Well over a dozen South Portland residents told city councilors Tuesday that an expected sharp increase in property tax bills following a citywide revaluation could make it difficult for retirees, middle-class homeowners and residents living on fixed incomes to remain in their homes.
Tuesday night’s hearing followed City Manager Scott Morelli’s letter to homeowners two weeks ago warning them to brace for sticker shock following the revaluation.
Many blamed the increase in house prices on out-of-state buyers, and some urged the council to put the revaluation-based tax increases on hold.
“If property taxes go up, it will make South Portland less appealing to buyers,” Thomas Difilipo said. “The pandemic is not going to last, the property tax rate will.”
Morelli said in his letter dated March 22 that homeowners could see tax hikes of 30 percent or more, even if school and municipal budgets remain flat. The virtual council meeting also included presentations of the fiscal year 2021-22 operating budgets for the school department and city government.
Those who spoke Tuesday said out-of-state home buyers looking to flee states that have been ravaged by the pandemic have been scooping up South Portland homes at prices that significantly exceed their market values.
“This (increase in home sales prices) is being caused by out-of-staters fleeing COVID hot spots and coming to Maine,” resident Diane Romano told the council. “This is unsustainable. If this continues, South Portland will become nothing more than a place for the wealthy.”
In his letter, Morelli told city taxpayers that Redfin – a Seattle real estate brokerage firm – named South Portland one of the nation’s 10 most competitive cities for buying a home, and said that 55.6 percent of homes sold in South Portland have gone for more than the listed price. He said the trend of sharply rising home prices began well before the pandemic.
As a result, South Portland’s sales ratio fell below state standards of 70 percent, Morelli said. Morelli warned taxpayers the sales trend will likely lead to a shift in the tax burden from commercial properties to residential.
“Because of this, when the revaluation occurs, there will be a property tax shift that takes place. In other words, property value growth on the residential side will outpace growth on the commercial side and as a result, residential property owners will bear more of the property tax burden,” Morelli wrote in his letter. “Once this revaluation is finalized later this spring, it will not be uncommon for residential property owners to see tax bill increases of 10, 20, 30 percent or more if the city budget were to remain flat.”
Those tax increases will drive some of the city’s long-term residents out of their homes, councilors were told. Some said it would be prudent to wait until the pandemic ends before implementing revaluation-based tax increases.
“I’m calling on you to take bold steps to mitigate this unreasonable tax increase,” Eve Raimon said. “People won’t be able to stay in their homes. Such drastic increases are ethically reprehensible.”
City Councilor Sue Henderson said the council should do something to protect homeowners from being forced to leave their properties by high tax bills.
“Where are people going to go?” Henderson asked. “We should not take this lying down. It’s not OK.”
David Cekutis said the timing of the revaluation, which started in 2019 but was postponed because of the economic impacts of the pandemic, could not have been worse.
“It just seems like the wrong time to be going through a reassessment,” Cekutis said. “The tax shift will put homeowners into financial trouble. We are re-assessing values at the worst possible time for homeowner because of this once-in-a-lifetime pandemic.”
Susan McCray, a teacher in the Portland school system, bought a home at Willard Beach 18 years ago. She is grateful for having the resources to live where she does, but worries that the city is headed in the wrong direction if property taxes are permitted to escalate.
“We feel very scared because we live paycheck to paycheck,” McCray said. “I don’t know if I can afford the tax hike you are talking about.”
Mayor Misha Pride urged residents to tell lawmakers to support L.D. 1247, a bill that would require a municipality or state department or agency to temporarily halt a property revaluation required by state law during a state of emergency and to resume the revaluation when the emergency ends. The Taxation Committee will hold a public hearing on the bill on April 14 at 9 a.m.
New property values will be posted on the city assessor’s page in May or June and the first tax bill reflecting these new values will be sent in July, Morelli said.
Morelli and School Superintendent Ken Kunin presented their spending plans for fiscal 2021-22 Tuesday evening, the first step in a weeks-long process that will lead to three budget workshops in April and May. Morelli also presented his Capital Improvement Program or CIP plan for the next six years. The final City Council vote on the budgets will occur in June. The school budget referendum is scheduled for June 8.
A council review of individual city department budgets will be held Saturday. The final budget workshop will be held May 4.
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