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

State Rep. Christopher Kessler is sponsoring a bill that would increase a price to shorter-expression rentals and getaway properties that are vacant additional than six months of the year to assistance fund affordable housing plans. Kessler’s district contains elements of Scarborough and South Portland, where by in Thornton Heights, an inexpensive housing enhancement observed at suitable is getting designed across from motels that commonly are made use of as housing for the homeless. Gregory Rec/Personnel Photographer

Some Maine lawmakers want to impose new service fees on wealthier property entrepreneurs who personal holiday houses or run shorter-expression rentals and use that further revenue to enhance 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 general public hearing this 7 days as need for housing continues to be significant and a developing quantity of out-of-state customers look to relocate here, either completely or seasonally.

“The housing disaster has just been increasing in the Portland spot for many decades,” Kessler stated. “COVID has just exacerbated all those troubles specifically in Maine for the reason that we have demonstrated ourselves to be a secure spot to dwell and perform and that has just improved the flood of people wanting to stay below.”

Kessler sees the invoice as a way to generate much more money to produce economical housing, supply home tax reduction and encourage much more units to be utilized as lasting housing, relatively than seasonal households or vacation getaways.

The monthly bill, L.D. 1337, is making opposition from serious estate brokers and tourism officials, who accept Maine’s very affordable housing crisis but say a new cost is not the solution. They say the proposed charge would infringe on non-public house legal rights and could discourage summer time residents who assistance guidance the nearby economic climate.

Kessler stated the bill is educated by comparable laws in other destinations, like Washington, D.C. It would goal properties that are not occupied by a long-lasting resident for at the very least 180 times yr, but incorporates a host of exemptions for small- and moderate-earnings house owners and these with seasonal camps.

Maine previously has the highest proportion of holiday residences in the nation, according to just one examination of U.S. Census info. And the monthly bill may possibly convey to the surface area prolonged-standing tensions involving whole-time Mainers and summer citizens.

If only a third to a 50 % of Maine’s estimated 140,000 vacant residences were topic to the price, tens of tens of millions of dollars could be lifted to assistance build housing for countless numbers of people on ready lists for very affordable housing and vouchers, Kessler stated.

Fifty percent of the earnings generated is meant for the state’s Housing Possibilities for Maine, or Residence, software, which cash issues this kind of as affordable housing and homeless services. And the relaxation would go into a state fund for the state’s homestead tax exemption method.

Aaron Bolster, president of Maine Association of Realtors, outdoors his Norridgewock residence on Saturday. Bolster is opposed to a bill that would impose a tax on vacant residences and short-term rentals. Ben McCanna/Staff members Photographer

But Aaron Bolster, president of the Maine Association of Realtors, claimed there is no promise the cash would finish up there. He stated authentic estate transfer taxes are supposed to fund the Property application, but have been routinely reallocated to other funds needs. “This would just be extra of the same,” he explained.

Then there’s the situation of personal assets rights, he mentioned, as properly as the administrative load the proposal would area on governing administration officials and property homeowners.

“It’s an assault on non-public residence legal rights,” Bolster reported. “It is also slippery of a slope.”

Residence exchange organization IPX 1031 investigated trip dwelling details from extra than 29,000 unique census-selected destinations throughout all 50 states and rated the top rated a few areas with the most holiday properties in each and every state. Maine rated the optimum, with 19 % of its housing stock becoming selected as holiday vacation properties. The optimum concentrations had been located in Cape Neddick (64 per cent), Winter season Harbor (54 p.c) and Castine (48 %.)

It is unclear regardless of whether all those percentages have enhanced throughout the pandemic. But Bolster mentioned that out-of-staters, who usually account for 25 p.c of all household gross sales, accounted for 31 percent of the revenue more than the last year.

Condition Rep. Traci Gere is co-sponsoring a invoice that would increase a payment to small-expression rentals and holiday vacation properties that are vacant extra than six months of the calendar year to support fund cost-effective housing packages. Part of Gere’s district incorporates Kennebunkport, wherever 47 percent of the town’s residences are seasonal or vacant. Gere is pictured Thursday on the bridge leading to Kennebunkport. Gregory Rec/Team Photographer

Rep. Traci Gere, a Democrat who signifies Kennebunkport and coastal Biddeford and Kennebunk, is one particular of eight co-sponsors of the bill. She explained a 2018 city examine established that 47 percent of the homes in Kennebunkport were seasonal or vacant. This kind of a large proportion of holiday vacation houses threatens the 12 months-spherical viability of the group and its firms – some thing she said draws summer time people and readers.

