CB council sends affordable housing taxes to voters

Everyone will likely be paying something

[ By Mark Reaman ]

Crested Butte voters will be deciding this fall whether to approve two ballot issues containing three tax increases that will generate money earmarked for affordable housing projects. On a 6-1 vote Monday, the council agreed to ballot language to put before town voters asking for the implementation of a new $2,500 ‘Community Housing Tax’ on second homes in town not occupied at least six consecutive months a year along with undeveloped residential lots. That would be on the same ballot question as a .5 percent increase in the town sales tax that would bring the total sales tax in town to 9.9 percent but not apply to groceries. A separate 2.5 percent increase in the vacation rental (short-term rental) tax currently at 5 percent would be on the ballot as well.

Together, that is expected to bring in about $1.6 million annually. The $2,500 fee would go up each year based on the Consumer Price Index (CPI). The November ballot question will ask voters to allow the town to borrow against the projected revenue through a bond issue so it could leverage the new tax for immediate projects related to affordable housing. The three most cited projects the money would go to include the build out of remaining lots in Paradise Park, a workforce housing project at Sixth and Butte and funding for a proposed InDeed program that would purchase deed restrictions on free market homes.

Crested Butte town manager Dara MacDonald told the council that the deadline to submit ballot language to the county was early September. Given their schedule, the August 16 meeting was the last regular meeting for council to make a decision before the deadline.

She said specific details about issues like possible exemptions to the Community Housing Tax would be set out in the so-called enabling ordinance that she recommended the council discuss and agree to in September and October before the actual vote on November 2. She made clear that any future council could change the ordinance if desired, but the ballot language would be set in stone.

Town attorney Barbara Green said the length of the ballot language was limited by state regulation so using an ordinance to drill down on details was not unusual. “It is important for the community to hear the details before the vote,” she emphasized.

Councilmember Jasmine Whelan said she felt the council could accomplish that goal this fall.

Mayor Jim Schmidt said major details were still up in the air and wondered what sort of charitable donation might be cause for an exemption to the tax.

Councilmember Mona Merrill said in the spirit of fairness, that and other details should be decided by the council while voters had a chance to evaluate those issues.

When councilmember Jason MacMillan suggested that putting in a sunset clause to let the tax expire after a given number of years might be more palatable to voters, MacDonald said new numbers would have to be calculated for the ballot language and a special council meeting might be needed.

Councilmember Will Dujardin made the point that by not including a sunset clause, the town had better bonding capability which was a big plus when it came to workforce housing projects.

Green noted that paying off a bond debt was not restricted to the new tax revenue but could come from other town revenue sources under the proposed ballot language.

Public pros and cons
As has been the case for weeks, public comment came down on both sides.

“I disagree in general about this given the division it creates in the community with second homeowners, but you all have done a good job settling on the $2,500 fee,” said Brennan Reilly. “That is a reasonable amount. I agree with John Spencer’s idea that this is like a homestead tax that many of us get in our home states. I also like pairing it with a sales tax that everyone has to pay.” He suggested not including the CPI adjustment.

Marco White said that as a board member of a local non-profit organization his concern was that despite coming to agreement over the $2,500 it would still be a “slap in the face” to some second homeowners who might then curtail donations to local non-profits.
Ian Billick said that bringing the fee down to $2,500 was a big step as was linking it to a sales tax increase. “The affordable housing problem will not get easier down the road so I would not want to sunset it. I have been a skeptic of this but think you have done a good job of making this ‘sausage’ and I support it as presented.”

Jim Day said he still found the idea unpalatable. “It still feels too rushed and while the idea may be good, the plan is not developed,” he said. “I wish the council had more collaborative outreach to the second homeowners. This could use a lot more research and discussion. The goal is a good one but it rubs me the wrong way to say second homeowners can afford to pay this but they can’t vote on it.”

