Gov. Maura Healey signed the Affordable Homes Act into law Tuesday, paving the way for the production, preservation and rehabilitation of more than 65,000 homes across the state over the next five years.

The legislation is the largest housing bond bill ever filed in the state, more than tripling the spending authorizations of the last housing bill passed in 2018. 

Calling it the “most ambitious legislation in Massachusetts history to tackle the state’s greatest challenge – housing costs,” the legislation authorizes $5.16 billion in spending over the next five years and includes 49 policy initiatives aimed at addressing rising housing costs due to high demand and limited supply.

Housing was a key topic during Healey’s State of the Commonwealth in January.

Key spending authorizations and policy changes include permitting accessory dwelling units, modernizing the state’s public housing system, enhancing programs that assist first-time homebuyers and promote homeownership, providing incentives to build more housing for low- to moderate-income residents, supporting the conversion of vacant commercial spaces into housing and promoting sustainable and green housing initiatives.

“The Affordable Homes Act creates homes for every kind of household, at every stage of life, and unlocks the potential in our neighborhoods. Today we are taking an unprecedented step forward in building a stronger Massachusetts where everyone can afford to live,” Healey said Tuesday. 

“What the Affordable Homes Act represents is our ability to come together and address our toughest challenges. I am deeply grateful to our partners in the Legislature for their leadership and look forward to the work ahead in implementing this law and making affordable homes a reality for every resident of our state.”

Lt. Gov. Kim Driscoll said with housing playing a critical role in supporting local economies, the bill will make a meaningful difference in keeping residents here in the state. 

“We went big with the Affordable Homes Act, and it received incredible support from members of the Legislature, advocates, employers, business leaders and health care professionals,” Driscoll said. “Together we understand the importance of investing in housing in order to remain a competitive state.”

In addition to the spending authorizations, the Affordable Homes Act introduces several key policy initiatives. These include allowing accessory dwelling units (or in-law apartments) under 900 square feet by right on single-family lots. These units can be attached or detached from a single-family home, such as basement or attic conversions, backyard cottages, or bump-out additions.

While still subject to local building codes, the new policy standardizes zoning regulations statewide. It allows homeowners on single-family lots to add small units without needing a special permit or variance unless they wish to add more than one unit.

The Healey-Driscoll Administration projects the new law will lead to the construction of 8,000 to 10,000 accessory dwelling units across the state over the next five years.

Another major policy action introduced by the Affordable Homes Act is the creation of a Seasonal Communities designation – the first step in developing specialized tools for communities with significant seasonal variations in housing needs, such as those in Cape Cod, the islands and the Berkshires. The framework will be developed by a newly established Seasonal Communities Coordinating Council, also created by the Affordable Homes Act.

The Affordable Homes Act allocates a record $2 billion for the repair, rehabilitation and modernization of the state’s public housing. Massachusetts has faced decades of underfunding its public housing which is the largest in the country with more than 43,000 units.

The bill also introduces new opportunities to transform vacant or underutilized commercial spaces into housing by establishing the Commercial Property Conversion program and the Commercial Property Conversion Tax Credit.

Additionally, the Act includes the creation of the Momentum Fund with an initial investment of $50 million. This permanent revolving fund, administered by MassHousing, aims to accelerate the development of mixed-income multifamily housing.

Several other programs will see significant increases, including $800 million for the Affordable Housing Trust Fund, which doubles the previous authorization. The Housing Stabilization and Investment Fund will rise to $425 million and $275 million will be allocated for sustainable and green housing initiatives, more than quadrupling the previous amount. Additionally, the Historic Rehabilitation Tax Credit, crucial for converting historic properties into housing, is doubled to $110 million with this new law.

In May the Healey-Driscoll administration kicked off a statewide initiative to raise awareness about the pressing need to reduce housing expenses throughout Massachusetts while emphasizing the impact housing has on everyday life.

Throughout the summer events across the state showcased the different ways housing affects residents’ lives and emphasized the importance of making housing more accessible to everyone.