Council to look deeper at funds for housing and climate change

Forming citizen’s committee; Empty House Tax still an option

By Mark Reaman

The Crested Butte Town Council appears ready to form one or perhaps two committees at its next meeting on March 16 to study and then make recommendations on how best to fund the town’s ambitious five-year affordable housing and Climate Action Plan (CAP) goals.

The committee idea emerged from a work session on the topic held Monday, March 9 in which various “funding mechanisms,” including the concept of an Empty House Tax were bandied about by the council and about a dozen interested citizens.

While no one at the work session appeared to like the moniker Empty House Tax, according to town finance director Rob Zillioux, a $3,000 per unit Empty House Excise Tax on the estimated 350 potentially qualifying units in town could raise about $1 million annually.

Taking the town sales tax rate from the current 4.5 percent to 5 percent would generate about a half million dollars each year.

Increasing the Short Term Rental excise tax to 6 percent from 5 percent would bring in an additional $60,000.

Raising the property tax two more mills would bring in about $250,000 more each year.

Borrowing $2 million at 3 percent interest over 20 years would result in total payments of about $2.5 million but would take away from other capital uses.

Selling the town-owned building at 308 Third Street could perhaps bring in $2 million.

Zillioux presented a broad overview of the costs associated with the council’s goals for climate mitigation and affordable housing over the next five years. Each overall plan as outlined would cost millions of dollars and he said if new revenue streams were not implemented, council would have to make tough decisions on what to spend money on in town.

“If we are to achieve the council’s stated goals it will take a lot more money than is generated now to make them happen,” he said. “We have been eating into reserves for the last few years already.”

Zillioux’s recommendations to fund the council goals included prioritizing housing and climate mitigation spending over other capital fund uses; pressuring the Valley Housing Fund to invest a lot of its money in Crested Butte projects since the town contributed $1.5 million toward the Long Lake project that was the primary funder of the VHF; placing an Empty House Excise Tax on the 2020 ballot, which he described as the “fastest and cleanest way to generate significant capital” to invest in the CAP and affordable housing; and consider selling the 308 Third Street building.

“The problem with selling town property is that you are not likely to get it back and the town may need it in the future,” said council member Mallika Magner.

Zillioux said the idea of selling bonds to finance the projects was in his opinion the least “savory option,” given the interest payments included in repaying the debt. He said the town’s bond attorney, Dee Wisor, had told town officials that voters could choose to reallocate the current Real Estate Transfer Tax (RETT) revenue without changing the amount collected. No other municipality has taken that step and there is concern that would result in a lawsuit that could eliminate the entire RETT. The council shied away from that option by the end of the meeting.

Council member Mona Merrill said the information provided by Zillioux was very helpful. “But it is complicated, especially now when it looks like everything might be going into a recession. That impacts so many things so it will be an ongoing discussion. It would be nice to have consistent funding for these projects but what it is, I don’t really know at the moment,” she said.

“As it stands I don’t like the Empty House Tax,” said council member Laura Mitchell. “I’d also ask the Valley Housing Fund to look in Crested Butte. I don’t want to drive a wedge in the community and feel the Empty House Tax does that. It damages the relationships we have in the community.”

Magner said she didn’t want to hurt local businesses or local middle class residents by raising property taxes. “I also value highly the open space around the valley and what the RETT has given us,” she said.

Council member Candice Bradley’s first impression was to lean toward expanding the RETT uses or selling 308 but later confirmed she was in favor of the Empty House Tax concept, while council member Chris Haver wanted a list of pros and cons for each suggestion but was adamantly against the Empty House Tax as presented.

“Not much has changed for me,” said councilman Will Dujardin. “We have committed to our constituents to do certain things and we have to pay for them. I think we need more reaching out for the Empty House Tax and get the details out there to people about what we are looking at. We have a huge mountain to climb and we need to get going on it. The longer we wait because we don’t want to hurt anyone’s feelings, the harder it will be.”

“I’ve always had a problem with the Empty House Tax,” countered mayor Jim Schmidt. “It’s a regressive tax. It affects an old timer with a house a lot differently than someone with a grandiose house they just bought for millions. That idea is driving a wedge in the community. I feel a property tax could pass in town and have a good start at funding some of these things. I agree that selling 308 isn’t good since the town might need it in the future and lots of good groups are using it now. I look at raising the property tax a bit or raising sales tax a half cent as reasonable.”

Peter Dea of the Crested Butte Land Trust lands committee said reallocating money away from the RETT that is a primary funder of open space projects would be a mistake. “The land and trails near town purchased with that money are so special to so many people,” he pointed out.

