Local officials move toward property tax for housing

Mill levy would bring in about $880K for a decade

By Mark Reaman

The Gunnison Valley Regional Housing Authority board of directors has decided to pursue a tax measure this November. The board agreed to ask voters to approve a 1.5 mill property tax increase on the fall ballot. The board members decided to “sunset” or stop, most of the tax after ten years but keep a half mill in perpetuity to be able to fund maintenance and administration of future projects in the valley. The 1.5 mills would be expected to bring in about $880,000 annually.

The money would be used to fund different elements of affordable housing in the valley and provide a source of funding for the Housing Authority not reliant on the local governments. It could be used to help fund infrastructure on property or subsidize actual housing units. It could be used for Housing Authority administrative purposes or to match grant money used for housing projects.

“After the sunset I would like to see a half mill remain to retain the ability to manage projects,” said Gunnison mayor Jim Gelwicks at the April 18 Housing Authority board meeting. “I think the Housing Authority needs an independent source of revenue separate from the county and municipalities to keep the organization going during changing economic and political climates.”

Gelwicks said, realistically, a property or sales tax constituted the only two options currently available to tackle funding for the Housing Authority. “Honestly, for the most part, none of the options are very palatable at this point for the city council in Gunnison,” he said. “It is not something people are eager to do. But for me personally, I’d rather see something on the ballot than not. It is a tough question down there. There are splits about this in our community. The need is there but there is a feeling that housing is starting to see some traction already.”

“I see the horizontal infrastructure costs as a big issue,” said Crested Butte community development director Michael Yerman. “To me if you eliminate the horizontal costs you can attain price levels that work for affordable housing. Would the Housing Authority look at using the tax money strategically for horizontal costs like roads, streets, easements, water and sewer? I think if you target the funds toward that it would help a lot of the projects around the valley.”

Gelwicks said it was his belief that such a move could encourage more workforce housing in Gunnison.

“Infrastructure is certainly a big hurdle in Gunnison,” agreed Housing Authority board chair Kelly McKinnis.

“Asking people to support a tax for infrastructure seems like a hard sell,” said board member Ellen Harriman. “It is hard with nothing in the ground right away. That visual is tough.”

“The reality is that any project will take two or three years from concept to units,” said Yerman.

“We need to do both to the best of our ability,” said Gelwicks, referring to addressing both infrastructure and actual building.

Mt. Crested Butte mayor Todd Barnes agreed infrastructure is important. “Those costs can be a headache,” he said. “The 17 acres we have in the North Village near the town hall has the same situation as everyone else. What is the easiest way to get infrastructure to it?”

Barnes told the board he was confident his council and the citizens of Mt. Crested Butte would support a tax increase for affordable housing. “It sounds like the problem could be getting the majority of people in Gunnison to do so,” he said.

“The infrastructure issue would need to be understood by the public and it seems that the two main areas where it would be needed most are Gunnison and Mt. Crested Butte,” said county commissioner John Messner.

“Our town would welcome that infrastructure,” said Barnes. “We can handle dense growth up there. That acreage could take several hundred units. Mt. Crested Butte is where the jobs are. It is close to trails. It is a good location for workforce housing.”

Messner noted that last year’s discussion about a housing tax proposal centered on bringing in about $800,000 annually. “That was not enough to meet what we determined was necessary to tackle the housing problem in our strategic plan,” said Messner.

“It doesn’t meet the needs of the housing needs study,” added Gelwicks.

“Even at the $800,000 or $880,000 level, it is something. The fact is, we will need more money than we can realistically ask for,” said Yerman. “We have to be aware of the impacts on our commercial properties that get hit the hardest with such a property tax increase. But my strategy is to take what we can get and pick off one project at a time. Maybe it is a LIHTC [low income housing tax credit] project in Gunnison. Maybe it is infrastructure in Mt. Crested Butte. But doing something incremental year after year works. It won’t be the big splash that everyone wants but as a planner I can look out 15 or 20 years and see significant progress. That will put us in a better place than trying to use the money for one big splash.”

“If you don’t start somewhere, then you are losing ground,” agreed Barnes. “This issue is not just in the Gunnison Valley. It is everywhere. Denver, L.A., other resorts are all feeling it. I think the 1.5 mill request is a good place to start.”

Barnes said Mt. Crested Butte might also consider floating a short-term rental tax similar to the one recently passed by Crested Butte. “As for the property tax, I think workforce housing is a hot topic and I don’t think it will be a hard sell. Everyone ultimately benefits. It is something we need to solve together, not apart.”

“The reality is that the property taxes in our area are very low,” said McKinnis. “Some other district will go after the tax opportunity at some point and I’d like to see it go for housing.”

“Residential property taxes may be low but that doesn’t matter when people get their tax bills,” said Messner. “When that happens the county phone rings off the hook. There is a perception that the county would be raising taxes. In that respect, the county would like the municipalities to take a lead on this initiative and the county will stay in the back seat. That also makes sense since the municipalities have clearly indicated that they feel affordable housing density should be located within town limits.”

“Whether the mill levy is 1 or 1.5, the fact is it is money we are not generating now,” said Crested Butte mayor Jim Schmidt. “Plus it can be leveraged against other grants. We need to start somewhere.”

Housing Authority executive director Jennifer Kermode said the tax money could probably be leveraged three or four times through grants.

Schmidt noted that the “elephant in the room” about the success of a fall ballot issue is the controversial Corner at Brush Creek affordable housing proposal, currently in the county sketch plan review process.

“I think it needs to reach a conclusion one way or the other quickly,” Schmidt said. “It will be tough for voters to make a decision with that hanging out there.”

“It has to be addressed in the messaging,” said Kermode.

Gunnison Valley Housing Foundation executive director Darren Higgins said that group has already formed a political action committee (PAC) to help educate the public on the affordable housing issue. “But we would rather start that education process now and not in August,” he told the Housing Authority board. “We just need to know what we’re selling.”

Housing Foundation board chair Jim Starr informed the board in a letter that he favored trying to pass a workforce housing tax this year despite higher property valuations that impacted property taxes. Part of his rationale is the anticipated demographics of voters. “[T]he election survey found last year that Democrats supported the tax by 66 percent to 34 percent for Republicans,” he wrote. “I believe this year’s election will see a greater percentage of Democrats and similar-leaning Independents voting than Republicans, so the odds are good.”

Overall, the Housing Authority board agreed that bonding against the tax would not be a good idea. They will work to determine project priorities but agreed setting hard projects would be difficult since things can be in flux quickly. “We need people to understand there are opportunities and not promises for a specific project,” noted Kermode.

The board wants the community to understand that public-private partnerships are important with future housing projects.

The Housing Authority board will draft ballot language that will be taken to the county and municipalities for support. That ballot language is expected to be fairly open and non-specific.

If approved by voters, the tax would cost a $1 million commercial property about $430, while a $1 million residence would be responsible for about $100.