Roccus7

Heads Up for those of you considering a vacation home in Maine

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Read this story about proposed legislation in disbelief on Sunday, figuring it would die an appropriate death.  On Sunday the Portland newspaper's Editorial Board Op-Ed was in support of this stinking pile of crap, and today it actually gets its first public hearing.  "Perfect" legislation for the state with the highest number of vacation homes per capita. For members of a party that like to say they're well-read, looks like a couple of members up in Maine didn't have Mommies that read them Aesop's Fables...

Can't believe that the Kennebunkport rep would be a sponsor. Maybe she's eying all the $$$ for the Bush Compound...
 

Bill would impose new fees on vacation homes, short-term rentals

By Randy Billings
April 12, 2021

Some Maine lawmakers want to impose new fees on wealthier property owners who own vacation homes or operate short-term rentals and use that additional revenue to increase 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 demand for housing remains high and a growing number of out-of-state buyers look to relocate here, either permanently or seasonally.

“The housing crisis has just been growing in the Portland area for many years,” Kessler said. “COVID has just exacerbated those issues particularly in Maine because we have shown ourselves to be a safe place to live and work and that has just increased the flood of people wanting to live here.”

Kessler sees the bill as a way to generate more money to develop affordable housing, provide property tax relief and encourage more units to be used as permanent housing, rather than seasonal homes or vacation getaways.

The bill, L.D. 1337, is generating opposition from real estate agents and tourism officials, who acknowledge Maine’s affordable housing crisis but say a new fee is not the answer. They say the proposed fee would infringe on private property rights and could discourage summer residents who help support the local economy.

Kessler said the bill is informed by similar laws in other places, including Washington, D.C. It would target homes that are not occupied by a permanent resident for at least 180 days year, but contains a host of exemptions for low- and moderate-income owners and those with seasonal camps.

Maine already has the highest percentage of vacation homes in the country, according to one analysis of U.S. Census data. And the bill may bring to the surface long-standing tensions between full-time Mainers and summer residents.

If only a third to a half of Maine’s estimated 140,000 vacant residences were subject to the fee, tens of millions of dollars could be raised to help build housing for thousands of families on waiting lists for affordable housing and vouchers, Kessler said.

Half of the revenue generated is intended for the state’s Housing Opportunities for Maine, or HOME, program, which funds things such as affordable housing and homeless services. And the rest would go into a state fund for the state’s homestead tax exemption program.

But Aaron Bolster, president of the Maine Association of Realtors, said there’s no guarantee the money would end up there. He said real estate transfer taxes are supposed to fund the HOME program, but have been routinely reallocated to other budget needs. “This would just be more of the same,” he said.
Then there’s the issue of private property rights, he said, as well as the administrative burden the proposal would place on government officials and property owners.

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

Property exchange firm IPX 1031 researched vacation home data from more than 29,000 different census-designated places across all 50 states and ranked the top three locations with the most vacation homes in every state. Maine ranked the highest, with 19 percent of its housing stock being designated as vacation homes. The highest concentrations were found in Cape Neddick (64 percent), Winter Harbor (54 percent) and Castine (48 percent.)

It’s unclear whether those percentages have increased during the pandemic. But Bolster said that out-of-staters, who typically account for 25 percent of all home sales, accounted for 31 percent of the sales over the last year.

Rep. Traci Gere, a Democrat who represents Kennebunkport and coastal Biddeford and Kennebunk, is one of eight co-sponsors of the bill. She said a 2018 town study determined that 47 percent of the homes in Kennebunkport were seasonal or vacant. Such a high percentage of vacation homes threatens the year-round viability of the community and its businesses – something she said draws summer residents and visitors.

“The impacts are dire,” Gere said. “Entire neighborhoods are going dark for much of the year, young families can’t afford to purchase homes, seniors must move away when they want to downsize, and local workers must commute increasingly long distances. These trends tear at the fabric of a year-round community – the relationships between people that make a town what it is.”

Tourism officials worry that the proposal could have a negative economic impact.

Alison Sucy, director of government affairs for the Maine Tourism Association, said the goals of the bill – generating revenue for affordable housing and property tax relief – are laudable, but a new tax assessment on wealthier vacationers and property owners is not the right approach. She worries that an exemption meant to exclude seasonal camps from the fee may not capture all summer camps, especially if they have been winterized.

“It’s not a good bill,” Sucy said. “People who own vacation homes – we certainly welcome those people to Maine and don’t want to do anything to discourage (that). They come here and spend money and if they’re maintaining a second property, then they’re contributing to the economy. A second assessment isn’t necessary.”

