Proposed septic tax credit would save Cape and Islands residents thousands. Here’s how.
State House News Service
March 7, 2023
BOSTON — A single sentence in Gov. Maura Healey’s tax plan that went largely under the radar during the governor’s media tour last week could mean a significant investment in clean water on Cape Cod, according to lawmakers and environmental advocates.
In her $859 million tax relief package (H 42), Healey proposed doubling the maximum credit for septic tank repair or replacement in primary residences from $6,000 to $12,000.
Failed and underperforming septic systems are a leading cause of pollution in Cape Cod’s fresh and saltwater systems. Nitrogen and phosphorus in human waste leak from septic tanks into the groundwater, which then flows into bays, estuaries, rivers and ponds.
These accumulating chemicals in natural water systems encourage the growth of toxic algae and bacteria called cyanobacteria, leading to increasingly frequent closures of lakes, ponds and beaches in the summer on the Cape. Nitrogen and phosphorus also deplete oxygen from the water, resulting in large-scale fish kills.
“Beaches get shut down every year because of water pollution, and that has impacts on our fishing industry, particularly on shellfishing, and our very vibrant tourism industry,” state Rep. Dylan Fernandes, D-Woods Hole, said. “Anything we can do to protect water quality is a really strong step to protecting our environment and economy on the Cape and Islands.”
Growing number of Cape’s embayments are quickly degrading
Environmental nonprofit the Association to Preserve Cape Cod, which monitors and collects data on cyanobacteria, found that the coastal embayments that serve as important wildlife habitats are quickly degrading.
Between 2019 and 2022 the rate of “unacceptable” water quality in these small bay ecosystems climbed from 68% up to 90%, according to APCC’s annual State of the Water report.
“It’s a very encouraging early sign that the new administration understands the challenges that we face on Cape Cod to upgrade inadequate septic systems,” Andrew Gottlieb, APCC executive director, said.
Flushing toilets on Cape Cod: Annual State of the Water report shows waters increasingly polluted
Gov. Healey’s proposal would double the tax credit for septic system upgrades, replacements
Current state law allows homeowners whose primary residence is in Massachusetts to receive a tax credit equal to 40% of the amount to design and install a septic system or to replace or repair a failed system in their yard. The credit covers 40% of the actual cost, with a maximum credit of $6,000. A homeowner who receives a full $6,000 credit under the regulation gets credit installments of $1,500 each tax year for four years.
Under Healey’s proposal, the credit would cover 40% of the actual cost up to $12,000 — doubling the amount that residents can get. It also accelerates the credit reimbursement schedule, giving homeowners up to $4,000 in septic repair credits each year for three tax years, instead of four.
An average regulation septic system costs homeowners around $15,000, Gottlieb said.
These standard systems — which are often called “Title 5 systems,” referring to the state regulation that establishes standards for sewage disposal systems — only filter about 25 to 30% of the harmful nitrogen nutrients out of wastewater before it flows into the ground, according to Brian Baumgaertel, clean water researcher at the Massachusetts Alternative Septic System Test Center. When septic systems fail, they can cause even more nutrient leaking and, therefore, pollution.
Mass. environmental officials propose updates to Title 5 septic system law
Healey’s proposal comes at a time when the Massachusetts Department of Environmental Protection is considering updating Title 5 standard requirements.
Under MassDEP’s proposed regulation change, any area designated a “nitrogen sensitive area” (which covers most of the Cape and Islands) would be “required to upgrade to the best-available, nitrogen-reducing technology within five years.” There are exceptions under this proposed change, including if a municipality can prove it is working toward installing a sewer system, which is the most effective way to reduce unwanted nutrients in water systems.
MassDEP held the last of five public hearings on the Title 5 amendment in January. If it were to be implemented, homeowners in many Cape and Islands towns would have to update their less-effective systems with a nitrogen-reducing system. These alternative systems use new technology to remove closer to 90 or 95% of the nutrients in wastewater before releasing it into the ground, Baumgaertel said.
Replacing a septic system can cost as much as $35,000
Sen. Julian Cyr, D-Truro, said he hopes Healey’s proposed Title 5 credit also incorporates these alternative systems. Baumgaertel, whose test center researches and builds these new septic systems, said installation can cost homeowners an average of $30,000 to $35,000.
“Doubling the maximum tax credit available will definitely be helpful in situations where people need to invest in nitrogen-reducing systems,” Gottlieb said.
Falmouth, Barnstable, Chatham and Provincetown are the only four towns on Cape Cod that currently have publicly owned wastewater treatment facilities, which serve only a small portion of their population, Gottlieb said. Orleans, Mashpee and Harwich are working to build sewer systems or treatment plants, but are at various stages of that expensive process.
When sewers do get up and running, Cyr said he hopes the proposed tax credit would also extend to homeowners who want to connect their houses to public sewer lines, which can also cost tens of thousands of dollars.
Barnstable County offers no-interest loans for septic system upgrades
Healey’s proposed tax credit plan, which she released last week, also aligns with a new Barnstable County loan program to address wastewater issues. The county’s Community Septic Management Loan Program revised its tiered interest rate system on March 1.
The Barnstable program previously offered 5% interest rates on loans to replace failed septic systems with either standard or nitrogen-reducing systems. As of last week, residents who fall below 120% of the area median income (about $100,000 income, Gottlieb said) are now eligible for loans at a 0% interest rate. Residents who make up to 180% area median income are eligible for 2% interest loans, and all other applicants are eligible for 4% rates.
Previous generations ignored septic system pollution problems
Previous generations have kicked the can down the road on solving Cape Cod’s wastewater and water quality problems, Cyr said, adding that a friend of his who works in Harwich local government recently found a letter from the 1970s, in which the federal government offered to pay 90% of the cost of a sewer — an offer it didn’t accept.
“We’ve got to bite the bullet on this issue,” he said. “This problem is not going away. A pristine marine environment is not only the lifeblood of what Cape Cod is, but is tied to our economy.”
Cyr and Fernandes praised Healey and Lt. Gov. Kim Driscoll on their work on this issue two months into office. Cyr, as well as Gottlieb, said Driscoll in particular had already spoken to them several times about the Cape’s wastewater pollution problems and potential solutions.
Baker recommended $200 million for Cape Cod water and sewer initiatives in a supplemental budget last summer, but the investment got scrapped when lawmakers realized they needed to return $3 billion to taxpayers under Chapter 62F.
“The Healey/Driscoll administration have already been terrific partners with us in coming up with revenue sources to solve Cape Cod’s $4 billion wastewater problem. While the prior administration took important steps to update Title 5 regulations, they never came up with an achievable revenue proposal about how to help our towns pay for this problem,” Cyr said. “Their proposal to spend $200 million rang hollow and wasn’t realistic given implementation of 62F and a regressive giveaway that drained state coffers of $3 billion.”
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