You know, that actually sounds like a great idea - making it compulsory to get a "residential kennel license" to own more than 3 cats. It would make it really clear how important it is to take care of them properly: neutering, worming etc., and in NZ to ensure they're fed and satisfied and not all going out and killing our native bird life. I love cats, but pet owners have to be responsible. Currently there's no licensing at all related to cats in NZ, and I think legislation similar to this could improve the situation without penalising those cat owners who (sensibly!) take care of only a few pets very well.
It is rather eccentric for someone to have that many cats. Usually when someone has that many cats, health issues arise, for the animals and the owner. I can understand why a town would make it illegal. We had a case here in Edmonton Alberta in Canada where a total of twenty cats were taken in by the humane society from one household. The lady had about fifty dead one in her freezer. She was taken in for psychiatric evaluation;my guess is that she had OCD or something. People can do strange things sometimes. But, it sounds like the lady is Massachusetts is just eccentric. No one should have that many cats.