The bill would assess a fee of half a percent of the building’s tax assessed value for a vacant residence, which is defined as not having a permanent resident for at least 180 days a year. For example, the owner of a vacant building with an assessed value of $200,000 would be required to pay a $1,000 fee, unless it falls under a list of exemptions designed to exclude low- to middle-income property owners and owners of seasonal camps.

“It’s very important that we take into account the ability to pay,” Kessler said. “The vast majority of Maine people are not going to have to pay this.”

Owners earning less than 150 percent of the Area Median Income for the Portland-South Portland metro area (ranging from $105,495 for a single person to $151,350 for a family of four) would be exempt, as would owners who receive income-based federal or state assistance. Seasonal camps and other buildings that are not winterized or are uninhabitable for at least three months a year, tax-exempt properties and recently sold homes are also exempt, among others.

Every property owner would be required to file an annual declaration with the state tax assessor stating whether the residence is the permanent residence of the owner, permanent residence of someone else or not a permanent residence. Owners of multi-unit buildings would have to file this for each unit. And Kessler said owners of multi-unit apartment buildings would only have to pay a fee for each unit that’s declared vacant.

The revenue would be split between funds that subsidize affordable housing and provide property tax relief. Half of the money would to the state’s HOME program, which is used by MaineHousing to subsidize affordable housing projects, and the rest would go the Local Government Fund, which is used to fund the state’s homestead property tax program.

“It has the potential to raise tens of millions of dollars which would go towards much-needed support for building more housing that’s affordable and helping to keep people in their homes through property tax relief,” Kessler said.

The proposed use of the revenue, however, is giving city officials in Portland some pause, as they consider whether to support the bill.

The officials said 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, rather than going into a statewide fund.

City Councilor Pious Ali, who leads the council’s legislative committee, said he and his colleagues support the staff’s position and would like the city to have unrestricted use of the funding generated here. He said the committee is waiting to receive some additional information from Kessler and the co-sponsors before taking a formal position ahead of the Taxation Committee’s public hearing scheduled for Wednesday.

Sen. Ben Chipman, D-Portland, who is co-sponsoring the bill, said it is one of several housing-related initiatives being considered this session and one that could help Portland and other coastal communities with vacation homes and short-term rentals. He said he heard anecdotes of people buying condos in Portland as vacation homes, leaving less inventory for people who want to live and work in the city.
“If someone can afford to build a second or in some cases a third or fourth home to have in Maine (that) they come to in the summertime, they can afford to pay this vacancy fee and it would just generate the funding we need to accumulate in the HOME fund so we can build affordable housing for people,” Chipman said.

Kessler said he will push to get the bill passed and signed by Gov. Janet Mills. But he encouraged municipalities to consider enacting the fee on the local level, saying it’s a “progressive and fair” way to stabilize municipal budgets.

“It’s a solution that should be on the table for everybody,” he said.

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They are looking for money and getting ready for what’s coming. It will get worst all around though. I hear even the big cities that prices are on the rise again. Our Boston property lease is going to double by this summer. Yep, post pandemic economy may be a bear for all. 

 

 

 

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The most interesting thing in this article is the assessment that maine hosts more second homes then any other state.... that has to be per capita, right?  Florida, Colorado, Arizona and others all seem that they would challenge Maine. 
 

As potentially being subject to this tax, of course I dislike it, because I generally just don’t like taxes, especially with capped tax deductions. However, if we consider this as a “natural resource” they certainly aren’t the first state to tax a unique local resource. But this feels a bit like a double tax. They already have the hotel tax on short term rentals, we already pay the “waterfront” tax, so this feels like “just more” but as a new invoice line item, rather than just boosting the existing rates... which makes it a lightning rod. 
 

Now, they need to NOT shoot them selves in the foot... If they overdo this, they’ll erode demand, have over supply, and while first time buyers can afford, Maine lacks a lot of jobs and industry to support those folks, and when real estate supply outpaces demand, values drop, good homeowners lose money, and bigger fish come in and buy... where depressed prices compensate for the new tax. So, I think they are dancing on a razors edge, and I am not seeing any awareness of that in the article. 

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3 mins ago, TGIF Harpswell said:

The most interesting thing in this article is the assessment that maine hosts more second homes then any other state.... that has to be per capita, right?  Florida, Colorado, Arizona and others all seem that they would challenge Maine. 
 

