What’s Included in Massachusetts’ $5.2 Billion Housing Bond Bill?
On August 1, 2024, the Massachusetts state legislature finalized and passed a $5.2 billion housing bond bill meant to address a dire shortage of affordable homes. Governor Maura Healey has until August 11 to sign the bill into law, and she will almost certainly do so after naming housing costs “our highest priority as an administration” earlier this year.
The biggest budget item in the bond bill, a full $2 billion, will fund the upkeep, renovation, and redevelopment of locally-owned public housing. In recent years, local officials and housing advocacy groups have raised the alarm over neglected maintenance and safety hazards in these buildings, which house more than 70,000 people statewide. Most units in the state’s public housing inventory are more than 50 years old.
In the long term, public housing might be easier to maintain in Massachusetts if more of the complexes were redeveloped into mixed-income properties with more units. It’s often difficult and inefficient for a lot of small, local housing authorities to take on such redevelopment projects themselves, but the housing bond bill also includes $200 million to help finance a “demonstration program” to revitalize public housing in a way that “reduces the need for future state modernization funding.”
Other large spending items from the bill pad various housing trust and investment funds, including the Affordable Housing Trust Fund ($800 million), Housing Stabilization and Investment Trust Fund ($425 million), Housing Innovations Trust Fund ($200 million), and Middle Income Housing Fund ($100 million). These funds have slightly different focuses and are administered by different entities, but they all provide financing to either governments, nonprofits, or private builders that create or preserve affordable housing. In general, preserving existing affordable housing is more cost-effective than creating it in new buildings, but adding new units is strictly necessary to address the shortage of available homes statewide.
Some items in the bill also allocate money for a specific purpose that may be dispersed through various means. For example, it allocates $275 million to environmentally-conscious housing projects and $100 million to finance the construction of for-sale housing for first-time buyers.
Relatively small outlays under the bill support various grant and technical assistance programs that don’t create housing directly. For example, there is a $175 million earmark for subsidizing public infrastructure improvements, which could help support housing development in some cases.
The bond bill also makes some policy reforms that don’t require spending. Notable among them is the statewide legalization of accessory dwelling units, which are small rental units on the same lot as single-family homes, often in basements, above garages, or in detached cottages. In a particularly wonkish reform, the bill makes it so that sizable adjacent lots owned by the same person or entity are considered separate parcels, meaning that theoretically the property owner could build a home on each of them. Currently, local ordinances often prohibit the construction of multiple homes on parcels that are owned by the same entity in single-family neighborhoods. The bill also makes it easier for tenants to have their prior eviction records sealed in a number of instances, essentially withholding this information from landlords and lenders.
There were also a couple of notable ideas that emerged from the legislative process but didn’t make the final bond bill. One was to give $1 billion to the Massachusetts Water Resources Authority to facilitate the expansion of their service area, which would eventually open up suburban areas for denser development. Another would earmark $150 million for subsidizing the conversion of commercial properties into housing. Both of these items were included in the House version of the bond bill, but not the Senate version (see Table 1).
Perhaps the most high-profile item in Governor Healey’s original proposal was not included by either legislative branch: permitting localities to enact transfer taxes of up to 2% on real estate transactions above $1 million. The proposed tax was widely panned by the commercial real estate industry, which has already suffered declining sale prices in many cases due to the ongoing effects of the COVID-19 pandemic on office vacancies. Studies have shown that real estate transfer taxes are almost entirely borne by the seller, even when they are levied on buyers.
In summary, some of the bond bill money is strictly necessary to ensure a decent quality of life for those already living in affordable housing. And the grant money and other subsidies it makes available will certainly increase the stock of affordable housing to some extent. But overall, $5.2 billion in state spending is not nearly enough to address the housing crisis at scale. Proponents of the bill have projected it would create as many as 40,000 units of new housing, compared to an estimated 200,000 units needed in Massachusetts by 2030 to keep up with demand.
Further, given that the state is only authorized to spend $2 billion on housing in its 5-year capital plan, the bond bill money will not be spent in full. In general, bond bills merely authorize the state to borrow money for a list of particular purposes, but to spend the money within the constraints of the capital plan, the Governor can only act on some of the bond bill items.
In the meantime, state officials have other policy options for addressing the yawning housing shortage in Massachusetts, including the ongoing implementation of the MBTA Communities Act.
Table 1: 2024 Housing Bond Bill Spending Items in the House Version (HB), Senate Version (SB), and Final Version Sent to the Governor
| Description | HB | SB | Final |
| Renovate, upgrade, and/or redevelop local housing authority projects | $2B | $2B | $2B |
| Finance/preserve affordable housing via Affordable Housing Trust Fund | $800M | $800M | $800M |
| Earmark funds for particular local housing initiatives | – | – | $426M |
| Finance/preserve housing via Housing Stabilization/Investment Trust Fund | $425M | $425M | $425M |
| Subsidize environmentally conscious housing projects | $275M | $275M | $275M |
| Create a “demonstration program” to make public housing self-funded | $200M | $200M | $200M |
| Subsidize alternative forms of housing via Housing Innovations Trust Fund | $200M | $200M | $200M |
| Subsidize public infrastructure via the HousingWorks infrastructure program | $175M | $375M | $175M |
| Finance affordable for-sale housing for first-time/disadvantaged buyers | $200M | $100M | $100M |
| Create workforce housing via the Middle Income Housing Fund | $100M | $100M | $100M |
| Subsidize new housing for intellectually disabled and mentally ill people | $70M | $70M | $70M |
| Subsidize home retrofits that improve access/mobility for disabled people | $60M | $60M | $60M |
| Subsidize housing for disabled people at risk of institutionalization | $55M | $55M | $55M |
| Create a fund to finance mixed-income and multi-family workforce housing | $250M | $50M | $50M |
| Implement housing choice designation and facilitate MBTACA compliance | $50M | $60M | $50M |
| Support development of early education and out of school time programs | $50M | $50M | $50M |
| Assist in revitalizing neighborhoods with blighted properties | $50M | $50M | $50M |
| Fund EOAF planning, studies, site preparation, and pre-development work | $30M | $30M | $30M |
| Support local community development and planning initiatives | $25M | $25M | $25M |
| Incentivize 40R zoning adoption via the Smart Growth Housing Trust Fund | $20M | $20M | $20M |
| Extend the MWRA service area to spur housing development in suburbs | $1B | – | – |
| Subsidize the conversion of commercial buildings into housing | $150M | – | – |
| Subsidize the (re)development of housing in rural areas and small towns | – | $50M | – |
| Subsidize housing innovations in seasonal communities | – | $50M | – |
| Subsidize the (re)development of housing in mid-sized/suburban towns | – | $50M | – |
| Support hazardous materials remediation and build housing on state land | $50M | – | – |
| Subsidize home rehabs via the Massachusetts Healthy Homes Program | $50M | – | – |
| Finance supported housing for veterans | $20M | – | – |
| Support local housing initiatives administered by the EOAF | – | $1M | – |
| Total | $6.2B | $5.2B | $5.2B |
Andrew Mikula is Pioneer Institute’s Senior Housing Fellow. Beyond housing, Andrew’s research areas of interest include urban planning, economic development, and regulatory reform. He holds a Master’s Degree in Urban Planning from the Harvard Graduate School of Design and a Bachelor’s Degree in Economics from Bates College.
