The Airbnb Industrial Revolution Benefits in Maine through an Emergency Housing Act.
Did The Legislature forget to regulate a sector- besides Airbnb?
Laws are written by the people in political power, who are changing all the time and so the moving and transforming systemic whole is treated like disassociated bits and pieces. Politicians hire consultants to do reports and then ignore those reports because the politicians already knew what they wanted to do. Often the reports are just visual effects or an appeal to authority to hold up whenever the results match the foregone conclusions and so the trail of history embedded into the system lies hidden behind the curtain of perceptions. If there is a problem to solve, the new politicians, different from the old politicians, are not familiarized with the system of laws to assess or consider if the current problem might be caused by previous enactments, with the exception of those enactments that have engendered large public attention, or the individual who brings specialized skills to the job.
In the many years that I have been reading the Maine economic development policies enacted since 1976, I never considered, until now, that the term “average income” is used in Maine economic development policy, rather than “median income” which is the term used in affordable and low-income housing, defined by the IRS as in:
”the IRS defines the term low-income housing as (a) any project in which 20 percent or more of the units are both rent restricted and occupied by persons whose income is 50 percent or less of the area median gross income or (b) one in which 40 percent or more of the units are both rent restricted and occupied by persons whose income is 60 percent or less of the area median gross income.” source (emphais by author)
Mathematically, the terms “median” and “average” are calculated differently. Median divides a population into two equal groups, half having an income above and half having an income below the median. Average income is the total income of the area divided by the total population.
If I search the Boothbay or the Maine average income on Google, the results automatically change my search term to the median income. In the past when I read that the State was bartering with subsidies and tax exemptions for X number of jobs at higher than average income, for the area, I unconsciously did the same as the google search does, I switched the meaning of “average” with the meaning of “median”. Now, as I think about it, the authors of the legislation ought to have been aware of the difference and if so intentionally chose the qualifier “average” over “median” perhaps anticipating that the public would interpret it in the same way that I did. This matters because the average can be higher than the median, and in the opposite case, one can argue the average is interpreted as median, as happens all the time. In reporting statistics, it is often the case that the median income and the percentage of people living in poverty are reported, but not the average income.
Gini Rating
Based on the Gini coefficient, a measure of income inequality based on the distribution of income across a population, income inequality varies considerably across the United States. The Gini coefficient is a scale from 0 to 1 -- 0 representing perfect equality and 1 representing the highest possible level of inequality. Nationwide, the Gini coefficient stands at 0.481 source
The Gini coefficient in Maine is 0.449 -- lower than the national average and 13th lowest among all 50 states.
A 2014 article published on CentralMaine, by Don Roberts, a representative to the Legislative Policy Committee of Maine Municipal Association, declares ”Our state is lowest (Gini rating), last in the nation, in income inequality. Source: the Gini coefficient” - there is no verifying link to the source.
Observing that Texas has the highest Gini rating in the country, Don Roberts goes on to say “Should it not occur to us that Texas may be a perfect example of why so-called income inequality may be a natural part of success? ”, which sums up the philosophy of public policy since the seventies when central management of the economy was instituted across the nation, and thereafter the wealth divide started expanding and kept on expanding- just a natural part of success, in the world view of central management leaders.
If true that in 2014, Maine had the lowest Gini rating, then we have advanced from the lowest to the 13th lowest Gini rating in eight years. We are moving right along!
In 2021, the per capita personal income in Maine was 57,159 U.S. dollars. source
The same source Statista Research Department, reports that
In 2020, the median household income in Maine amounted to 63,440 U.S. dollars. This is a slight decrease from the previous year when the median household income in the state was 66,546 U.S. dollars.
If the median income is higher than the per capita income, it implies a large wealth gap between the median of the top and the median of the bottom half of the economy. Rather than the top of the economy skewing the average up, the bottom half of the economy is skewing the average down.