Margot Levy said the package had many revenue tools which was a good thing. “The CPI provision just ties it to reality,” she said. “The only reason to include a sunset is if you think the need for affordable housing will be less in the future. And that’s not likely.”
John Spencer disagreed and said including a CPI index “compounds the feeling of unfairness. There is no hedge for the second homeowners. If inflation takes the $2,500 to zero then revote.” He also wanted to guarantee the council planned to take any rent revenue generated from housing projects and use it for housing. He said that hadn’t been discussed by the town and it could be millions of dollars over time so it shouldn’t be used for other town endeavors.

Beth Goldstone said she was excited for the issue to go to local voters. “The $2,500 sounds very reasonable especially given the amount of property tax paid here compared to other places,” she said.

Anna Fenerty said she understood the unfairness being felt by second homeowners, but as a person born in Crested Butte, she was grappling with the busyness of the place she hasn’t been able to enjoy this summer. “That too feels unfair, so there is unfairness on both sides,” she said.

Haden Spencer said the feedback she is hearing is that the decision is being rushed. “There is still a lot of tension over this,” she told the council. “The CPI sends a message that the pockets of second homeowners are so deep it doesn’t matter.”

Laura Yale said she felt the division in the community wasn’t over this discussion but rather about the increasing wealth inequality in Crested Butte.

Jerry Baker said he rents his accessory dwelling unit so he understands the issue, but wanted a more concrete plan on where the money would eventually go.

Odyssey said the fact that there are no bus drivers for students and restaurants are compromised by short staffs was reason to move forward with the ballot issue. “It is a right now issue,” he said.

Kyleena Falzone said second homeowners who choose to make a charitable contribution instead of pay the fee should be able to choose which project their money goes toward.

Glo Cunningham was not a fan of the tax proposal. “Affordable housing is in a state of crisis and getting money quickly is important,” she said. “But many old-timer families are sad this is happening and have said they might have to sell their family home and leave after generations. I still believe in a commission made up of locals and second homeowners who work together to raise money for housing. I think it would work. And I think any donation that merits an exemption must go to affordable housing.”

Council comments
Councilwoman Mallika Magner said the affordable housing issue has been in Crested Butte a long time and it won’t go away any time soon. She spoke in favor of using the CPI index to adjust the Community Housing Tax annually. She also spoke against a sunset clause so that bonding could be more easily utilized. “I don’t think this tax will incentivize any new long-term rentals but it does provide an income stream. Combining the sales tax with the Community Housing Tax shows that locals are willing to share the pain and put skin in the game. That is important.”

Whelan said it was important to bring the issue to the voters. “As for divisiveness, the community is splintering already because of the lack of affordable housing. The workers are being forced to move. It is tragic.” She said having a regular income stream would help everyone that is part of the Crested Butte community. She also emphasized the importance of fleshing out and communicating the details of the issue in the next couple of months.

Saying the proposal was a good compromise, Merrill agreed the continuing conversation about details was important and encouraged the continued involvement of all the public.

Dujardin said he was excited over the progress made the last couple of weeks and felt using the CPI to adjust the fee annually was equitable and fair. “Seeing the continued displacement of friends and family is hard on all of us. Tying this to a sales tax increase shows the community coalition. It’s part of coming together. We’re investing in our community’s future and the community gets to make the decision. This process has not been pretty at times but is has been good community coalition.”

MacMillan said the new taxes would make a real difference. “I hope it helps stabilize the community and helps save what is left,” he said. “It has been messy at times but been a good process to have so many people participate. This is a way to use all the tools in the tool belt. It can make a big dent in the problem.”

“There is a lot more to do,” added councilmember Chris Haver. “I have wanted this to be as fair and inclusive as possible. I wasn’t for a dark house tax but pairing it with the sales tax made it better. The money is needed and action is needed.”

Schmidt again stated he felt an empty house tax was not fair. “To single out second homeowners isn’t fair,” he said. “Using a flat tax is not fair. It will chase out the poorest of the second homeowners who have been here for many years and are a part of the community. A mill levy would have been more equitable. I think many people will find a way around this with the exemptions. But I can see the writing on the wall.”

He did indeed as the council voted 6-1 to send the proposed language to the November ballot. Schmidt was the lone vote against the action.