South Portland Mayor suggests a reverse mortgage is a solution to increasing property tax bills for the city’s elderly homeowners
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Amid discussion regarding recent property tax hikes at a South Portland City Council meeting last month, Mayor Misha Pride suggested that elderly residents living on a fixed income may want to consider reverse mortgaging their homes to manage the growing tax burden.
At the Tuesday, Aug. 13 meeting, the City Council was discussing a proposal to allocate an additional $50,000 to the city’s Senior Property Tax Relief Fund, in response to a shift of the tax burden from South Portland’s commercial properties to residential ones, caused by the city’s most recent revaluation.
The fund, launched in 2011 and designed to provide financial relief to qualifying seniors, has undergone several amendments over the years.
According to South Portland Tax Assessor Brent Martin, the age for eligibility has been lowered from 70 to 65, and the maximum relief amount per household has increased from $300 to $500.
However, actual benefits are often pro-rated based on available funds and the number of applicants, with the average benefit in 2024 being just $258, Martin wrote in a memo to the City Council.
With higher property taxes caused by the revaluation, more elderly South Portland homeowners could be applying for tax relief, meaning a lower average benefit under the fund for those seniors unless additional funds are allocated into the program.
During discussion on the proposal of allocating additional funds to the tax relief fund, South Portland Mayor Misha Pride described the “perfect storm” in the city that led to recent revaluation causing the spike in property taxes.
“This is very much a perfect storm,” Mayor Pride said. “We live in a coastal community, it’s very attractive to live here. And unfortunately, that means lots of people are buying lots of residential properties.”
“It’s not that commercial is necessarily doing poorly, it’s that there isn’t enough buying and selling of commercial properties to warrant reviewing and raising those percentages…so it’s a really difficult position to be in,” he continued.
Residential property sales outpacing commercial sales has resolution in property value growth on the residential side, meaning that under the revaluation, residential property owners are now bearing more of the property tax burden.
The mayor expressed his empathy for residents dealing with the rising costs, noting that his own property taxes had steadily increased over the past five years.
“I’m really sad, and, you know, my taxes are going up too — and have every year for the last five years, my valuation’s gone up every year for the last five years,” Pride said. “I didn’t have the jump that a lot people saw because mine has been steadily going up every year.”
Then, in addressing the financial pressures the taxes are placing on the city’s seniors, Mayor Pride made a suggestion that triggered an audible gasp and agitation among those present at the August meeting: that elderly homeowners in South Portland take out a reverse mortgage on their homes.
“I just sort of throw this out there because I’ve also been thinking a lot about how especially those with fixed incomes can deal with this, it is kind of a last resort measure, but seeing as our property values are so high, seniors may want to consider a reverse mortgage,” Pride said.
“I know it’s an ugly word,” he admitted, “but there are — I’m just saying, I know it’s horrible, but it’s sort of a last resort.”
Pride clarified that he does not recommend reverse mortgages lightly, but with the significant rise in property values, it could be a viable option for some seniors on fixed incomes. “It’s not something I’d advise someone on first blush,” he added.
“This is really difficult for everyone, we don’t take any pleasure in this, and the city doesn’t get any more money,” he said. “And that’s something I think is hard for people to hear, is that the city is not getting a penny more from taxes, it’s really truly just a shift of who’s paying them, which is, I think, the hardest thing for people to hear and understand.”
The mayor also discussed the possibility of “buying down the tax rate” from city funds, although he noted that this idea had initially faced opposition from the city manager. Pride suggested he would revisit the conversation with city staff, given the widespread financial strain residents are experiencing.
“Maybe the guidance from the city manager will have changed due to the hurt that so many people are feeling right now,” Pride said.
An order to allocate an additional $100,000 to the city’s Senior Tax Relief program was passed unanimously by the South Portland City Council at their Sept. 3 meeting.
By Edward Tomic September 23, 2024