City data puts the estimated median household income in Boothbay in 2019 at $62,851 (it was $41,406 in 2000). According to that data, the median income in Boothbay has increased by a little better than 50% in nineteen years. What part of that is due to Airbnb? Property owners’ income increases with Airbnb as affordable housing vanishes. Can that explain why the Statista data reports the median income higher than the average income?
Maine Biz reports Maine's Airbnb hosts earned $100 million from more than 534,000 guests in 2019. That's up from a reported 430,000 bookings in 2018 that generated $67 million. Maine Biz January 2020.
The Airbnb website states :
Guests who book Airbnb listings that are located in the State of Maine will pay the following taxes as part of their reservation:
Maine State Sales Tax: 9% of the listing price including any cleaning fees and guest fees for all reservations. For detailed information, visit the Maine Revenue Services’ website
The state collected at least 9 million on 100 million dollars in bookings, depending on whether fees are included or are additional.
In 2021, Maine Airbnb hosts earned over $180 million through the platform, the company says. Since 2010, they've earned approximately $485 million. The number of Airbnb listings in Maine reached 20,000 in October, up from 12,500 in 2019. (source)
Even Maine Biz is acknowledging the connection to the housing shortage- but not so the Maine Legislature.
The latest workforce shortage affecting the Boothbay Peninsula is a lifeguard shortage. The explanation in The Boothbay Register is that there is a national lifeguard shortage.
Affordable housing is determined as a percentage of median income, so the cost of affordable housing goes up with the median income. If there is a big gap between the median income of the two medium halves (otherwise known as the missing middle) the bottom half of the economy will not be able to afford affordable housing with rents based on 80% of the overall median.
1. Definition. For the purposes of this section, "affordable housing development" means:
14 A. For rental housing, a development in which a household with an income at 80% of the local area median income can afford a majority of the units without spending more than 30% of the household's monthly income on housing costs; and….
Using the $62,851 figure for the median income times 80% = $50,280.8 divided by 12 is 4,190. X 30% = $ 1,257.02 housing cost per month for affordable housing in Boothbay.
In Maine, the lifeguard's average base salary is $15.83 (source) which is $2,532.8 per month, times 30% is $759.84, which the lifeguard can afford to pay for housing.
The average lifeguard’s annual income is $32,926.4 based on a forty-hour work week, 52 weeks per year. That puts the lifeguard into the low-income category, qualified for low-income housing, not qualified for affordable housing. The lifeguard does not make close to 80% of the median income in Boothbay. For a lifeguard to afford affordable housing in Boothbay the hourly pay would have to be $26.18 calculated on a forty-hour week. The same of course is true for any job in the area. The custodian, job at the high school has been difficult to fill. The job starts at $16.25 an hour or better depending on experience, not enough to afford affordable housing in Boothbay. The custodian is also categorized as low-income and qualifies for low-income housing.
How about a teacher? Watson and Yale of the newly created Boothbay Region Housing Trust said “the Boothbay Region, like Martha’s Vineyard, can find a way for workers, teachers, and other professionals to live here:” Teachers are always mentioned when the leaders are talking about targeted workforces,
As of Jun 18, 2022, the average annual pay for a public school teacher in Maine is $37,566 a year. source, just coming in under 60% of the median at $37,710. This is the equivalent of $722/week or $3,131/month. Not close to 80% of the median income in Boothbay. Sorry, teach, you don’t qualify for affordable housing in Boothbay.
What about healthcare workers, another often mentioned targeted workforce?
As of Jun 11, 2022, the average annual pay for a Healthcare Worker in Maine is $30,438 a year, approximately $14.63 an hour. This is the equivalent of $585/week or $2,537/month. source
Healthcare workers are also low-income in Boothbay. They do not qualify for affordable housing.
Watson and Yale said they plan to work with Boothbay and Boothbay Harbor to find some traction in securing projects leading to significant development in affordable workforce housing (source), but none of the targeted workforces they mentioned, excluding the vaguely defined “professionals” can afford affordable housing, they are all low-income workers pursuant to statutory definitions.
