Monthly bill would impose new fees on family vacation properties, shorter-expression rentals

Condition Rep. Christopher Kessler is sponsoring a monthly bill that would include a rate to small-phrase rentals and vacation homes that are vacant more than 6 months of the yr to enable fund economical housing applications. Kessler’s district involves parts of Scarborough and South Portland, exactly where in Thornton Heights, an affordable housing enhancement observed at ideal is staying created across from motels that routinely are utilized as housing for the homeless. Gregory Rec/Staff Photographer

Some Maine lawmakers want to impose new fees on wealthier house proprietors who possess trip households or operate quick-phrase rentals and use that extra earnings to boost economical 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 cities. It heads to a community listening to this week as demand from customers for housing stays substantial and a escalating variety of out-of-state prospective buyers seem to relocate listed here, both forever or seasonally.

“The housing crisis has just been growing in the Portland place for a lot of decades,” Kessler reported. “COVID has just exacerbated these difficulties specially in Maine simply because we have revealed ourselves to be a harmless put to dwell and do the job and that has just amplified the flood of people wanting to reside listed here.”

Kessler sees the monthly bill as a way to generate a lot more cash to create cost-effective housing, supply home tax relief and encourage a lot more models to be made use of as lasting housing, relatively than seasonal households or holiday vacation getaways.

The invoice, L.D. 1337, is building opposition from real estate brokers and tourism officers, who acknowledge Maine’s cost-effective housing crisis but say a new rate is not the answer. They say the proposed charge would infringe on private residence rights and could discourage summer season inhabitants who assist guidance the local economic climate.

Kessler claimed the invoice is knowledgeable by equivalent legislation in other sites, like Washington, D.C. It would focus on households that are not occupied by a everlasting resident for at minimum 180 days calendar year, but consists of a host of exemptions for lower- and average-cash flow homeowners and people with seasonal camps.

Maine now has the maximum proportion of holiday vacation residences in the nation, in accordance to a person examination of U.S. Census details. And the bill could bring to the floor long-standing tensions in between total-time Mainers and summertime residents.

If only a third to a half of Maine’s approximated 140,000 vacant residences were being topic to the fee, tens of thousands and thousands of bucks could be lifted to enable create housing for hundreds of family members on waiting lists for very affordable housing and vouchers, Kessler said.

50 % of the revenue generated is meant for the state’s Housing Prospects for Maine, or Home, software, which resources factors such as cost-effective housing and homeless providers. And the relaxation would go into a state fund for the state’s homestead tax exemption system.

Aaron Bolster, president of Maine Association of Realtors, exterior his Norridgewock house on Saturday. Bolster is opposed to a bill that would impose a tax on vacant homes and shorter-term rentals. Ben McCanna/Staff Photographer

But Aaron Bolster, president of the Maine Association of Realtors, reported there’s no assure the money would stop up there. He reported genuine estate transfer taxes are supposed to fund the House method, but have been routinely reallocated to other budget requirements. “This would just be much more of the identical,” he stated.

Then there is the concern of personal assets rights, he mentioned, as well as the administrative load the proposal would spot on government officials and assets homeowners.

“It’s an assault on private residence rights,” Bolster reported. “It’s too slippery of a slope.”

Property exchange company IPX 1031 investigated family vacation home data from far more than 29,000 different census-specified places throughout all 50 states and ranked the top 3 areas with the most family vacation houses in just about every state. Maine ranked the highest, with 19 % of its housing stock being selected as trip households. The optimum concentrations have been located in Cape Neddick (64 percent), Winter Harbor (54 per cent) and Castine (48 percent.)

It is unclear whether or not these percentages have improved for the duration of the pandemic. But Bolster said that out-of-staters, who normally account for 25 % of all residence sales, accounted for 31 percent of the income more than the previous year.

Condition Rep. Traci Gere is co-sponsoring a bill that would add a rate to brief-phrase rentals and getaway properties that are vacant much more than six months of the yr to assistance fund reasonably priced housing systems. Portion of Gere’s district contains Kennebunkport, in which 47 per cent of the town’s residences are seasonal or vacant. Gere is pictured Thursday on the bridge primary to Kennebunkport. Gregory Rec/Personnel Photographer

Rep. Traci Gere, a Democrat who signifies Kennebunkport and coastal Biddeford and Kennebunk, is a single of eight co-sponsors of the monthly bill. She said a 2018 town research established that 47 percent of the homes in Kennebunkport have been seasonal or vacant. This kind of a significant proportion of holiday vacation houses threatens the 12 months-round viability of the group and its companies – one thing she said draws summer citizens and readers.

