’s advocacy on these issues, the budget compromise agreed to by the House and Senate does not contain either of these proposals. It is important to note, however, that both proposals still exist as separate legislation and are currently working their way through the legislative process.
In addition to addressing the proposed room occupancy tax provision in the Senate budget, the Joint Committee on Financial Services also held three hearings on a different bill that would tax short term rentals at varying tax rates. Realtors® from across the Commonwealth testified at hearings in Lenox, Barnstable, and Boston on the impact that such a tax would have on homeowners who only occasionally rent their homes. This will continue to be a big issue as the legislature heads towards an August recess. Thank you to all of the Realtors® that showed up to testify at the hearings.
H.O.M.E. BILL HEARING
The legislature held two hearings on An Act improving housing opportunities and the Massachusetts economy, the H.O.M.E. Bill. President Paul Yorkis, MAR Legislative & Regulatory Counsel, Justin Davidson and representatives from the Greater Boston Real Estate Board testified first before the Joint Committee on Municipalities and Regional Government and highlighted some of the key provisions of the bill that would aid in the production of much needed housing in Massachusetts. Just a few weeks later, President Yorkis, Government Affairs Committee Chair Steve Medeiros, and MAR Past President Corinne Fitzgerald testified before the Joint Committee on Community Development and Small Business, once again advocating for the passage of the H.O.M.E Bill.
On June 13th MAR General Counsel and Director of Government Affairs, Michael McDonagh testified before the Joint Committee on Revenue in opposition to proposals to create a transfer tax on the sale of real estate. Transfer taxes would create an entrance or exit fee to homeownership and would have serious implications for the Massachusetts housing economy. These taxes single out home buyers and sellers and raise the bottom line price of many homes by thousands of dollars.
TITLE 5 WORK GROUP
President Yorkis continued to represent Realtors® at the Department of Environmental Protection’s Title 5 Stakeholder meetings. The purpose of the meetings is to have outside experts and interested parties that represent a variety of interests and viewpoints provide advice to MassDEP on what modifications should be considered.
In June, the Governor’s Lead Paint Advisory Commission met to discuss proposed changes to the lead regulations in the Commonwealth. The proposed amendments are intended to improve organization, clarify regulatory requirements, rescind unnecessary or outdated requirements, and implement a standard for lead poisoning and a blood lead level of concern used by the CDC and most states. Of note to those in the deleading field, they also propose to remove the deleading standard for a small number of surfaces, specifically some surfaces currently considered “accessible/mouthable”, which could substantially reduce deleading costs.
NAR MID YEAR
In May, thousands of Realtors® attended the 2017 Realtors® Legislative Meetings and Trade Expo in Washington, D.C. It has never been more important for Realtors® to remain engaged in advocacy initiatives and have our unified message and voice heard on Capitol Hill. As long as Realtors® continue to remain steadfast in working together, great strides will be made to protect the American Dream of property ownership and the real estate industry. This year Realtors® met with members of Congress to discuss tax reform, flood insurance, and protecting sustainable homeownership.
BOARD OF REGISTRATION
At its May 10th meeting, the Board of Registration of Real Estate Brokers and Salespersons once again discussed the use of the new Massachusetts Mandatory Real Estate Licensee-Consumer Relationship Disclosure form. MAR had requested clarification regarding use of the old form once the new form was released. The Board confirmed that there will be a two-year grace period before any action would be taken against agents using the old form during a transaction. Despite the approved grace period, MAR still strongly suggests that all agents use the new form released by the Board in January of this year.
MARGARET C. CARLSON REALTOR® DAY ON BEACON HILL
Over 400 Massachusetts Realtor® -members traveled to the State House on Wednesday June 14th to participate in the 32nd annual Realtor® Day on Beacon Hill. The annual lobbying day gave Realtors® the opportunity to discuss with their legislators the key issues that impact consumers, housing and the economy. State Senator Karen Spilka (D – Ashland), Chair of the Senate Ways & Means Committee, provided the 2017 keynote address. Thank you to all who attended.
