Great Barrington — As Berkshire County’s affordable-housing crisis continues on into yet another new year, members of the town’s Affordable Housing Trust Fund unanimously voted during their Thursday, December 19, meeting to pass a recommendation to the Selectboard for an affordable-housing property tax exemption program.
The tax exemption is pursuant to a State General Law approved by the legislature in October 2023 as part of the Act to Improve the Commonwealth’s Competitiveness, Affordability, and Equity. Under the general law, a municipality can establish a property tax exemption for real estate property classified as Class One Residential.
Class One Residential is defined by the state, in part, as:
… property used or held for human habitation containing one or more dwelling units including rooming houses with facilities designed and used for living, sleeping, cooking and eating on a non-transient basis, including a bed and breakfast home with no more than three rooms for rent. Such property includes accessory land, buildings or improvements incidental to such habitation and used exclusively by the residents of the property or their guests.
The state’s act allows the town to determine qualification guidelines and regulations for property owners, how much of an exemption a property owner can qualify for, and guidelines on rental units on the property.
The Affordable Housing Trust Fund’s Tax Exemption Subcommittee met on December 7 to discuss and determine guidelines for the tax exemption. During that meeting, the subcommittee voted to recommend the affordable-housing property tax exemption to members of the Affordable Housing Trust Fund with several provisions.
To qualify:
- Renters can earn no more than 100 percent of the Area Median Income limit as calculated by the United States Housing and Urban Development (see here);
- Renters cannot pay more than 30 percent of the rental occupants monthly income;
- Property tax exemptions in any one fiscal year will be limited to $100,000 and approved on a first-come basis until the town’s exemption ceiling has been met for the fiscal year;
- Property owners would not have to live in Great Barrington in order to qualify for the exemption; and
- In order to promote the availability of new affordable-housing units, rental units currently rented on an affordable basis that would currently qualify for the program would not be eligible for the tax exemption.
Affordable Housing Trust Fund board member Peter Most presented the proposal at the meeting [DISCLAIMER: Peter Most is a contributing columnist for The Berkshire Edge]. “The subcommittee believed this would be a terrific program to foster,” Most said. “I think that everybody on this committee recognizes there is an absence of affordable housing in Great Barrington. What we are trying to do is incentivize bringing new units online.”
Most said that the program would have to be approved by the Selectboard and then sent for voter approval at the annual town meeting in May. If approved, the program would last for three years. “While $100,000 is not an insignificant amount, it is when compared to the town’s [estimated] $46 million budget,” Most said. “It would be money well spent, particularly given the lack of affordable housing affecting our community.”
Most explained that, while it is possible that the property owner could stay in the program for up to three years, they would need to re-establish their application for tax exemptions with the town on an annual basis.
Board Co-Chair Fred Clark expressed his support for the proposed tax exemption. “I think as we work on affordable-housing aspects, it’s become incredibly clear that nobody’s going to be able to buy our way out of this crisis,” Clark said. “We need to look for ways to incentivize and use any tool in our toolbox to encourage affordable housing.”
However, board Co-Chair Ananda Timpane said that setting a tenant’s income limit at 100 percent AMI would be disastrous for the proposed program. “Let’s say my friend has an [accessory dwelling unit (ADU)], and the rent they are charging qualifies within 100 percent AMI,” Timpane said. “They rent it to a tenant who is income qualified, and assuming the town would have a verification process, it’s verified. But in year two, that tenant got a raise or something happened, and they’re now just a little bit over [100 percent AMI]. My concern is that the current structure we are talking about pressures landlords to have a month-to-month lease.”
“One of the requirements [of the program] is that it has to be a year lease [for renters],” Most said.
“But even with a year lease, there is pressure to push a tenant out that earns a little bit more,” Timpane said. “I have concerns about any policy we participate in that causes more housing instability.”
In response, Most said that the state permits a municipality to set the level to up to 200 percent AMI.
The Affordable Housing Trust Fund board voted that, while a renter’s AMI must be at 100 percent for a property owner to qualify for the program, the renter’s income could go up to 200 percent AMI for the duration of the subsequent years in the program.
The board also voted to increase the recommended $100,000-a-year town cap on property tax exemptions to $150,000.
As of press time, it is unknown when the Selectboard will take up the Affordable Housing Trust Fund’s recommendation because the board’s next meeting has not yet been scheduled.
Click here for documents presented at the December 19 meeting pertaining to the proposed property tax exemption.