Panel backs ‘bridge program’ to give seniors in Portland property tax relief

The City Council’s Finance Committee voted 3-0 Thursday night to recommend approval of a “bridge program” designed to provide property tax relief to low-income seniors until the state’s new tax deferral program takes effect next year.

Nicholas Mavodones, the committee chair, April Fournier and Mark Dion voted in favor of the proposal during the virtual meeting. The bridge program now will go before the full City Council for final approval. The council needs to approve the reimbursement part of the plan because it involves a change to the city ordinance to increase the maximum payment.

Under the Portland Senior Tax Equity Program, or P-STEP, it will double the maximum tax credit reimbursement from $1,200 to $2,400 and would be applied directly to a property tax bill, the city said. Eligibility is determined by income.

A second component of the bridge program involves direct outreach to residents 62 and over by placing them on a customized payment plan that utilizes all available tax relief sources including P-STEP to help pay taxes until the state tax relief program takes effect. That part of Portland’s bridge program will be handled on an administrative level.

The consideration of a “bridge” program to help seniors on fixed incomes pay their property taxes and avoid liens comes as the city completes a revaluation that doubled or tripled the value of homes in some parts of Portland.

Portland’s first revaluation in 15 years was done as home prices soared across the city and the state in general. While many Portlanders saw their tax burden fall because of the revaluation, the fiercely competitive real estate market and spiking tax assessments in some neighborhoods are expected to make it difficult for others to stay in their homes. Homeowners on the peninsula, especially the East End, saw the largest increases.

Brendan O’Connell, the city’s finance director, said the bridge program will help qualifying seniors until a tax relief law that was signed by Gov. Janet Mills in July goes into effect in the 2023 fiscal year, which begins in July 2022. Portland lobbied at the state level in support of the law, which defers property taxes for eligible homeowners until their homes are sold at a later time. Under that program, the state will pay the municipality any property taxes due and place a lien on the property, but not foreclose on the loan so the owner can remain in their home as long as necessary.

The new law reinstates the state’s property tax deferral program, which was in place from 1989 to 1991. It allowed the state to pay the property taxes of those who qualify, then be reimbursed by the estate when the property owner or owners die or sell their home.

The state is using $3.2 million in federal American Rescue Plan funds to establish the Senior Tax Deferral Revolving Account through fiscal year 2023. After that, default funding will come from the HOME Fund through MaineHousing, the state’s housing authority.

O’Connell said the program is a win-win for everyone, but that the city can take steps until it goes into effect to help seniors who are currently struggling to pay their property tax bills.

“We want to make sure none of these seniors are getting liens because if you have a lien on your home, you don’t qualify for the state program,” he said.

The first component of the bridge program recommended by city staff is an increase to P-STEP, which was passed by the city in 2017 for residents 62 and older. Last year, 180 property owners participated in the program.

To qualify, a homeowner or renter must be at least 62 and also receive the Maine Property Tax Fairness Credit. That program is open to people with a maximum adjusted gross income of between $33,333 and $53,000, depending on the size of the household. Property taxes paid must be more than 6 percent of the household income, while rents must exceed 40 percent of household income.

Under the city’s proposal, the reimbursement amounts for the program would double from a maximum of $1,200 to $2,400 and be applied directly to property taxes due. This will cost an estimated $100,000 to the city in the 2022 fiscal year.

The second component of the plan – creating a bridge program for those who would qualify for the new state program – requires significant additional administrative effort and public outreach, but is critical for those in need, O’Connell said. To do that, property taxpayers who meet the state criteria would be put on a customized payment plan utilizing all available resources, including P-STEP, to provide a repayment bridge until the state deferral program is available in the 2022-23 fiscal year.