An Act To Support Affordable Housing
Maine Legislature, Session 122, LD 1301
Committee: Taxation
Sponsors: KOFFMAN, CANAVAN, PELLETIER-SIMPSON, PERCY, PINGREE, PIOTTI, SAMPSON, WATSON, DAMON

Legislative Document 
No. 1301 
H.P.898 
House of Representatives, March 15,2005 
An Act To Support Affordable Housing 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative KOFFMAN of Bar Harbor. 
17/~ 
frl.7i/ac~ 
MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representatives: CANAVAN of Waterville, PELLETIER-SIMPSON of 
Auburn, PERCY of Phippsburg, PINGREE of North Haven, PIOTTI of Unity, SAMPSON of 
Auburn, WATSON of Bath, Senator: DAMON of Hancock. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA c. 216 is enacted to read: 
CHAPTER 216 
LOCAL OPTIOB REAL ESTATE SALES TAX 
Slag1. 
Definitions 
As 
used 
in this 
chapter, 
unless 
the 
context otherwise 
indicates, the following terms have the following meanings. 
1. 
Eligible individual or family. 
"Eligible individual or 
family" means an individual or family whose total adjusted gross 
income is less than 120"1> of the median income for the United 
States 
Department 
of 
Labor 
district 
in 
which 
the 
eligible 
property was sold. 
2. 
Eligible 
property. 
"Eligible 
property" 
means 
sin9le-family 
residential 
real 
property 
sold 
for 
more 
than 
$1, 000, 000. 
3. 
Parti~.YAg 
... ~icipalit,y. 
"Participating 
municipality" means a municipali ty that elects to impose a local 
option real estate sales tax pursuant to section 1892. 
4. 
Local o:et..-ion real est~sales tax. 
"Local option real 
estate sales tax" means the real estate sales tax imposed by a 
participating municipality 
on 
eligible 
property 
pursuant 
to 
section 1892. 
Slag2. 
Imposition and collection of local option real estate 
sales tax 
A participating municipality may impose a local option real 
estate sales tax of 
l'l-o on the sale of eligible property. 
The 
local option real estate sales tax must be collected in the same 
manner and at the same time as the tax collected pursuant to 
section 4641-5, subsection 1. 
The tax imposed pursuant to this 
section is in addition to the real estate transfer tax imposed 
pursuant to section 4641-A. 
Slag3. 
Determi~iQ~~ayment of municipal share: 
adminiijtrative costs 
On the last day of each month, the register of deeds shall 
identify the amount of revenue under this chapter attributable to 
each participating municipality, based on the location of the 
properties being transferred and the amount of tax collected 
under 
section 1892 
for 
those properties minus 
the costs of 
administering this chapter, and certify the net amount due the 
municipality to the county treasurer. 
Each 
county treasurer 
shall, on or before the 10th day of each month, pay over to each 
municipality that municipality's 
share 
of 
the 
tax 
collected 
pursuant to this chapter for the previous month. 
If the tax 
collected is not paid over by the 10th day of the month, the 
municipality may impose interest pursuant to section 186. 
The 
amount subtracted for the administration of this section may not 
exceed 2~ of the total taxes collected. 
§1894. 
Use of revenue for affordable housing 
Funds received pursuant to section 1893 by a participating 
municipality must be managed as prescribed in this section. 
1. 
Use 
for 
development 
of 
affordable 
housing. 
Each 
participating municipality shall deposit the 
revenue 
received 
pursuant to section 1893 in a segregated account. 
Funds within 
the segregated account must be disbursed to; 
A. 
A housing authority within the municipality; 
B. 
A 
nonprofit 
housing 
trust 
or 
nonprofit 
housing 
corporation located in the municipality that is organized in 
this State under Title 13 B and that aualifies for the tax 
exemption under 26 United States Code, Section SOl(c); or 
C. 
A nonprofit organization established for the purpose of 
building, 
buying 
or 
developing 
affordable 
rental 
and 
owner occupied 
housing 
in the municipality for 
eligible 
individuals or families. 
If the municipality does not have any of the organizations listed 
in paragraphs A, Band C, then the municipality shall transfer 
all funds received pursuant to section 1893 to the Maine State 
Housing Authority. 
JB 
2. 
Requirements of housing organization. 
The organization 
receiving funds pursuant to subsection L 
paragraph A, 
B or C 
shall develop affordable housing in the municipality from which 
the funds were received. 
At least 
30~ of the housing developed 
pursuant 
to 
this 
subsection 
must 
be 
considered 
affordable 
housing, as determined by the Maine State Housing Authority. 
The 
organization shall maintain eguity in the affordable housing at a 
rate set by the organization and shall include in the deed to the 
affordable housing the right of first refusal. 
3. 
Prohibited use. 
A municipality shall 
determine its 
annual budget and assessment without consideration of the amount 
received pursuant to section 1893. 
Revenue generated pursuant to 
this section may not be used to supplant local funds. 
4. 
Effec~~_n~:v:e~lJ~e_~b,~:r;i.~g:_j~pd _o~~%~ate-aid prograQI_S"-
Revenue received pursuant to section 1893 may not be considere..Q 
to be receipts from the taxes imposed under this Part for the 
purpose of transfers to the Local Government Fund under Title 
30-.\, section 5681. 
Revenue received pursuant to section 1893 
may not be used to reduce or eliminate any funding otherwise due 
the municipality under any provision of law providing aid to the 
participating municipality, including, but not limited to, aid 
for schools, roads, public assistance or jails. 
S189S. 
Referendum 
The guestion Of whether to impose a local option real estate 
sales tax must be submitted to the legal voters of a municipality 
that seeks to impose the local option real estate sales tax. 
The petition process and the voting at elections held in 
cities, 
towns 
and plantations must be held and conducted in 
accordance with Title 30-.\, sections 2528, 2529 and 2532 even if 
the municipality has not accepted the provisions of section 
2528. 
The voting at elections held in municipalities must be 
held and conducted in accordance wi~h Title 21-,\. 
The municipal 
clerk shall make a return of the results, certify the results and 
send them to the Secretary of State. The Secretary of State shall 
forward 
the 
results 
to 
the 
register 
of 
deeds 
for 
that 
municipali ty. 
The local option real estate sales tax may be discontinued 
by referendum conducted in the same manner as the referendum 
adopting the tax under this section. 
§1896. 
Effective date of tax 
The local option real estat_e __ ~aJ.J;t~ authorized by tttLli 
chapter takes effect 120 days after the municipal referendum vote 
under section 189S if it is accepted by a majority of the local 
voters voting at the election and the total number of votes cast 
egua1s or exceeds 20% of the total number of votes cast in that 
municipality in the most recent gubernatorial election. 
SUMMARY 
This bill allows a municipality to impose a local option 
real estate sales tax of 1% on the sale of property for more than 
$1,000,000. 
Revenue 
from the tax must be distributed by the 
municipality 
levying 
the 
tax 
to 
local 
nonprofit 
housing 
organizations for the purpose of building, buying or developing 
affordable rental and owner-occupied housing in the municipality 
for eligible individuals or families. 
An "eligible individual or 
family" 
is 
defined 
as 
an 
individual 
or 
family 
whose 
total 
adjusted gross income is less than 120% of the median income for 
the United States Department of Labor district in which the 
eligible property was sold. 
If the municipality does not have a 
local nonprofit housing organization, the municipality must send 
the revenue to the Maine State Housing Authority.