Bill would impose new expenses on getaway homes, limited-expression rentals

Condition Rep. Christopher Kessler is sponsoring a monthly bill that would insert a cost to…

Condition Rep. Christopher Kessler is sponsoring a monthly bill that would insert a cost to quick-phrase rentals and family vacation houses that are vacant much more than 6 months of the year to support fund economical housing courses. Kessler’s district contains elements of Scarborough and South Portland, in which in Thornton Heights, an cost-effective housing growth seen at ideal is being built throughout from motels that frequently are utilized as housing for the homeless. Gregory Rec/Workers Photographer

Some Maine lawmakers want to impose new costs on wealthier residence entrepreneurs who possess trip houses or function quick-phrase rentals and use that extra earnings to raise economical housing.

A invoice 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 7 days as need for housing remains substantial and a expanding amount of out-of-condition customers glimpse to relocate below, both permanently or seasonally.

“The housing disaster has just been growing in the Portland region for several yrs,” Kessler stated. “COVID has just exacerbated people issues notably in Maine due to the fact we have demonstrated ourselves to be a safe and sound area to live and work and that has just amplified the flood of folks wanting to live in this article.”

Kessler sees the invoice as a way to make more revenue to create inexpensive housing, supply residence tax reduction and encourage much more models to be utilized as lasting housing, somewhat than seasonal properties or holiday getaways.

The invoice, L.D. 1337, is making opposition from real estate brokers and tourism officials, who accept Maine’s reasonably priced housing disaster but say a new price is not the answer. They say the proposed charge would infringe on non-public assets rights and could discourage summertime citizens who assist support the local economy.

Kessler stated the invoice is knowledgeable by very similar regulations in other areas, such as Washington, D.C. It would goal properties that are not occupied by a long term resident for at the very least 180 times year, but incorporates a host of exemptions for minimal- and reasonable-revenue proprietors and individuals with seasonal camps.

Maine presently has the best percentage of getaway houses in the place, in accordance to a person examination of U.S. Census facts. And the invoice may perhaps bring to the surface area very long-standing tensions between complete-time Mainers and summer season citizens.

If only a third to a 50 {6557c92bab376e861f4db2362dd750ed9808ade9f2baf81ac39a444313a64dce} of Maine’s believed 140,000 vacant residences were issue to the cost, tens of hundreds of thousands of pounds could be lifted to enable establish housing for hundreds of families on waiting lists for economical housing and vouchers, Kessler claimed.

Fifty percent of the earnings generated is meant for the state’s Housing Opportunities for Maine, or Property, program, which cash matters these types of as cost-effective housing and homeless products and services. And the rest would go into a point out fund for the state’s homestead tax exemption method.

Aaron Bolster, president of Maine Association of Realtors, outdoors his Norridgewock home on Saturday. Bolster is opposed to a invoice that would impose a tax on vacant properties and small-term rentals. Ben McCanna/Staff Photographer

But Aaron Bolster, president of the Maine Affiliation of Realtors, stated there is no guarantee the dollars would conclude up there. He mentioned authentic estate transfer taxes are meant to fund the Household system, but have been routinely reallocated to other spending budget needs. “This would just be additional of the very same,” he said.

Then there is the concern of personal house rights, he explained, as nicely as the administrative load the proposal would position on government officials and assets homeowners.

“It’s an assault on private assets legal rights,” Bolster claimed. “It is too slippery of a slope.”

Assets exchange business IPX 1031 investigated trip dwelling details from extra than 29,000 distinctive census-specified destinations throughout all 50 states and rated the best 3 spots with the most holiday vacation homes in just about every point out. Maine ranked the optimum, with 19 per cent of its housing stock staying specified as family vacation houses. The optimum concentrations have been located in Cape Neddick (64 per cent), Wintertime Harbor (54 {6557c92bab376e861f4db2362dd750ed9808ade9f2baf81ac39a444313a64dce}) and Castine (48 {6557c92bab376e861f4db2362dd750ed9808ade9f2baf81ac39a444313a64dce}.)

It is unclear regardless of whether all those percentages have elevated in the course of the pandemic. But Bolster explained that out-of-staters, who typically account for 25 per cent of all household sales, accounted for 31 {6557c92bab376e861f4db2362dd750ed9808ade9f2baf81ac39a444313a64dce} of the revenue more than the past 12 months.

Condition Rep. Traci Gere is co-sponsoring a bill that would include a price to brief-term rentals and family vacation households that are vacant extra than 6 months of the yr to assistance fund economical housing applications. Element of Gere’s district incorporates Kennebunkport, the place 47 percent of the town’s residences are seasonal or vacant. Gere is pictured Thursday on the bridge primary to Kennebunkport. Gregory Rec/Workers Photographer

Rep. Traci Gere, a Democrat who represents Kennebunkport and coastal Biddeford and Kennebunk, is a single of eight co-sponsors of the bill. She explained a 2018 town examine established that 47 per cent of the households in Kennebunkport were being seasonal or vacant. This kind of a substantial share of family vacation homes threatens the 12 months-spherical viability of the group and its companies – something she mentioned attracts summer season people and people.