As potentially being subject to this tax, of course I dislike it, because I generally just don’t like taxes, especially with capped tax deductions. However, if we consider this as a “natural resource” they certainly aren’t the first state to tax a unique local resource. But this feels a bit like a double tax. They already have the hotel tax on short term rentals, we already pay the “waterfront” tax, so this feels like “just more” but as a new invoice line item, rather than just boosting the existing rates... which makes it a lightning rod. 
 

Now, they need to NOT shoot them selves in the foot... If they overdo this, they’ll erode demand, have over supply, and while first time buyers can afford, Maine lacks a lot of jobs and industry to support those folks, and when real estate supply outpaces demand, values drop, good homeowners lose money, and bigger fish come in and buy... where depressed prices compensate for the new tax. So, I think they are dancing on a razors edge, and I am not seeing any awareness of that in the article. 

Yes it's per capita...

 

NO, it's not a tax, which would be double taxation and illegal per the state constitution; it's a "Fee".  AND it only calculates the value of the physical unoccupied residence, not the land, so they're uncharacteristically leaving money on the table for those pricey ocean/river/lake front properties...

 

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27 mins ago, Roccus7 said:

Yes it's per capita...

 

NO, it's not a tax, which would be double taxation and illegal per the state constitution; it's a "Fee".  AND it only calculates the value of the physical unoccupied residence, not the land, so they're uncharacteristically leaving money on the table for those pricey ocean/river/lake front properties...

 

Thanks for the clarification. I missed that point. Well, I guess we can add “fee’s” to an otherwise short list of things that I don’t like.

 

I foresee those who have no interest in property value, who intend or hope to hold for generations to make a rush to qualify their structures as “seasonal”, which is another uncharacteristically,  and 100% unpoliced, designation that would keep places out of the fray. 
 

that said, I was AMAZED as some prices on Airbnb for some very lack luster places in Portland for a week this summer. $750 to 2k a night in July, not near anything of note. If those rates hold, or even just go down by 50%, people won’t WANT to live in their own homes. 
 

 

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I'm in Wells, Not surprised that a rep, from Kennebunk would like to see this, Kennebunk is one of the lower percentage coastal areas with single rental homes. How about taxing  a room rented in Kennebunk by the fancy Hotels? All hell would break loose. They continually try to close there beaches. Me. has a rooming tax of 9% plus sales tax. I spent years going to town meetings to understand what they were changing. Decisions on budget, expenses are an after thought. I could go for ever .. Maine theory is spend it, we will find it, here, we as a tourist state wants to work 7 months only, close to get tax rebates and stifle others from opening up  One of the reasons kids under 25 ALL leave. one of the most purposefully dysfunction states anywhere. Amen, done, pissed off with rocks for brains

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Florida has similar tax ....Jersey has some sort of short term rental tax.....the states that are tax/retirement/pension friendly may be come less friendly.....the states are broke ,the money will be collected thru the state or the feds but the taxpayers will pay...AGAIN.....lol lol lol

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10 hours ago, TGIF Harpswell said:

 

I foresee those who have no interest in property value, who intend or hope to hold for generations to make a rush to qualify their structures as “seasonal”, which is another uncharacteristically,  and 100% unpoliced, designation that would keep places out of the fray.
 

 

Just have the central heating system removed.  That would give the needed seasonal definition, as Maine residence rules mean it could be lived in 12 months a year...

 

10 hours ago, RAW said:

I'm in Wells, Not surprised that a rep, from Kennebunk would like to see this, Kennebunk is one of the lower percentage coastal areas with single rental homes. How about taxing  a room rented in Kennebunk by the fancy Hotels? All hell would break loose. They continually try to close there beaches. Me. has a rooming tax of 9% plus sales tax. I spent years going to town meetings to understand what they were changing. Decisions on budget, expenses are an after thought. I could go for ever .. Maine theory is spend it, we will find it, here, we as a tourist state wants to work 7 months only, close to get tax rebates and stifle others from opening up  One of the reasons kids under 25 ALL leave. one of the most purposefully dysfunction states anywhere. Amen, done, pissed off with rocks for brains

This is for ANY home unoccupied for 6 months + a year, short term rental or NOT.  Therefore snow birds, who "live" in FL will get hit too.  Since that is the case, and there are many Kennebunk area snowbirds, I'm totally surprised that their rep had the stones to be a co-sponsor.  She must be looking at all the $$$$ available on Walker's Point.  No surprise that the bill's initiator is from SoPo, those folks can't figure out how to grab more $$.  

