Exemptions and definitions
[ by Mark Reaman ]
The Crested Butte town council is working out details of how ballot language will be implemented in town to raise funds to address affordable housing issues if it is passed by voters this November. Led by town staff, the council on Tuesday began the process of defining who will be subject to the annual tax on property basically not occupied by full time residents, whether owners or renters.
The initial discussion centered on definitions of what constituted things like a “primary residence,” “taxable property,” and “rented.” Figuring out what exemptions to the tax should be included was also touched on but not decided.
The measure would create a new $2,500 annual tax on homes in town that are not occupied by primary residents or rented for a minimum of 180 consecutive days. If a portion of the property is rented long-term then the entire property would be exempt from the tax. So if for example, an ADU (Accessory Dwelling Unit) is rented on a property with a main house that is not occupied at least six months a year, it would not be taxed.
Along with that $2,500 tax is a half-cent increase in town sales tax that excludes groceries. A second ballot measure would increase the short-term rental excise tax from 5 percent to 7.5 percent. Funds raised would be earmarked for affordable housing initiatives.
Under the definition discussion, homeowners with residential property would have to sign an affidavit every year stating that they are subject to the tax, that the home is a primary residence or that the home is rented for six months or more. The primary resident must be prepared to provide two pieces of evidence such as a driver’s license or voter registration card. Renters would have to do the same and prove they are working in the valley or that the home is their primary residence.
“That sounds pretty Big Brother to me,” said mayor Jim Schmidt.
The most discussion centered on potential exemptions. Some suggested exemptions included situations involving the health or death of a homeowner, if a house is being renovated and not able to be occupied, or if legal ownership is transferred and hinders renting. Whether allowing an exemption for a second homeowner who contributes money to a non-profit that deals with affordable housing was not settled.
Staff had suggested such property owners could donate the $2,500 to a charitable organization that could only contribute its revenue to the town’s affordable housing fund, but no one was sure there was any benefit to the property owner under that scenario. Staff’s reasoning was they wanted council to control any funds meant to be generated through the proposed tax. The preference was to keep the money in town but at least give the council the option to use the money how they saw fit even if it went to projects outside town boundaries.
“Is the council really okay if the money from this goes to housing in Gunnison?” asked town manager Dara MacDonald.
“For me it is,” said newly appointed councilmember Ian Billick. “Housing anywhere in the valley impacts Crested Butte. If it gives a sense of more control to those having to pay the tax it is not an issue with me as long as it goes to housing in the valley.”
MacDonald said the other consideration was if the town asked for a bond to pay for a project the lender might need to be guaranteed a more permanent income stream. Billick said he understood that and if that case came up the ordinance could be changed at that time to eliminate such barriers.
“Part of this is to fund specific projects so I’m not comfortable if the money goes to other projects we aren’t talking about,” said councilmember Jasmine Whelan.
Billick suggested the council come back to the potential exemption for more discussion.
Mayor Jim Schmidt suggested an exemption be granted to long-time generational community members who may have inherited a family house but do not have the means to easily pay the annual tax. He noted a letter was sent by such a person who stated her house was not winterized so couldn’t be rented for six consecutive months.
“I feel this is punishing people who have been part of the community for a long time with a flat tax,” Schmidt said. “We’ve heard from people who don’t have a lot of money so maybe an income qualification with AMI (Area Median Income) levels is considered.”
MacDonald said that would mean asking people for thorough tax or financial documents.
“That is really Big Brother,” said community development director Troy Russ.
“I’d like to see if there is a way to handle those really long-term homeowners,” said councilmember Chris Haver.
“Some have suggested that those homes are so valuable they should just sell them,” said Schmidt. “I don’t want them to sell them. I want them to keep being part of this community.”
Billick suggested using a timeframe might be better. “I’m comfortable giving people who have owned a home 30 or 40 years and don’t use them as a short-term rental getting a break,” he suggested.
“We’ve owned our home here 34 years,” said Jim Day. “We don’t live there all year long, but it is our home.”
Potential exemptions for longtime homeowners will also continue to be discussed.
Russ said administration of the tax would be the next major topic. Topics on violations, penalties and appeals will be discussed at the next meeting.