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Wednesday, April 16, 2003

Coastal residents appeal for tax relief

Copyright 2003 Blethen Maine Newspapers Inc.

 

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AUGUSTA Residents from Harpswell, Chebeague Island and other coastal communities urged lawmakers on Tuesday to provide tax relief to waterfront landowners in the same way that the state's tree growth program provides relief to inland landowners.

But critics say the proposal would provide the greatest benefit to wealthy out-of-staters who own vacation homes, and could shift the tax burden to year-round residents who don't live on the water.

The Chebeague proposal dominated much of the discussion during Tuesday's marathon of public hearings on tax reform. The Legislature's Taxation Committee heard testimony on 10 bills, including three comprehensive proposals that would broaden the sales tax and provide targeted relief to people who are struggling to pay their property taxes.

About 120 people attended the hearings, including 25 people from Chebeague Island and 15 from Harpswell. Residents also came from St. George, Kennebunkport, Yarmouth, Freeport, Brunswick, Westport, Tenants Harbor and Ogunquit.

Two of the bills, taken together, comprise what has been called "the Chebeague plan." The proposal would cap annual land assessment increases at 2 percent for those who voluntarily join a new land bank program. To take advantage of the program, people would have to agree not to sell their land to anyone outside their family. If they did sell, they would be hit with a huge penalty paid to their city or town.

Supporters believe the penalty would generate enough revenue over time to compensate communities for the immediate drop in tax revenue. They say that it would work much like the state's tree growth program, which allows wood lots to be taxed at a lower rate but penalizes landowners when they sell to developers.

At Tuesday's hearing, many coastal residents testified that skyrocketing land assessments are threatening to tax them out of homes they have owned for decades, and in some cases their entire lives. They also said the tax system is forcing people to break up large tracts of undeveloped coastal land and sell off lots, leading to gentrification and sprawl.

"We have reached the critical point, and something has to be done" said Malcolm "Laddie" Whidden, a lobster wholesaler from Harpswell. "If not, we are going to displace whole segments of the communities. The working and residential waterfront, as well as many other places in the state, will be beyond the means of the current population."

Donna Damon, a Chebeague Island resident and Cumberland town councilor, said that rising real estate assessments are creating havoc on the island, and that people's only option now is to pressure their neighbors to not sell their homes. Every time a house is sold for an enormous profit, she said, assessments on neighboring land soar. Some said their taxes have doubled and tripled in just one year.

"We are being taxed out of our homes by a process that pits neighbor against neighbor," Damon said.

But Nathan Michaud, a community planning officer for the Rockland-based Island Institute, said in an interview outside the hearing room that he worries about the unintended consequences of the Chebeague plan.

He noted that owners of vacation homes would be able to take advantage of the program because wealthy people can afford to buy expensive coastal property and hang onto it forever as a family legacy. Working families on islands, he said, would find it hard to keep their properties because they need the equity if they decide to make a move. Consequently, very few would participate in the program, he said, and they would have to absorb the tax savings enjoyed by wealthy out-of-staters.

"It's really important you take these things into account," Michaud said.

Whidden said that owners of vacation homes contribute a lot to the community, so it would be unfair to exclude them. David Hill, a Yarmouth resident who owns a vacation home on Chebeague Island, said the proposal could survive if vacation homes are excluded.

"If you include just the year-rounders," he said, "that's fine. But it's not right to exclude a large portion of the community that contributes so much."

On Chebeague Island, he said, many of the owners of second homes are moderate-income people whose families have owned their properties for decades and hope to pass them to children. If rising taxes force them to sell, he said, they will be replaced by the "super rich" who have no long-term ties to the island.

The Taxation Committee will hold a work session on the proposal Thursday and may vote on it.

Staff Writer Tom Bell can be contacted at 623-1031 or at:

tbell@pressherald.com


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