Narragansett council hears proposal for municipal transfer tax to fund affordable housing and land conservation

Narragansett Town Council on Feb. 18 hosted a work session with the Affordable Housing Trust Collaborative and the Land Conservancy Trust to discuss creating a municipal real estate transfer tax or similar conveyance charge to fund affordable housing and land acquisition.

The proposal presented by Terry Fleming, chair of the Land Conservancy Trust, and Cliff Tyler, vice chair of the Affordable Housing Trust Collaborative, called for the council to request enabling legislation from the state so the town could adopt a transfer tax patterned on Little Compton and New Shoreham (Block Island). Fleming said the enabling legislation is the prerequisite: "We need to get the enabling legislation passed initially. And, if we don't, then, then we can't take that avenue." Tyler described local housing need and existing funding limits: "The need for affordable housing here in the town of Narragansett is tremendous," he said, and urged the council to pursue new, dedicated revenue streams.

Why it matters: presenters said current resources are insufficient to acquire land or develop housing at scale. They noted a voter-approved $3,000,000 bond for affordable housing (available for deployment through a triggering process), an untriggered $1,000,000 land bond, and roughly $500,000 in land-trust reserves. Fleming and Tyler told the council those amounts would not support large property acquisitions or the development costs they expect.

What was proposed: presenters outlined two primary revenue approaches discussed nationally and used by other Rhode Island towns: - A municipal real estate transfer tax (sometimes called a mansion tax) levied at the time of deed recording on buyers of properties, modeled on enabling statutes used by New Shoreham and Little Compton. Tyler and Fleming said enabling legislation allows a municipality to set a local percentage (they noted examples that permit up to 5 percent under local enabling acts) and to adopt exclusions or tiers. - Changes or reallocation of the state conveyance/recording fee that now flows in part to local general funds. Tyler described how South Kingstown has redirected a portion of its conveyance receipts into open-space and, more recently, housing programs.

Presenters discussed common policy levers: exempting deed-restricted affordable homes, exemptions for first-time buyers or an initial dollar amount (e.g., excluding the first $500,000–$1,000,000 of a sale), tiered rates, and short-term rental levies. They described Block Island's approach as an example where a local transfer rate is used for land trust funding and noted that such exemptions and recapture provisions (for example, taxing an exempted first-time-buyer sale if the owner resells within a set period) are possible.

Council questions and next steps: council members asked about how the two trusts would coordinate and whether existing conserved land could be repurposed. Fleming said most current conservancy parcels are protected by easements and that the trusts generally look at different types of parcels; some very large properties, he said, could be considered for joint development under strict conditions. The council discussed timing: presenters said a draft resolution to ask the town's state representatives to sponsor enabling legislation could be prepared for March, with a goal of legislative filing by April of the current session. The presenters also asked the council to schedule a second, longer workshop for detailed modeling and to open the discussion to more members.

No formal vote was taken: the session was informational and focused on drafting a resolution and planning a follow-up workshop. Fleming and Tyler offered to provide revenue models and more detailed ordinance language at a later meeting.

Closing: the Town Council president closed the work session by thanking the trusts and directing staff and the presenters to return with a draft resolution and additional detail at a subsequent workshop.