House Speaker Ryan Fecteau (D-Biddeford) has slipped a tax change into the spending bill Democrats will pass before adjourning the legislature this summer that is intended to increase the amount of real estate taxes flowing into subsidized housing funds.
“With Maine’s housing vacancy rate at just 2%, both current residents and those looking to relocate struggle to find affordable housing. Without bold action, our workforce, older adults, and families will continue to bear the burden of this crisis. LD 1082 is a smart, sustainable approach to expanding Maine’s affordable housing supply and supporting economic growth. Avesta Housing strongly urges the committee to support this bill,” said Avesta Housing Director of Real Estate Development Patrick Hess in written testimony to the Taxation Committee.
Avesta Housing is a private non-profit organization that is one of the largest affordable housing providers in Northern New England. Avesta Housing is also Speaker Fecteau’s employer and stands to be one of the biggest beneficiaries of the proposed changes. Changes that include a new “tax on the rich” provision that will increase real estate transfer tax rates on property sale values over $1 million.
Gregg Payne, Senior Advisor on Housing in the Governor’s Office of Policy, Innovation and the Future (GOPIF) and a former Avesta Housing development officer for 14 years, also endorsed the proposal in testimony. “We see real merit in such reforms, and support the principles underlying Speaker Fecteau’s proposal,” Payne said.
“It is important that we get this reform right, and that we be forward-looking in an environment of rapidly escalating home prices. Thank you to Speaker Fecteau for his ongoing partnership with the Administration in addressing Maine’s housing affordability challenges,” the executive branch advisor added.
Payne is not the only person in recent memory to have worked at both Avesta and GOPIF. Speaker Fecteau also previously worked as a Senior Advisor in the Governor’s Office of Policy, Innovation and the Future. Shortly thereafter, he was hired by Avesta Housing in 2023 as part of their real estate development team.
In testimony before the Tax Committee ,the Maine Association of Realtors strongly opposed LD 1082, arguing it would raise housing costs and reduce availability.
“LD 1082 would establish a graduated and increased real estate transfer tax (RETT) based on the portion of sales prices over $1 million, ‘a millionaire tax’ if you will,” said J. Andrew Cashman on behalf of the organization. “Increasing taxes related to the transfer of real property based on higher property values will do more harm than good to Maine’s housing needs.”
“Sellers would likely raise their listing prices to offset the increased real estate transfer tax rate/obligation, further accelerating the cost of housing. For residential transactions, longtime homeowners looking to downsize may hesitate to sell or move due to the high cost associated with selling, taking away from their earned equity they have accrued over the lifetime of ownership. This impact also extends to retirees who are dependent on selling property to fund their retirement,” Cashman added.
The Tax Committee voted out three reports. The majority report is a bipartisan “Ought to Pass” with Representative Tom Lavigne (R-Berwick) joining Democrats. An additional “Ought to Pass” and an “Ought not to Pass” reports are also attached to the bill. LD 1082 hit the House Floor on Monday and is currently tabled. It sits on the legislative calendar as Unfinished Business #17.
According to the fiscal note for the bill, it would increase the real estate transfer tax and increase the flow of taxpayer dollars into the Housing First Fund and the Housing Opportunities for Maine (HOME) Fund. Avesta Housing leverages the Maine HOME Fund to acquire, renovate, and sell affordable homes to moderate-income families through its “A Path Forward” program, working in partnership with Maine State Housing Authority.
While Fecteau is LD 1082’s primary sponsor, the bill also has Senate President Mathea Daughtry (D-Cumberland) as a cosponsor. This makes it a high profile, high priority policy goal for Democrat leaders. Taking no chances on a floor debate, the bill was quietly inserted into the second biennial budget. The budget, with LD 1082 as part of it, is expected to be passed on a party line vote as early as this evening.
Even though the bill is projected to become law as part of the budget, opponents warn that the tax increase could deter sales, particularly among retirees reliant on property equity. The budget bill’s passage could reshape Maine’s housing policy going forward as the legislature nears its summer adjournment
