AUGUSTA – A bill to extend the sales tax exemption to allow nonprofit developers to serve households with incomes up to 120 percent of the area’s median income could help ease the housing crunch, the legislation’s sponsor said.

Democrat Rep. Traci Gere (District 9) presented the bill to the Taxation Committee a week ago. It was scheduled for a work session on Thursday, Feb. 17.

A bill introduced by Rep. Traci Gere would extend the sales tax exemption allowing nonprofit developers to serve households with incomes up to 120 percent of the area’s median income. The legislation could help ease the housing crunch, Gere said. Gere (District 9) presented the bill to the Taxation Committee last week and It was scheduled for a work session on Feb. 17. Dan King photo

The median income for York County at the 2020 Census was $67,830, a figure is believed to be the most recent available.

“The affordable housing crisis affects all parts of our state,” said Gere in an email. “Across all three communities in my district, which includes Kennebunkport and coastal Biddeford and Kennebunk, seniors looking to downsize can find no affordable places to rent or buy, so they end up leaving the communities they have long called home.

“People working in public safety, education, healthcare, and other essential sectors, cannot afford to buy homes in the communities where they work, so end up living far away with long commutes. Many of these workers are people with young families, just the people we need to put roots down and contribute to our communities.”

Currently the exemption threshold, as defined by the U. S Department of Housing and Urban Development, is 80 percent of the area median.

“This is a technical bill that, for purposes of this tax exemption, clarifies that nonprofit developers may be working to create housing to serve households at or below 120 percent of area median income, ” said Erik Jorgensen of MaineHousing in testimony to the Taxation Committee on Feb. 8. “This level of income fits squarely into the domain of ‘workforce housing.’ This is a concept that has considerable currency in this moment, a time when houses that used to be considered ‘starter homes’ are increasingly difficult to purchase – and even harder to build new.”

“We think now is the time to take this action,” said Elizabeth Frazier representing the Maine Real Estate and Development Association. “To fix our low inventory, we need to build more units. To ensure enough of those units are affordable to Mainers, we must bring down the per-unit cost of production. (The association) believes this legislation will help reduce costs and lead to more affordable housing production.”

A lack of available housing that Mainers can afford is one of the most challenging issues facing Maine, Gere noted in her testimony to the committee. “This bill will help our nonprofit housing organizations build more homes that are affordable for the people we need to stay and work here to sustain and grow our economy,” she said.

“This would seem to be a common-sense measure, one that is consistent with Maine’s housing goals and fair to all of our nonprofit development organizations,” said Jorgensen. “We appreciate that Rep. Gere brought it forward.”

Frazier said the proposed 120-percent income threshold aligns with Gov. Janet Mills’ initiative to provide $10 million of funding for an Affordable Homeownership Program at MaineHousing.

“That initiative is aimed at helping resolve Maine’s housing affordable housing crisis, and the 120 percent income threshold is based on an understanding that Maine homes at that income level are being consistently priced out of our home ownership market due to high home prices,” Frazier said in her testimony. “We understand from our members that expanding the credit could help individual affordable housing projects save as much as $5,000 per unit. If the proposal in LD 1732 is enacted, the cost saving could go toward the construction of more affordable units.”

In his testimony, which was neither for or against the bill, Michael Allen, the associate commissioner for tax policy of the Maine Department of Administrative and Financial services, described the preliminary administrative cost for this bill as “negligible”

“It would be able to be absorbed within the bureau’s current budgetary restraints,” Allen told the taxation committee.

Gere pointed out that according to MaineHousing’s 2021 Homeownership Housing Facts and Affordability Index, only Aroostook County was considered affordable for homeownership. “In all other Maine counties, a household earning the median income could not cover the payment- including a 30-year mortgage, taxes, and insurance on a median-priced home using no more than 28 percent of their income,” Gere said.