The mayor of South Portland, Maine, recently acknowledged that property taxes in the region are particularly challenging for people living on fixed incomes. In advising on managing these costs, the mayor raised the possibility of a reverse mortgage.
This is evident from local reporting The Maine Wire from a recent city council meeting. Property taxes in the city – as is the case with many places across the country – are higher and the tax burden is increasingly shifting from commercial to residential properties. This led to discussion about a proposal to “allocate an additional $50,000 to the city’s Senior Property Tax Relief Fund,” according to the newspaper.
Such programs exist in other cities and states and allow older residents to defer tax payments to a later date, but they do not opt out. The age of eligibility for South Portland’s program has been lowered from 70 to 65 to allow more people to qualify. But in turn this reduces the potential benefit to individual households.
“This really is a perfect storm,” Mayor Misha Pride said, according to reports. “We live in a coastal community, it is very attractive to live here. And unfortunately that means that many people buy a lot of homes.”
As commercial real estate buying and selling activity has slowed, Pride argued that revising the percentages and potential new allocations to the program may not be worth it. This led to the mayor’s recommendation, which, according to reports, “caused an audible gasp and unrest among those present at the August meeting.”
“I’m just throwing this out there because I’ve also been thinking a lot about how people on fixed incomes in particular can deal with this,” Pride said. “It’s kind of a last resort, but since our property values are so high, seniors may want to consider a reverse mortgage.”
Pride then read the room’s response.
“I know it’s a bad word, but I’ll say it,” he said. “I know it’s horrible, but it’s kind of a last resort.”
The mayor clarified that he is not making the recommendation lightly, repeating the phrase “last resort” and saying the idea is solely related to addressing the challenging financial conditions for the city’s seniors.
“This is really difficult for everyone, we are not enjoying it and the city is not getting any more money,” the report said. “And that’s something that I think is hard for people to hear: that the city isn’t getting a cent more in taxes, it’s really just a shift in who pays them, which is, I think, the hardest thing for people to hear . and understand.”
At a subsequent meeting on September 3, an additional $100,000 was unanimously approved for the tax credit program. HousingWire‘s Reverse Mortgage Daily (RMD) reached out to Pride’s office, but he could not immediately be reached.
Pride’s statements are eerily similar to those made by another mayor – in another country – earlier this year. Tim Cadogan, the mayor of the Central Otago district in south-central New Zealand, recently answered a voter’s question about rising rates similar to U.S. property taxes.
After suggesting that qualified borrowers could use reverse mortgages to help pay for the rate hikes, local media reported he received a slew of responses accusing him and other elected leaders of being “out of touch.” Another called the suggestion “disturbing.”
However, Cadogan pushed back on these claims with reasoning similar to Pride’s.
“I was accused […] because he is out of touch with reality,” he says in a weekly column published in June. “But here’s the reality of what I faced more than once during the drop-in sessions; an older person telling me that the proposed rate increases, on top of all the other bills that have skyrocketed recently, would mean they cannot afford food or heating.”
Cadogan, like Pride, also labeled the underlying problem a “perfect storm” that led to the proposed solution of a reverse mortgage.
