Invoice would impose new expenses on trip residences, shorter-term rentals
Some Maine lawmakers want to impose new expenses on wealthier assets house owners who personal holiday vacation properties or operate limited-expression rentals and use that more earnings to enhance very affordable housing.
A bill that would do that is sponsored by Rep. Christopher Kessler, D-South Portland, and co-sponsored by lawmakers in Portland and other coastal towns. It heads to a public hearing this week as desire for housing remains high and a developing amount of out-of-state purchasers look to relocate below, both forever or seasonally.
“The housing disaster has just been growing in the Portland area for many several years,” Kessler said. “COVID has just exacerbated those troubles specially in Maine because we have demonstrated ourselves to be a secure spot to are living and get the job done and that has just greater the flood of individuals wanting to stay in this article.”
Kessler sees the bill as a way to crank out more dollars to acquire economical housing, supply home tax relief and inspire a lot more models to be made use of as long lasting housing, somewhat than seasonal homes or vacation getaways.
The bill, L.D. 1337, is building opposition from actual estate agents and tourism officials, who accept Maine’s reasonably priced housing crisis but say a new price is not the remedy. They say the proposed payment would infringe on personal house legal rights and could discourage summer months inhabitants who assistance support the area economic climate.
Kessler stated the invoice is knowledgeable by identical laws in other destinations, together with Washington, D.C. It would focus on houses that are not occupied by a lasting resident for at least 180 days yr, but is made up of a host of exemptions for very low- and moderate-revenue homeowners and these with seasonal camps.
Maine presently has the highest share of family vacation residences in the country, according to one particular assessment of U.S. Census information. And the monthly bill may possibly convey to the floor prolonged-standing tensions in between whole-time Mainers and summer residents.
If only a 3rd to a 50 percent of Maine’s approximated 140,000 vacant residences ended up subject matter to the charge, tens of hundreds of thousands of dollars could be elevated to assist build housing for 1000’s of households on waiting lists for cost-effective housing and vouchers, Kessler reported.
Half of the profits generated is intended for the state’s Housing Chances for Maine, or House, program, which funds points these kinds of as very affordable housing and homeless solutions. And the rest would go into a state fund for the state’s homestead tax exemption program.
But Aaron Bolster, president of the Maine Affiliation of Realtors, reported there’s no assurance the funds would conclusion up there. He said real estate transfer taxes are supposed to fund the Household software, but have been routinely reallocated to other finances requirements. “This would just be a lot more of the very same,” he reported.
Then there’s the challenge of personal home legal rights, he mentioned, as well as the administrative load the proposal would location on authorities officials and home homeowners.
“It’s an assault on personal assets legal rights,” Bolster stated. “It is far too slippery of a slope.”
Property trade organization IPX 1031 researched holiday house facts from a lot more than 29,000 distinctive census-designated sites throughout all 50 states and rated the leading three locations with the most holiday vacation residences in each individual point out. Maine rated the greatest, with 19 per cent of its housing stock getting specified as trip houses. The optimum concentrations had been found in Cape Neddick (64 per cent), Winter season Harbor (54 p.c) and Castine (48 p.c.)
It’s unclear regardless of whether individuals percentages have greater all through the pandemic. But Bolster explained that out-of-staters, who typically account for 25 per cent of all dwelling profits, accounted for 31 per cent of the product sales around the final year.
Rep. Traci Gere, a Democrat who represents Kennebunkport and coastal Biddeford and Kennebunk, is a single of eight co-sponsors of the bill. She said a 2018 city review determined that 47 p.c of the houses in Kennebunkport ended up seasonal or vacant. These kinds of a substantial proportion of trip homes threatens the year-round viability of the community and its enterprises – one thing she mentioned draws summer citizens and people.
“The impacts are dire,” Gere explained. “Entire neighborhoods are likely darkish for substantially of the year, young family members cannot pay for to buy houses, seniors have to transfer absent when they want to downsize, and local personnel ought to commute more and more very long distances. These tendencies tear at the material of a calendar year-spherical local community – the associations involving people today that make a city what it is.”