“The impacts are dire,” Gere mentioned. “Entire neighborhoods are heading darkish for a lot of the 12 months, young people cannot afford to buy households, seniors must transfer absent when they want to downsize, and neighborhood personnel should commute more and more long distances. These developments tear at the material of a calendar year-round neighborhood – the interactions concerning people today that make a city what it is.”

Tourism officers fear that the proposal could have a unfavorable financial effects.

Alison Sucy, director of governing administration affairs for the Maine Tourism Association, reported the plans of the bill – creating revenue for cost-effective housing and home tax aid – are laudable, but a new tax assessment on wealthier vacationers and house homeowners is not the proper technique. She problems that an exemption meant to exclude seasonal camps from the price may not capture all summertime camps, especially if they have been winterized.

“It’s not a good monthly bill,” Sucy reported. “People who personal trip properties – we definitely welcome all those people to Maine and never want to do just about anything to discourage (that). They arrive listed here and invest revenue and if they’re protecting a next home, then they are contributing to the economy. A next assessment is not essential.”

The invoice would assess a rate of fifty percent a {6557c92bab376e861f4db2362dd750ed9808ade9f2baf81ac39a444313a64dce} of the building’s tax assessed benefit for a vacant home, which is defined as not obtaining a long term resident for at minimum 180 days a year. For instance, the owner of a vacant making with an assessed price of $200,000 would be essential to pay a $1,000 payment, except if it falls under a list of exemptions designed to exclude reduced- to middle-cash flow assets proprietors and homeowners of seasonal camps.

“It’s really critical that we take into account the means to pay out,” Kessler explained. “The broad the vast majority of Maine people today are not heading to have to fork out this.”

Owners earning significantly less than 150 per cent of the Location Median Revenue for the Portland-South Portland metro area (ranging from $105,495 for a one particular person to $151,350 for a family members of four) would be exempt, as would owners who get profits-primarily based federal or condition assistance. Seasonal camps and other buildings that are not winterized or are uninhabitable for at the very least 3 months a 12 months, tax-exempt homes and a short while ago marketed homes are also exempt, among the other people.

Every house owner would be necessary to file an once-a-year declaration with the state tax assessor stating whether or not the home is the lasting residence of the owner, long term home of an individual else or not a everlasting residence. Homeowners of multi-device structures would have to file this for each device. And Kessler said proprietors of multi-device apartment properties would only have to pay a price for just about every device that’s declared vacant.

The income would be break up amongst money that subsidize very affordable housing and offer assets tax aid. 50 {6557c92bab376e861f4db2362dd750ed9808ade9f2baf81ac39a444313a64dce} of the money would to the state’s House method, which is employed by MaineHousing to subsidize economical housing projects, and the relaxation would go the Local Governing administration Fund, which is applied to fund the state’s homestead residence tax application.

“It has the probable to raise tens of thousands and thousands of pounds which would go in direction of significantly-necessary assist for making more housing that is economical and assisting to keep people in their households as a result of property tax reduction,” Kessler claimed.

The proposed use of the revenue, nonetheless, is providing town officials in Portland some pause, as they think about no matter whether to help the monthly bill.

The officials stated in a memo to metropolis councilors that they support emptiness fees, but they would like all of the profits generated from vacant residences in Portland to be returned to Portland, alternatively than likely into a statewide fund.

Metropolis Councilor Pious Ali, who potential customers the council’s legislative committee, explained he and his colleagues guidance the staff’s placement and would like the metropolis to have unrestricted use of the funding produced in this article. He reported the committee is waiting to receive some additional details from Kessler and the co-sponsors in advance of getting a official position ahead of the Taxation Committee’s public hearing scheduled for Wednesday.

Sen. Ben Chipman, D-Portland, who is co-sponsoring the invoice, stated it is one particular of several housing-related initiatives becoming considered this session and one particular that could aid Portland and other coastal communities with getaway homes and quick-expression rentals. He reported he listened to anecdotes of persons shopping for condos in Portland as holiday vacation households, leaving a lot less inventory for individuals who want to live and do the job in the metropolis.

“If anyone can pay for to make a 2nd or in some conditions a 3rd or fourth home to have in Maine (that) they come to in the summertime, they can find the money for to shell out this emptiness cost and it would just deliver the funding we need to accumulate in the Residence fund so we can develop affordable housing for folks,” Chipman claimed.

Kessler claimed he will drive to get the invoice passed and signed by Gov. Janet Mills. But he encouraged municipalities to consider enacting the cost on the nearby degree, indicating it’s a “progressive and fair” way to stabilize municipal budgets.

“It’s a option that must be on the table for all people,” he reported. 

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