 

To me the biggest of shortcoming of this legislation, and there are hundreds, is that ALL the money goes to the State, not the municipalities.  1/2 goes to the affordable housing kitty, and the other goes to the state general funds, which does give money back to the towns, but there's no guarantee that a town will get back 1/2 of the 0.5% it gave to the state.

Edited by Roccus7

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Just look at the area around the Portland Sea Dogs and convention center. Refugees from Somalia, Nigeria and Lewiston where thay don't want to live anymore. They are waiting for new housing, needy seniors are not getting what they get. But there bleeding hearts with other people money across the country coming out as cancel culture needs to be funded. 

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9 mins ago, RAW said:

Just look at the area around the Portland Sea Dogs and convention center. Refugees from Somalia, Nigeria and Lewiston where thay don't want to live anymore. They are waiting for new housing, needy seniors are not getting what they get. But there bleeding hearts with other people money across the country coming out as cancel culture needs to be funded. 

Yeah blame refugees, oldest and dumbest trick in the book.

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53 mins ago, RAW said:

I'm in Wells, Not surprised that a rep, from Kennebunk would like to see this, Kennebunk is one of the lower percentage coastal areas with single rental homes. How about taxing  a room rented in Kennebunk by the fancy Hotels? All hell would break loose. They continually try to close there beaches. Me. has a rooming tax of 9% plus sales tax. I spent years going to town meetings to understand what they were changing. Decisions on budget, expenses are an after thought. I could go for ever .. Maine theory is spend it, we will find it, here, we as a tourist state wants to work 7 months only, close to get tax rebates and stifle others from opening up  One of the reasons kids under 25 ALL leave. one of the most purposefully dysfunction states anywhere. Amen, done, pissed off with rocks for brains

I do agree with the point of “people leaving”. Maine has been in a 40 year downward spiral where the state economy doesn’t offer enough reward for the investment of people to say. My family emigrated out in 1990, for greener career pastures for my dad. I was able to make 3 years work in the area, before I ran out of runway. When I worked there, the # 2 or 3 industry in the state was social services. 
 

 If they prioritized 75% of these funds to creating sustainable industry/jobs, relèvent you the 21st century, I would be 100% for it, and would gleefully pay, on the hope I could someday live and work there. Until then, this will become a welfare state clause, which will be highly devisive. Everyone is entitled to their opinion on that, but that makes it polarizing. 

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Living in a coastal spot about 1/3 my neighbors are seasonal. I could see where areas that are mostly seasonal/rental would create a tough community. But maybe boost our homestead credits. This won't happen because it would reduce tax revenue and that is a no no. Can't balance budgets so they need to find new taxes wherever they can. Reading the Portland school budget, holy smokes have fun. 

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9 mins ago, Sea Of Atlas said:

Yeah blame refugees, oldest and dumbest trick in the book.

No, blame the officials that had no plan for the situation,

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2 mins ago, Chiefy said:

Living in a coastal spot about 1/3 my neighbors are seasonal. I could see where areas that are mostly seasonal/rental would create a tough community. But maybe boost our homestead credits. This won't happen because it would reduce tax revenue and that is a no no. Can't balance budgets so they need to find new taxes wherever they can. Reading the Portland school budget, holy smokes have fun. 

But all these seasonal people pay taxes, they don't draw on resources, and theoretically pay into the seasonal economy and "cottage industries" such as property mgt, etc.  I don't think this is the part of the economy that is upside down, but it does present an easy target for fast cash.  

 

If the state invested in sustainability, boosting income, hence increasing tax revenue, and drawing outside investment and talent, they could find their way out of the paper bag....

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2 mins ago, TGIF Harpswell said:

But all these seasonal people pay taxes, they don't draw on resources, and theoretically pay into the seasonal economy and "cottage industries" such as property mgt, etc.  I don't think this is the part of the economy that is upside down, but it does present an easy target for fast cash.  

 

If the state invested in sustainability, boosting income, hence increasing tax revenue, and drawing outside investment and talent, they could find their way out of the paper bag....

I mean seasonal communities that have a lot of rentals can be challanging for other reasons. Who wants to have renters or bachlor parties every other week next door. Agree that people who own the homes pay tax and use probably the least amount of the services(school, trash etc) but I think they are targeting them saying that in turn if they flip and generate revenue from rentals then they want some. Probably a triple dip as the owner pays property tax, income tax on the rental and now a local use tax for renting. If the owner is out of state and paying tax on the rental income to their home tax state Maine wants their piece. Owner is probably easier to hammer than trying to do it with income tax laws. Maine is trying to get more tax and this is surprising to who? guise of creating more "affordable housing" so the hand wringers can rally.

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