2012-12-28 / Community

Cape, South Portland look at property tax relief

By Jack Flagler
Staff Writer

South Portland and Cape Elizabeth may provide some assistance for longtime residents and seniors to ease their property tax burden. But as South Portland City Councilor Alan Livingston sees it, “assistance” might be a misnomer.

“I’ve heard people say senior citizens are proud and they don’t want to accept assistance. I don’t want them to think of it as assistance, but as a thank you, a tribute,” Livingston said.

South Portland instituted its property tax refund program in 2011. The city decided Monday, Dec. 17 to break the application process up into two phases to allow residents 70 and older who have been in the city for 10 of the last 12 years to take advantage of the program. The recent changes will allow more time for seniors to submit applications for a refund throughout the calendar year. South Portland Finance Director Greg L’Heureux hopes it will also encourage more participation.

The purpose of the program is to supplement the state’s Circuit Breaker assistance program, which is available to seniors or to low-income residents. When that program’s maximum payout was cut from $2,000 to $1,600 two years ago, South Portland decided to offer its own refund, capped at $400, to make up the difference.

Meanwhile, in Cape Elizabeth, the town ordinance committee is planning to review a possible property tax deferral program in its meeting Friday, Jan. 4. Maine instituted a law in 2009 that gave municipalities the ability to defer property taxes for residents older than 70 years old who have lived in town for longer than 10 years. Those taxes would be paid back to the city with interest when the home changed ownership.

The property tax issue came up in Cape Elizabeth when a citizen, Marilyn Kristiansen, wrote a letter to the town council in support of a deferral program, requesting discussion at a workshop.

The front window of Kristiansen’s home on Alewife Cove looks over waves and rocky coastline. Her husband Kris Kristiansen often paints waterfront scenes, but there are challenges associated with the beautiful location.

The first worry, Marilyn Kristiansen said, is the weather. She showed pictures of a flood her family experienced

She showed pictures of a flood her family experienced after she had moved to Scotland in the 1970s that put the vehicles underwater, and overtook the first story of the home next door, where the “piano was floating.”

At that time, Cape Elizabeth was still a farming community, Marilyn Kristiansen said. But over time it has become a destination for those from away who want to enjoy Maine. As those wealthier families continue to come in, she said, property tax values rise, threatening seniors with static incomes living in homes passed down for decades, with no plans to sell.

“We happen to believe that home and heritage and a diverse community have always been, and continue to be, important to many in Cape Elizabeth, and are some of its greatest assets,” she wrote in a letter to the council.

“You can’t eat the view,” he joked.

But Cape Elizabeth Town Assessor Matthew Sturgis said there are serious challenges for towns that consider implementing a deferral, including a hefty interest that may burden the future property owner if the tax is deferred.

“The two areas that people may find the least attractive as far as the exchange to the future is the high interest rate – potentially 7.5 percent interest annually – and then secondly, it’s just placing an incumbency on your property,” Sturgis said.

That interest rate is charged every year the tax is deferred, which could steer interested parties away from enrolling in the program because it would make the sale of their home more difficult. Sturgis wrote in a memo to the town council that two towns have adopted the law, Kennebunk and Wells, but there has been no participation in the deferral program there.

L’Heureux said the city opted to go with the refund program rather than the deferral because there was less uncertainty. While the deferrals are ultimately paid back and do not reflect a cost to the town, those payments could come back at any time, and the city’s revenues could take a temporary hit if many seniors enrolled in the deferral program and paid no property taxes at all for a period of time.

“We would rather recognize some benefit (to seniors) to lessen the burden today, rather than to just defer payments entirely,” L’Heureux said.

Sturgis said a refund program could be a possible alternative to the deferral in Cape Elizabeth, but the downside is the money for that program would “come directly out of the operating budget and could potentially have more of an impact on the town’s tax rate.”

The tax rate in South Portland shouldn’t suffer too much, L’Heureux said, because the city is prepared for increased involvement. It has a surplus of money that was budgeted but never disbursed in the first year of the program. About 30 more individuals took advantage of the program in its second year than those that did so in the first. In next year’s budgeting process, the city will re-evaluate the dollar figure to allocate.

Livingston hopes with more information about participation, South Portland can consider expanding the program by either dropping the age limit, increasing the dollar value, or changing the required consecutive number of years as a resident in the city.

“I think we can do better,” Livingston said.

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