The featuring of teachers, healthcare workers, and other essential workers as the “targeted desirable workforce”, is just a marketing storyboard, as was the narrative about a four-way stop, off to the side of the main throughway being incredibly dangerous, so said our community leaders, and the solution was to rearrange the roads in the area so traffic would concentrate in every direction in a lawless yielding circle placed right in the middle of the heaviest traffic flow on the Peninsula.
The Historical New England Town
Lewis Mumford noted the exception to limitless population growth in the seventeenth-century New England town with its community design organized around a commons where the town hall and other meeting houses were situated, surrounded by residential buildings that included back yards large enough to grow gardens and apple orchards, while in the front, Main Street was lined with trees. As the cities grew more and more crowded, The New England Town was prescient about limiting population growth:
..the New England town during this period ceased to grow beyond the possibility of socializing and assimilating its members : when near crowding, a new congregation would move off under a special pastor, erect a new meeting house, form a new village, lay out fresh fields. Hiving off to new centers discouraged congestion in the old ones ; and the further act of dividing the land among the members of the community in terms of family need, as well as wealth and rank, gave a rough equality to the members, or at least guaranteed them a basic minimum of existence….A democratic polity-and the most healthy and comely of urban environments : a typical contrast to the despotic order of the dominant baroque city. To describe it is almost to define everything that the absolute order was not.
The section above is quoted from the author’s article What Do Lessons from the Industrial Revolution Have to Tell Us Today?
Today’s leaders follow Mr.Roberts’s definition of success “business development, growth and population increase” The workforce that can potentially afford affordable housing in communities where the Airbnb industry is expanding is that favored industry- big tech, but time is short on that one with the Airbnb industry expanding so aggressively and driving up the median income. Towns will need their low-income workers to lower the median so that affordable housing is affordable to the professional classes.
The part of the picture that leadership is missing is that the big tech workforce is moving toward remote working. My view is that our leaders believe that the Industrial Park will be filled with large tech corporate headquarters, or at least large corporations of any sort and envision the fifty million dollar school, set up to serve as tax-payer subsidized industrial training under the Industrial Partnerships Act of 2013. The school will be the key to attracting large corporations to the peninsula. No one is saying how the fifty million dollar school will be financed, The architectural plan is already being financed by dark money, we know not the source of the funding nor the agency that processed that two and a half million dollars to pay for the architects to design the school in advance of the public referendum to vote on whether we want to go down that road.
Since the workforces that Watson and Yale keep talking about cannot actually afford affordable housing in Boothbay, I believe their real target is a brand new population of tech workers. In order to attract the corporation to employ the tech workers, affordable housing to house them has to exist.
The state collects taxes on all those Airbnb rentals. From the corporate view, transforming the single-family homes into Airbnb’s and then building dense blocks of closely packed workforce housing works! Maine is excelling in the Airbnb Industrial Revolution!
But Maine’s leaders are not listening to the workers calling for a better work-life balance. For some reason, Maine leaders think they need some more highly paid workforces on the peninsula, rather than doing the natural thing, just letting the Airbnb industry gobble all other industries up.
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Let us assess the cultural meaning of the recently enacted An Act To Implement the Recommendations of the Commission To Increase Housing Opportunities in Maine by Studying Zoning and Land Use Restrictions
Here’s what affordable housing looks like under the new law:
Forget about the private lawns and gardens. With even parking spaces reduced to less than one per unit, the idea is to locate affordable workforce housing in as small a space as possible- and this is for every municipality in Maine. The grounds on which developments for workforces are located, if there are any, will be managed by central management.
Enactment: 2. Density requirements. A municipality shall allow an affordable housing development to have a dwelling unit density of at least 2 1/2 times the density that is otherwise allowed in the zone where the affordable housing development is located and may not require more than 2 off-street parking spaces for every 3 units.