Tourism officials get worried that the proposal could have a negative financial impact.
Alison Sucy, director of government affairs for the Maine Tourism Affiliation, said the aims of the monthly bill – creating revenue for affordable housing and residence tax reduction – are laudable, but a new tax evaluation on wealthier vacationers and residence owners is not the right approach. She problems that an exemption intended to exclude seasonal camps from the cost could not capture all summer camps, in particular if they have been winterized.
“It’s not a good bill,” Sucy mentioned. “People who personal getaway houses – we unquestionably welcome individuals individuals to Maine and really don’t want to do anything to discourage (that). They appear listed here and spend dollars and if they’re sustaining a 2nd residence, then they’re contributing to the overall economy. A 2nd assessment is not necessary.”
The invoice would evaluate a payment of fifty percent a % of the building’s tax assessed value for a vacant home, which is outlined as not possessing a long lasting resident for at least 180 times a yr. For instance, the owner of a vacant developing with an assessed price of $200,000 would be needed to pay back a $1,000 price, except if it falls under a record of exemptions created to exclude very low- to center-money home proprietors and homeowners of seasonal camps.
“It’s pretty significant that we acquire into account the potential to shell out,” Kessler mentioned. “The large the greater part of Maine individuals are not heading to have to pay this.”
Owners earning considerably less than 150 p.c of the Region Median Income for the Portland-South Portland metro place (ranging from $105,495 for a solitary human being to $151,350 for a spouse and children of 4) would be exempt, as would homeowners who get income-centered federal or condition help. Seasonal camps and other properties that are not winterized or are uninhabitable for at minimum three months a year, tax-exempt attributes and recently bought households are also exempt, amongst many others.
Each and every residence owner would be required to file an annual declaration with the condition tax assessor stating whether the residence is the everlasting home of the owner, long-lasting home of anyone else or not a permanent home. Homeowners of multi-unit buildings would have to file this for every device. And Kessler stated proprietors of multi-device condominium structures would only have to fork out a price for every single unit that is declared vacant.
The revenue would be split involving money that subsidize cost-effective housing and provide house tax reduction. Fifty percent of the money would to the state’s Home software, which is used by MaineHousing to subsidize reasonably priced housing assignments, and the rest would go the Community Federal government Fund, which is utilized to fund the state’s homestead house tax system.
“It has the possible to increase tens of hundreds of thousands of dollars which would go to much-desired assist for constructing additional housing which is reasonably priced and supporting to retain people in their homes by property tax relief,” Kessler claimed.
The proposed use of the revenue, having said that, is supplying city officers in Portland some pause, as they consider no matter whether to assistance the bill.
The officials reported in a memo to metropolis councilors that they aid emptiness costs, but they would like all of the profits created from vacant residences in Portland to be returned to Portland, relatively than heading into a statewide fund.
Town Councilor Pious Ali, who potential customers the council’s legislative committee, said he and his colleagues assistance the staff’s place and would like the city to have unrestricted use of the funding produced right here. He mentioned the committee is ready to get some additional facts from Kessler and the co-sponsors right before getting a formal situation ahead of the Taxation Committee’s public hearing scheduled for Wednesday.
Sen. Ben Chipman, D-Portland, who is co-sponsoring the bill, claimed it is just one of many housing-similar initiatives being considered this session and a person that could assistance Portland and other coastal communities with family vacation residences and brief-phrase rentals. He mentioned he heard anecdotes of people today shopping for condos in Portland as family vacation properties, leaving much less inventory for folks who want to are living and work in the city.
“If an individual can manage to build a second or in some situations a third or fourth house to have in Maine (that) they come to in the summertime, they can afford to fork out this emptiness price and it would just produce the funding we want to accumulate in the Home fund so we can build affordable housing for folks,” Chipman reported.
Kessler stated he will force to get the bill passed and signed by Gov. Janet Mills. But he encouraged municipalities to take into consideration enacting the rate on the regional level, saying it is a “progressive and fair” way to stabilize municipal budgets.
“It’s a solution that need to be on the desk for everyone,” he mentioned.
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