To the editor:

I appreciate the work of the Joint Housing Subcommittee and agree with the objective of this initiative: financial support for affordable and workforce housing in Great Barrington. However, I believe that adoption of the proposed Real Estate Transfer Fee is simply not a good fit for our town. The primary reason is how high our property tax rate is compared to our neighboring towns.

An important source of property tax revenue for our town is new growth, specifically newly constructed homes. Individuals considering new homes will evaluate a wide variety of factors when it comes to location, and we are fortunate that many of them consider proximity to Great Barrington an appealing feature. They will also likely review the property rates of the various adjacent towns. (See Exhibit A.) Great Barrington’s tax rate is significantly higher than all of our neighbors: For example, our tax rate is twice that of Egremont and almost three times Alford’s rate. I don’t think it will shock anyone to say that our higher tax rate is a strong motivation to shift a new home construction project to our neighboring towns; it saves those homeowners significant amounts of money.

For example, the proposed transfer fee for the sale of an existing $1 million house would generate $10,000 in proceeds to the town. However, encouraging a new $1 million home project to shift from Great Barrington to one of our neighboring towns will cost us approximately $14,000 in foregone tax revenue each year (at the current tax rate). Regardless of whatever data we look at, this new tax will only add to our reputation as a high-tax town and push new tax growth to other towns.

When evaluating this proposal, we need to consider a full range of impacts. Higher-end home building clearly does not address our affordable housing problems, but the fact is these homes represent about 15 percent of our total tax revenue. This tax revenue is critical as we consider large new critical investments in our schools and water systems at the same time our cannabis tax revenues are declining.

We can take a look at a list of other Massachusetts towns that are seeking to enact a similar real estate transfer fee from Local Option for Housing Affordability (LOHA) Coalition’s website. All but one of the 18 on the list have a tax rate significantly lower than Great Barrington. (See Exhibit B.)

Circling back to the objective of this proposal, I note that the town already has an additional tax for affordable housing: the Community Preservation Act (CPA). One possible alternative to the proposed transfer fee is to increase the portion of CPA money that goes to affordable housing. Since our inception of the CPA in 2012, a total $6.5 million has been awarded, with affordable housing receiving 35 percent of the total, or about $2.3 million. There is an ability to allocate a greater portion of CPA funds to affordable housing, subject to recommendations of the Community Preservation Committee and the approval of annual town meeting.

Lastly, as we consider this proposal, please note that all sellers of property in our town and across the state already pay a transfer stamp tax to the state of just under one half of one percent. So the new proposed tax would be in addition to the state tax.

Philip Orenstein
Great Barrington

Note: Although the author is a member of the Great Barrington Finance Committee, the opinions expressed here are solely those of the author and do not necessarily represent the views of the Finance Committee.

Exhibit A