A CB vacation rental excise tax would put tax at over 18 percent

Adding 5 percent more for workforce housing

by Mark Reaman

The Town Council of Crested Butte is ready and willing to impose an additional 5 percent excise tax on short-term rentals in town, with the money generated to be used for workforce housing. Such a tax would mean vacation renters would be charged a total of 18.5 percent in taxes for each nightly stay. It is estimated the excise tax would generate about $250,000 a year. The idea got a thumbs-up from councilmembers at Tuesday’s meeting.

“I want to make sure we aren’t burdening one particular business with this and we aren’t just trying to create an easy target. I recognize we have a soft spot for affordable housing,” said councilman Chris Ladoulis.

Town manager Dara MacDonald explained that the advent of people renting homes to vacationers—the rentals commonly known as STRs—creates more access for vacationers to visit town and spur more business in the restaurants and retail shops. “In the end it is a pass-through to the end user and not the homeowner,” she said.

“I see the homeowners using a residence as a business but not paying the much higher commercial property tax rate on the structure. They don’t pay the same property tax rate as a lodge,” said mayor Glenn Michel. “I think it helps balance that out a bit.”

“Will it deter people from coming here and booking STRs?” asked councilman Paul Merck.

“You may see some diminishing in such visits when people compare prices but I think it needs to be done,” said councilwoman Laura Mitchell. “I would try the 5 percent addition in tax.”

“STRs create a clear impact on the ability of locals to live in town,” added Michel. “The money raised will be used to help that situation.”

“The idea is to address workforce housing. If the market can bear it, people will pay it,” said councilman Roland Mason.

“And again, remember, the homeowners won’t be paying this, the visitors will,” said Michel. “If some homeowners decide the tax is too much to ask and they don’t use their place as a vacation rental, perhaps they will consider renting it long-term. That would be a good thing.”

Councilman Jim Schmidt said that when staying in large cities, a lodging tax total of more than 20 percent is not unusual anymore. “You just shrug and pay it,” he said. “I think the 5 percent figure is fine.”

“I’d lean more toward an 8 percent tax so I can easily support 5 percent,” added councilman Jackson Petito.

“I would like the money designated specifically for rentals,” suggested Ladoulis. “I think the days of subsidizing single-family homes are over.”

“I’d designate it for workforce housing and call it good,” suggested Mason.

The council gave staff the go-ahead to contact a bond attorney to begin developing the ballot language for this coming November. The council would reconsider placing its excise tax proposal on the November ballot if the Gunnison Valley Regional Housing Authority decides to put forward a tax proposal this fall to fund affordable housing construction. That decision is expected to come as early as this week. In the meantime, the town staff will plow ahead with the logistics of preparing the ballot issue.