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, LD 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%), Winter Harbor (54%) and Castine (48%).

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