“The impacts are dire,” Gere stated. “Entire neighborhoods are heading dim for significantly of the calendar year, young households simply cannot find the money for to acquire residences, seniors ought to move away when they want to downsize, and community employees need to commute progressively lengthy distances. These developments tear at the material of a year-spherical group – the relationships among people today that make a town what it is.”

Tourism officers fret that the proposal could have a detrimental economic influence.

Alison Sucy, director of government affairs for the Maine Tourism Association, mentioned the targets of the bill – producing earnings for economical housing and home tax relief – are laudable, but a new tax assessment on wealthier vacationers and home house owners is not the proper strategy. She worries that an exemption intended to exclude seasonal camps from the fee may well not capture all summertime camps, primarily if they have been winterized.

“It’s not a fantastic invoice,” Sucy said. “People who personal vacation residences – we unquestionably welcome those individuals to Maine and never want to do anything at all to discourage (that). They arrive right here and shell out dollars and if they’re protecting a second home, then they are contributing to the economy. A next evaluation is not necessary.”

The bill would evaluate a charge of 50 percent a % of the building’s tax assessed price for a vacant residence, which is outlined as not owning a long term resident for at the very least 180 times a calendar year. For case in point, the owner of a vacant setting up with an assessed price of $200,000 would be necessary to shell out a $1,000 cost, until it falls beneath a checklist of exemptions developed to exclude minimal- to center-cash flow assets proprietors and entrepreneurs of seasonal camps.

“It’s extremely important that we take into account the potential to pay back,” Kessler mentioned. “The huge the greater part of Maine folks are not likely to have to pay this.”

Entrepreneurs earning significantly less than 150 p.c of the Space Median Earnings for the Portland-South Portland metro area (ranging from $105,495 for a one man or woman to $151,350 for a relatives of 4) would be exempt, as would owners who obtain earnings-centered federal or condition support. Seasonal camps and other properties that are not winterized or are uninhabitable for at least three months a yr, tax-exempt homes and a short while ago sold homes are also exempt, amid many others.

Each individual property owner would be necessary to file an yearly declaration with the condition tax assessor stating no matter whether the residence is the long term home of the owner, permanent home of a person else or not a long term residence. Entrepreneurs of multi-device buildings would have to file this for just about every device. And Kessler explained proprietors of multi-device apartment properties would only have to fork out a fee for every unit that is declared vacant.

The profits would be break up in between cash that subsidize very affordable housing and offer residence tax aid. Fifty percent of the money would to the state’s Residence method, which is employed by MaineHousing to subsidize affordable housing assignments, and the rest would go the Regional Government Fund, which is employed to fund the state’s homestead assets tax program.

“It has the prospective to increase tens of millions of bucks which would go towards a great deal-wanted assist for creating extra housing which is economical and supporting to continue to keep folks in their homes by means of home tax aid,” Kessler mentioned.

The proposed use of the revenue, however, is offering town officers in Portland some pause, as they take into consideration whether to guidance the invoice.

The officials reported in a memo to city councilors that they support vacancy fees, but they would like all of the revenue generated from vacant residences in Portland to be returned to Portland, instead than going into a statewide fund.

City Councilor Pious Ali, who leads the council’s legislative committee, claimed he and his colleagues assist the staff’s situation and would like the metropolis to have unrestricted use of the funding produced in this article. He mentioned the committee is waiting to obtain some further data from Kessler and the co-sponsors in advance of using a formal place ahead of the Taxation Committee’s general public listening to scheduled for Wednesday.

Sen. Ben Chipman, D-Portland, who is co-sponsoring the bill, stated it is one of many housing-associated initiatives getting considered this session and one particular that could help Portland and other coastal communities with family vacation residences and short-phrase rentals. He reported he read anecdotes of men and women shopping for condos in Portland as holiday houses, leaving less inventory for men and women who want to reside and work in the city.

“If another person can manage to create a second or in some instances a third or fourth dwelling to have in Maine (that) they come to in the summertime, they can manage to pay this emptiness price and it would just create the funding we will need to accumulate in the House fund so we can build affordable housing for people,” Chipman explained.

Kessler said he will drive to get the bill handed and signed by Gov. Janet Mills. But he inspired municipalities to take into consideration enacting the cost on the local degree, saying it’s a “progressive and fair” way to stabilize municipal budgets.

“It’s a remedy that ought to be on the desk for every person,” he explained. 

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