2017 PRIVATE PROPERTY RIGHTS AWARD
Kevin Sears of Springfield was awarded the 2017 Private Property Rights Award at Realtor® Day on Beacon Hill on June 14th. The award is given to Massachusetts Realtors® whose outstanding efforts in advocacy have helped the Association achieve its objectives of increased access to homeownership and preservation of private property rights. Congratulations to Kevin.
HOUSING PRODUCTION HEARING
Proponents of efforts to increase housing production in Massachusetts crowded the hearing room at the State House on June 20th when the Joint Committee on Housing held a hearing on bills relative to production. President Yorkis delivered testimony that not only emphasized the housing supply shortage but also highlighted the revenue to the state and municipalities that goes along with housing production.
The Federal Housing Finance Agency (FHFA) announced today that the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2017 will increase from $417,000 to $424,100. This increase is particularly important in high cost states such as Massachusetts where eight counties are considered by the FHFA to be “high-cost areas,” and will see additional loan limit increases as follows:
The increase in conforming loan limits is a long time coming, according to William Brown, the president of the National Association of Realtors®.
“Today’s conforming loan limit increase is a much-needed recognition of rising home prices in high-cost markets, and a help to first-time and lower-income borrowers looking to utilize an FHA mortgage,” Brown said. “Credit remains tight, but this decision will help more qualified buyers address the hurdles and high costs standing between them and the dream of homeownership.”
This heat map shows the conforming loan limit by county.
The 2015-2016 legislative session came to a frantic end just past midnight on July 31st, 2016. The end of the two year formal sessions marks the deadline for any significant legislation to pass the House and Senate and on to the governor’s desk. Due in large part to the advocacy of individual Realtor® members across the commonwealth, the Massachusetts Association of Realtors® can highlight several notable victories:
Successfully Opposed Mandatory Energy Audits and Scoring
The Senate’s Energy Diversity Legislation contained language from a stand-alone bill that would have required sellers to perform a Mass Save energy audit prior to listing their home for sale and would also require the seller disclose to any prospective buyer the information in the energy audit. Additionally, the bill called for the Department of Energy Resources to design and implement an energy scoring and labeling system. Mandatory energy audits at or prior to the transfer of property would disrupt sales and would have a negative impact on the Massachusetts housing economy. Specifically, requiring energy efficiency scoring on homes in Massachusetts would have stigmatized our older homes, causing a substantial decline in home value.
Although the Senate included these proposals in their legislation, the House did not; therefore, they were subject to the conference committee appointed to negotiate the differences between the bills. More than 2,700 Realtors® took action and contacted their legislators to voice their strong opposition to the auditing and scoring proposals. That outreach, combined with our lobbying and marketing campaigns was successful in convincing the conference committee to leave those provisions out of the final bill, which was approved just hours before session ended.
Successfully Opposed Room Occupancy Taxes
The Senate’s economic development bill included provisions from stand-alone bills that would have extended the existing tax on hotels and motels to the rental of private homes. The House did not include the new tax in their economic development bill and it was therefore subject to a conference committee. Realtors® were successful in convincing the conference committee to exclude this new tax from the final bill.
Successfully Opposed Anti-Production Zoning Legislation
In May 2016, the Senate advanced a redrafted version of S.122 An Act promoting the planning and development of sustainable communities of by a vote of 23-15. After months of meetings, the Senate Committee on Ways & Means released a bill that was considerably improved from the original version but would still have negatively impacted housing production in Massachusetts at a time when the state is dealing with a severe housing crisis due in large part to a low rate of housing production that has not kept pace with population growth and needs. MAR successfully lobbied the House to not take the bill up before session ended and thereby defeated the proposal.
Successfully Opposed Real Estate Transfer Taxes
Legislators filed three different transfer tax proposals that would have created new transfer taxes on the sale of property in Provincetown, Nantucket, and one statewide effort. MAR successfully advocated against these proposals and none of them advanced before Sunday’s deadline.
