Is it time to deed restrict businesses in Crested Butte?

CB council starts discussion on how to help owner/operators

By Mark Reaman

To what extent should town government help local small businesses keep things affordable for the greater population? What, if anything, can the town do to support owner-operators being able to run businesses in the North Valley? 

Those were the topics of discussion for the Crested Butte town council at a work session on Monday, November 20. Council wondered if it could somehow subsidize property values to then somehow deed (or lease) restrict prices from small businesses. An example could be town offering cheap rent for a restaurant if it agrees to keep menu items below a certain average price point.

The initial discussion on the topic is a part of the greater comprehensive planning effort that will result in a strategic plan for Crested Butte. Other elements of the plan being discussed include transportation and mobility planning, historic preservation planning, a major update to the town’s design standards and guidelines, along with updates to the town building and zoning codes. It’s all part of the Community Compass initiative and Monday’s discussion centered around the goal of enabling people who live and work here to thrive. 

Crested Butte community development director Troy Russ led the work session and reminded the council that data indicated 2012 was the last time that people making the average income in the town could afford a free market house in CB.

“Mountain communities are really understanding they need to address cost of living impacts to remain a viable community,” he said. He pointed out that previous action on business activity has been taken through the town’s horizontal zoning that restricts certain uses on the first floors of Elk Avenue businesses; strict commercial zoning that prohibits bars and other uses along Belleview Avenue; restrictions against franchises except in limited parts of town; and the town employing a local business preference in its competitive bidding process.

“The town has been active but needs to be more active going forward,” suggested Russ. He presented five ideas “for discussion purposes only” to take the temperature of the council. The ideas included: allowing density bonuses to, for example, allow free market residential units on top of a commercial building to help subsidize the costs of business on the lower floors; expanding access to local capital by partnering with local banks to help with loan or grant opportunities; similar to the GoodDeed program that helps with housing, having the town financially assist in real estate transactions with the expectation the property will be deed restricted to lower the cost of the land in the operation of future businesses; developing town property to use as incubator opportunities for local businesses; and having the town acquire and develop property specifically for the development of deed-restricted commercial opportunities to attract small and local businesses.

Russ said the most efficient idea was probably for the town to develop its own property, but staff had not yet determined how that would work. “Is there a need in town for such a direction,” he asked council. “And what should town be trying to target? Restaurants? Retails? The trades?”

Councilmembers were certainly open to the discussion. Mayor Ian Billick said the dramatic increase in land values in mountain resorts was probably accelerated during COVID and the issue is a growing one in communities like Crested Butte. 

“Thinking about the residential segment in such places, it is easier to understand what is happening with housing given the higher prices and things like short-term rentals replacing long-term rentals. In the commercial sector, what is leaving and what is replacing it,” asked councilmember Jason MacMillan.

“An example would be The Last Steep,” responded Russ. “That was a small, family-owned and run restaurant and now Kyleena (Falzone) and Jeff (Hermanson) have it. They have more efficiencies so can lower costs through things like using accounting in all their restaurants. The Steep is not a bad loss with what was gained but it is an incremental change in who is there.”

“We are seeing more of that type of transition,” agreed Billick. “I think one thing that is unique to Crested Butte is the number of owner/operators like Marchitelli at the Noodle, Kyleena with her restaurants, Dewey Overholser who is doing some things like the Coffee Lab and A Bar Above.” 

“Hometown growth is important,” said Russ.

Responding to a question from councilmember Mallika Magner, Russ said the current restrictions on the lots and buildings in town could be changed to allow things like more density and larger, taller buildings. He said he was not advocating for such changes but said the council could look at providing such incentives to see if they make sense in reducing cost of living impacts on prices for the general population. “The entire purpose of the infill study is to examine those questions with the community,” he said.

“If we go down that path, the first question we have to ask and answer is ‘what problem are we trying to solve?’,” said Billick.

Councilmember Anna Fenerty suggested the town somehow encourage and perhaps subsidize ways to support local students moving toward the trade industry through things like electrical apprenticeships. “That to me seems a good investment,” she said.

“That is a great example of what could be done,” agreed Russ. “But so much with cost of living comes down to the cost of land in the valley. For example, an electrician who has been here a while and owns his building and is getting close to retirement probably wants to sell that property. It’s the cashing out dilemma which is legitimate. Should the town try to work with him to help him keep his wealth while then keeping an electrician in town by helping a young tradesman afford that property?”

“I support keeping a strong trade community here but geography questions matter. While we want restaurants on Elk Avenue it might be more affordable to subsidize an electrician’s building in Riverland where it costs half the price and maybe provides two spaces,” said Billick. “Does it need to be in town? I’m not sure how to think about that.”

“Housing is still the primary issue for me,” said Fenerty. “But we have to view it all. We have all these flowers we’ve been enjoying but we need to look at the roots and make things more stable.”

“My big thing is encouraging the owner/operators,” said councilmember Gabi Prochaska. “I agree the trades don’t necessarily have to be located right in town. But we need them up here. We need people to have the capacity to own and operate a business here. How we help small businesses stay owned by owner/operators is important.”

“A diversified economy is very important,” said MacMillan. “Having owner/operators is really important and I agree we can think regionally. Training and developing a new generation of tradespeople is important.”

“I appreciate the range of options,” said Magner. “It is an important discussion and drilling down will help with community.”

“If the town has opportunity to purchase land, that is probably the most important thing,” concluded Billick. “I would want the town to try things. Utilize some of these new tools on a small scale and see what works. Start small and get the innovation cycle going. I think we should try new things in this area.”

As part of the discussion, Russ said the upcoming Crested Butte Infill Study will provide a market analysis of various retail and trade industry service areas and identify where the town and north valley have deficits.