(The opinions and views expressed in the commentaries and letters to the Editor of The Somerville Times belong solely to the authors and do not reflect the views or opinions of The Somerville Times, its staff or publishers)

Dear Board of Aldermen,

We are concerned about the proposed transfer tax and the debate taking place around it. Much of the discussion taking place among elected officials seems to start from the conclusion that the tax is a good idea, focusing on the political considerations around how to pass it. There are many good-sounding ideas for what could be done with new tax revenue, but proponents are painting an overly optimistic picture of a future with this tax while dismissing real and substantial concerns about it. Some have even implied that anyone who questions the tax is against supporting those in need, and that maximizing revenue for affordable housing is more important than minimizing hardship on residents.

This is wrong and is a flawed way to approach policy. We urge you to move past the rhetoric and objectively evaluate the full range of considerations surrounding the tax, including the following:

• This tax will cause real hardships. For the average Somerville household, the tax would be between $5,000 – $20,000. This could equal at least one month’s earnings, and in many cases it would be much more than that. The tax will come out of their life savings that may otherwise be used to support family members or pay for healthcare, education, retirement, or their new home. Those who think this tax is not a big deal because it is “only” 1-2% of a properties sale price are out of touch with the financial reality for most Somerville households.
• This tax is a barrier to homeownership and would discourage families from settling here. Overwhelmingly, the trend has been that young people move to Somerville and then leave when they have kids and want to purchase a home. A transfer tax has the potential to make this dynamic even worse by making it more costly to become a homeowner. It will encourage some to choose to settle in neighboring towns and cities which have similar housing costs but would not have a transfer tax, undermining the goal of attracting and retaining long term residents and families, which is one of the goals being used to justify the tax.

With the recent rapid appreciation in property values, some say the tax could be easily absorbed by homeowners. But with the cost of property already high, anyone choosing to purchase a home today faces a future with limited potential for appreciation. For an investor or wealthy individual a 1-2% tax may not be significant, but it will be a real consideration for middle class families making the biggest financial decision of their lives. While they may hope to spend the rest of their lives here, they could also be forced to move to take care of a family member or to change jobs; the prospect of being on the hook for tens of thousands of dollars if this were to happen would give anyone real pause. A transfer tax could also inflate property prices by reducing supply of homes on the market. If imposed on sellers, it will create an incentive to rent a property instead of selling in order to avoid paying the tax.

• A transfer tax by itself will help no one. A tax can generate revenue but will not help a single person on its own. Its ability to help Somerville residents depends on how the revenue would be spent. Any new tax, but especially one of this magnitude, should be justified by a detailed plan for how the revenue it generates is going to be used.
• There is no real plan for what to do with the tax revenue. There has been a lot of broad speculation about new housing programs that could be created with revenue from the tax but no firm plans. It is not right to ask Somerville residents to accept this tax without first evaluating the complete range of long term needs in our City and putting in place a plan to accomplish the goals being used to justify it. Proposing a broad new tax should be a last resort, not a first step.

When Somerville voters approved a property tax override to fund the new high school, it was based on a specific proposal and detailed financing plan that allowed people to evaluate whether the additional tax had merit. A prerequisite of any new tax should be an implementation plan, otherwise there is no way to evaluate whether a new tax is justified.

Advocates have said that this tax would be targeted towards helping Somerville residents including preventing displacement, but without a plan and new programs revenue would likely go to fund affordable housing programs which are also open to non-residents. Revenue generated from Somerville residents should go towards helping other Somerville residents in need, not subsidizing the housing of those from other cities and towns.

• Housing is a regional issue that needs regional solutions – Somerville cannot bear the burden for regional housing affordability issues on its own. Instead of imposing a new tax unilaterally on those who live within Somerville’s 4 square miles, Mayor Curtatone should work with the Metro Mayors Coalition to make sure any new transfer tax is shared by all within Greater Boston’s 1,422 square miles.
• We need a broader public debate about spending on affordable housing. Funding dedicated to the Somerville Affordable Housing Trust Fund has already dramatically increased in recent years.

The fund distributed $2.7 million in its first 20 years, but over the next few years is set to receive more than $20 million from linkage payments and from the deal between the City, SCC and FRIT to reduce on-site affordable housing in Assembly Row. The Community Preservation Act is also delivering more than $1 million annually to the fund.

There has been little public debate about how this money is being spent, and we are now told that a transfer tax is the only way to provide targeted assistance to city workers and teachers, create homeownership opportunities, mitigate displacement, and accomplish a host of other goals. The public first deserves a chance for more input on how existing funding is being spent and deserves to know why these goals are not being accomplished with current funding.

During campaign season, many candidates promoted the idea of a transfer tax targeted at “speculators and house flippers”. But the transfer tax as currently proposed is clearly going far beyond this. A more limited transfer tax could target “speculators and house flippers” by applying only to properties sold within a five-year period that have not received a residential exemption, which would likely have enjoyed broad public support. This would take regular homeowners out of its crosshairs, whose only fault is having decided to invest in their community by owning their home.

Regardless of how much this is debated, a transfer tax requires approval of a home rule petition by the state legislature to be implemented. The ongoing debate over the tax has the potential to waste an enormous amount of time and create real divisiveness in our community with little prospect of ever actually being implemented. We urge you to let the current transfer tax proposal die and focus on the hard work of addressing the many pressing issues facing Somerville, including actual housing programs and policies that would help Somerville residents.

Thank you for your consideration,

Tim and Shu Talun
Somerville