Successfully Opposed Wetland Disclosure Legislation
This legislation would have required real estate licenses to research and disclose to prospective buyers the presence of any wetlands on a property. Such a requirement is far outside the scope of a real estate agent’s licensing and training. This proposal ultimately died in the House without a vote.
Successfully Advocated for Passage of Starter Home Legislation
MAR, along with other coalition members, advocated for the passage of legislation to encourage the production of “starter homes.” Communities will be able to voluntarily encourage the production of homes smaller than 1,850 square feet on lots smaller than a quarter acre. This will complement the current success that Chapter 40R has had with mixed-use and multifamily housing with the single family houses that young families are currently seeking. Importantly, this policy targets young families and other entry level buyers who are currently priced out of the market. Single family housing production continues to be far below the level that is required to meet demand, which results in increasing housing prices. The starter home program will help communities meet the demand by encouraging the production of affordable market rate single-family homes.
REMAINING ITEMS TO ADDRESS
Mortgage Forgiveness Debt Relief
Legislation that would have exempted debt forgiven during a short sale from a homeowner’s taxable income did not make it to the Governor’s desk before time ran out this session. H. 3770 An Act relative to discharge of indebtedness of principal residence from gross income received a favorable report from the Joint Committee on Revenue but was not taken up by either chamber before the July 31st deadline.
Both the House and Senate each advanced legislation that would have regulated the sale of scrap metal. Unfortunately, the chambers were unable to reach an agreement on which proposal should pass as the final bill and the proposal died.
The H.O.M.E. Bill
S.119 An Act improving housing opportunities and the Massachusetts economy focused on specific areas of Massachusetts zoning law that our members identified as provisions that could be changed to aid the production of much needed workforce and middle class housing. The Joint Committee on Housing recognized the importance of many of the provisions contained in the bill when it included S.119 in a favorable report of H.1111, another housing production bill. This action, unfortunately marked the end of the progress of that specific bill.
Thank you to Realtors® across the Commonwealth for advocating on these issues!
(Please note: This blog post was prepared by MAR Legal Staff: Michael McDonagh, General Counsel; Ashley Stolba, Associate Counsel; and Justin Davidson, Legislative & Regulatory Counsel)
MAR and its 22,000 members applaud the decision of the Massachusetts Legislature to do no harm to homeowners by not including mandatory energy inspections and scoring provisions in the conference committee report on energy diversity. If passed, these mandates would have been detrimental to the Massachusetts real estate market, especially low- and moderate-income homeowners.
Yesterday (7/28/16), the Boston Globe published an editorial in favor of mandatory energy inspections and grades “Pass the home energy audit measure.”
While MAR supports the goals of the bill to bring more energy efficiency to the Commonwealth, the Association opposes provisions that call for mandatory energy inspections and grades prior to a home being listed for sale. Below is the letter to the editor submitted to the Boston Globe by MAR President Annie Blatz in response to the editorial. For more information on MAR’s position, go to www.NoEnergyGrade.com
If only it were that ‘simple’
Annie Blatz, 2016 President, Massachusetts Association of Realtors® and Branch Executive at Kinlin Grover Real Estate, Cape Cod.
As a Realtor® for over 31 years and the 2016 president of the Massachusetts Association of Realtors®(MAR), I vehemently disagree with the Boston Globe’s editorial “Pass the home energy audit measure.”
Realtors® support energy efficiency and actively promote the voluntary Mass Save program to clients on both sides of a transaction. Common sense tells us to allow buyers to request the information that they find important, not mandate a one-size-fits-all program.
The Globe is correct that the consumer should be protected when buying a home. In fact, they already are. A buyer is free to have a home inspection, to request utility bills and have an energy audit done. No other attribute of a home is scored by the government.
What this bill will do is add another layer of bureaucracy and delays to an already complicated real estate transaction. This isn’t good for the economy or our inventory-starved state.
Finally, despite what the Globe believes, these requirements would negatively impact low- and moderate-income homebuyers. It’s not “concern-trolling” on our part, it’s the experience of over 22,000 members dealing first-hand with the unintended consequences of past “simple” requirements.