Imagine the traditional New England village with row houses packed tightly in suburban city blocks right in the middle of town to accommodate proximity to conveniences requirements of the new law.
But there is an odd catch. The language of the law uses the term “affordable housing” and even specifies the 80% ratio to the median income. Does this mean low-income housing is excluded from high-density allowances? It looks that way but it seems too bizarre to be true. Now imagine that you can drive a little further out and find a low-income development with residential buildings that included back yards large enough to grow gardens and apple orchards, while in the front, Main Street was lined with trees, because the law, to my layman observation, doesn’t stop this from happening for low-income housing- the housing that is affordable to the “essential workers workforce”.
The density allowances of 2.5 times the density of the surrounding area apply only to affordable housing, as stated herein:
Sec. 9. 30-A MRSA §4364-B is enacted to read:
§4364-B. Affordable housing density
For an affordable housing development approved on or after April 20, 2022, a municipality shall apply density requirements in accordance with this section.
1. Definition. For the purposes of this section, "affordable housing development" means:
A. For rental housing, a development in which a household with an income at 80% of the local area median income can afford a majority of the units without spending more than 30% of the household's monthly income on housing costs; and
B. For owned housing, a development in which a household with an income at 120% of the local area median income can afford a majority of the units without spending more than 30% of the household's monthly income on housing costs.
Note the language is at 80% and not 80% or less, or more. It’s oddly specific.
The low to middle-income populous is accounted for in the act under:
Sec. 6. 30-A MRSA §4360, sub-§4 is enacted to read: Growth caps prohibited. A municipality may not adopt an ordinance that caps the number of building or development permits each year for any kind of residential dwellings, including but not limited to building or development permits for affordable housing.
3. Ordinance requirements. A municipality may adopt a rate of growth ordinance only if:
12 A. The ordinance is consistent with section 4314, subsection 3; and(striking out many paragraphs) D. The number of building or development permits for any kind of residential dwellings, including but not limited to building or development permits for affordable housing, allowed under the ordinance is not restricted
In actuality the 2.5 density for the workforce housing over the surrounding Airbnb regions of the community is not a requirement, it’s an allowance but local developers and real estate agents, and affordable housing trusts have been pushing for increased density in affordable housing, using the housing crisis as a reason, but its also more money in their pockets. The essential workers class, who can’t even afford affordable housing are the poster children for the marketing of affordable housing. I know it doesn’t optimize the profit bottom line of the developers and realtors- but creating a humanistic New England Village throwback community for the low-income essential workers would make Boothbay very competitive with communities like Martha’s Vineyard for the essential workers whom all the Airbnb communities need. Martha’s Vinyard essential workers solution is a boarding house, managed by the worker’s employer, with 12 people to a kitchen and this during covid. That’s a lesser quality lifestyle than Maine affordable housing and the wisdom of communal living with one’s co-workers isn’t. Many businesses frown upon close relationships between their workers, especially members of the opposite sex.
And- let’s not forget, Boothbay needs the low-income workers to keep the median income down so that the affordable housing will still be affordable to the big tech workers, or any workers.
So do we have an Essential Workers Housing Trust that sees the wisdom and the irony? If so here is another thought: Back to the definition of low-income housing:
”the IRS defines the term low-income housing as (a) any project in which 20 percent or more of the units are both rent restricted and occupied by persons whose income is 50 percent or less of the area median gross income or (b) one in which 40 percent or more of the units are both rent restricted and occupied by persons whose income is 60 percent or less of the area median gross income.” source (emphais by author)
Notice that leaves either 80% or 40% of the occupants undesignated as to their incomes? How about if the low-income housing allowed 20% of the occupants to make up to 80% of medium income? The remaining percentage could be any income level up to the median. This would create an unusual community in which there was a smooth continuum of income streams. Scientists would probably want to study it and so there might be grants for that.
Coming up Next (or Soon) - §4364-A. municipal incentive program, which is part of the new housing act.
Also published on Medium in An Injustice! 6/27/ 2022