“The impacts are dire,” Gere claimed. “Entire neighborhoods are going dark for substantially of the 12 months, young households just cannot afford to purchase households, seniors will have to shift away when they want to downsize, and neighborhood personnel have to commute progressively very long distances. These trends tear at the fabric of a calendar year-round local community – the relationships concerning individuals that make a town what it is.”

Tourism officials fear that the proposal could have a unfavorable financial impact.

Alison Sucy, director of government affairs for the Maine Tourism Affiliation, claimed the aims of the invoice – generating revenue for inexpensive housing and residence tax relief – are laudable, but a new tax evaluation on wealthier vacationers and home owners is not the ideal method. She concerns that an exemption meant to exclude seasonal camps from the rate may possibly not capture all summer time camps, in particular if they have been winterized.

“It’s not a very good monthly bill,” Sucy said. “People who personal getaway properties – we undoubtedly welcome these folks to Maine and really do not want to do nearly anything to discourage (that). They occur in this article and shell out cash and if they are protecting a next residence, then they are contributing to the economic system. A second assessment isn’t needed.”

The monthly bill would assess a fee of 50 percent a p.c of the building’s tax assessed worth for a vacant residence, which is defined as not getting a long-lasting resident for at minimum 180 days a calendar year. For instance, the operator of a vacant setting up with an assessed value of $200,000 would be required to shell out a $1,000 rate, except if it falls under a checklist of exemptions intended to exclude minimal- to center-cash flow assets proprietors and homeowners of seasonal camps.

“It’s incredibly crucial that we choose into account the means to pay out,” Kessler said. “The vast majority of Maine people are not heading to have to pay back this.”

Owners earning a lot less than 150 p.c of the Area Median Profits for the Portland-South Portland metro place (ranging from $105,495 for a solitary human being to $151,350 for a family members of four) would be exempt, as would house owners who get money-based mostly federal or state help. Seasonal camps and other buildings that are not winterized or are uninhabitable for at minimum 3 months a 12 months, tax-exempt attributes and not long ago sold residences are also exempt, among other people.

Each and every assets proprietor would be expected to file an yearly declaration with the point out tax assessor stating irrespective of whether the home is the long term home of the proprietor, long lasting residence of anyone else or not a long term residence. Homeowners of multi-device properties would have to file this for just about every unit. And Kessler claimed entrepreneurs of multi-device condominium buildings would only have to pay a charge for each device that is declared vacant.

The earnings would be split in between resources that subsidize economical housing and give assets tax relief. 50 percent of the money would to the state’s Household program, which is made use of by MaineHousing to subsidize cost-effective housing initiatives, and the rest would go the Local Government Fund, which is made use of to fund the state’s homestead assets tax system.

“It has the probable to elevate tens of thousands and thousands of bucks which would go to much-essential help for making far more housing that is economical and aiding to maintain men and women in their properties through assets tax aid,” Kessler claimed.

The proposed use of the revenue, however, is offering town officers in Portland some pause, as they consider no matter whether to help the monthly bill.

The officials explained in a memo to metropolis councilors that they help emptiness costs, but they would like all of the revenue created from vacant residences in Portland to be returned to Portland, relatively than heading into a statewide fund.

City Councilor Pious Ali, who prospects the council’s legislative committee, claimed he and his colleagues assistance the staff’s placement and would like the metropolis to have unrestricted use of the funding generated here. He mentioned the committee is waiting around to obtain some supplemental info from Kessler and the co-sponsors just before taking a formal situation in advance of the Taxation Committee’s general public listening to scheduled for Wednesday.

Sen. Ben Chipman, D-Portland, who is co-sponsoring the bill, mentioned it is a person of quite a few housing-connected initiatives becoming thought of this session and just one that could enable Portland and other coastal communities with vacation properties and small-term rentals. He mentioned he listened to anecdotes of men and women buying condos in Portland as holiday households, leaving much less inventory for people today who want to dwell and work in the metropolis.

“If someone can pay for to make a next or in some instances a 3rd or fourth home to have in Maine (that) they occur to in the summertime, they can manage to pay out this emptiness price and it would just deliver the funding we need to accumulate in the Property fund so we can construct inexpensive housing for men and women,” Chipman claimed.

Kessler said he will drive to get the bill handed and signed by Gov. Janet Mills. But he inspired municipalities to look at enacting the rate on the nearby degree, stating it’s a “progressive and fair” way to stabilize municipal budgets.

“It’s a remedy that must be on the table for every person,” he stated. 


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