John Spencer who, with his wife, Haden, splits time between Crested Butte and Texas, said he raised an eyebrow at how some of the numbers presented by Zillioux were presented. He indicated they painted a skewed picture of how to pay for housing and climate goals. He also counseled the town to be aware of language used and how that rankled some in the community. “Describing all the impacted homes as ‘trophy second and third homes’ as is done in this presentation is not helpful,” he said.

“But it’s factual,” responded Zillioux.

“My home is not a trophy home by any stretch,” said Spencer. “There are a ton of unanswered questions so there needs to be a sober discussion about this Empty House Tax idea.”

Retired town planner John Hess said he has seen his property taxes increase $1,000 over the last several years, and that impacts his fixed income. “If you are talking about climate mitigation projects think about taxing things that contribute to it like gasoline or tires for cars,” he suggested. “Adjust the ROAH [Resident Occupied Affordable Housing] impact fees so that it charges more than the current 30 percent of the housing impact. And even the Crested Butte Land Trust started out slow so start now and form a group with a board that would be a place for people to choose to donate money toward climate projects. Instead of taxing people, give them opportunity to donate money.”

“I am super concerned with the Empty House Tax,” said Haden Spencer. “Think about tapping into the people who have had their eyes opened through this discussion. We’re all in this together. We all are part of a community we care about. Start a real dialogue that is richer, deeper and more creative to find solutions from different perspectives.”

CBLT executive director Noel Durant pointed out the Long Lake land swap deal just closed and that was a “good example of innovative ways to address various issues.”

Tiff Simpson, who recently moved into deed-restricted housing in Paradise Park, said if not for the town’s affordable housing program she wouldn’t be in town. “I hate the Empty House Tax label. It’s not very positive but I’m for it,” she said. “The question is, is the town going to bat for people looking for a first home? These people are privileged enough to have a second home. Keep the workers that live here in the forefront of your mind. Put it on the ballot and trust the people of town to decide this for you.”

“Find other creative solutions,” countered Allison Butcher. “I’ve raised a heck of a lot of money in this town and see the generosity of both locals and second homeowners. Right now there is no effort or place for people to make tax-deductible donations for these projects. Start a campaign. People care deeply about this place. Instead of a tax, give people an opportunity to donate.”

Jim Starr, who chairs the Valley Housing Fund but was speaking as a private citizen, said the town could adjust the housing payment in lieu fees or impose recreational user fees on people living outside of town who use Crested Butte’s parks and playing fields. He said selling town buildings was a bad idea in the long run and, given current low interest rates, the council should look closer at bonding potential. “If you can get it for 1 percent interest it is probably worth it,” he said.

John Spencer said selling bonds could be an avenue for second homeowner participation, as they might be more than willing to buy the bonds for a good cause.

Starr also suggested the formation of a committee to delve into all the potential funding mechanisms and come up with finite details. “Include second homeowners to look at the need and the numbers. Have a committee work together like it did with the Short Term Rental tax and come to council with a recommendation of what is appropriate and something that doesn’t divide the community.”

Starr said the VHF was open to expanding its duties and providing a venue for donations for affordable housing. “But it helps to have a specific project when raising money,” he said.

“There are five projects listed for future housing as part of our goals. If there were other ways to do this other than the Empty House Tax we’d be thinking of them already,” said Dujardin. “We already have one of the highest sales taxes around. That’s why we’re here now. If second homeowners say they’ll donate to affordable housing, they can go to the Valley Housing Fund and do it. I say let’s see it.”

“I’m hungry to know more about the projects,” said Haden Spencer. “Until this Empty House Tax discussion came out in the paper people didn’t know about it and the complexity. I think there is a sincere desire to participate but people want to understand it.

“It seems the idea of committee to delve into details has a lot of potential,” said Merrill.

”I still think we need the pros and cons detailed for each mechanism,” said council member Chris Haver. “As presented, I’m not in favor of the Empty House Tax. It feels like we’re just asking someone else to pay for what we want. It should be broader. If it is important to people, they’ll vote for it.”

“We are in such a hole with our diminishing locals,” said Dujardin. “I’m just trying to look out for our one square mile. It seems the only way for workers to get in here is through our deed-restricted housing. I’m banging my head against the wall. Maybe we need to tweak the Empty House Tax idea to find the fair number and who it applies to. It will take a lot of work so I think we should get going with a committee even if it takes longer than this election cycle. But we know the reasons and the need. I agree with Tiff and think we can put it to the voters and let them decide.”

“There have been some great ideas discussed tonight,” concluded Peter Dea. “Let them be vetted. Let them mature a bit as opposed to putting a divisive ballot issue to the voters this fall.”

Haver said he liked the idea of forming two committees: One to work on affordable housing and one to work on the Climate Action Plan and ways to fund those projects. “I don’t think we’ll find one silver bullet to pay for both,” he said.

Schmidt asked that the consideration of forming a committee, or committees, to deal with the topics be placed on the agenda for the March 16 meeting.