Mt. CB council will continue to consider STR tax increase

Further discussion planned over whether to include on November ballot

By Mark Reaman

While not every Mt. Crested Butte council member is enthusiastic about the idea, it appears a majority are willing to put an affordable housing tax increase initiative on the upcoming November ballot. Council discussed the idea at the May 7 meeting after mayor Nicholas Kempin raised the idea at a work session. The money could be dedicated to affordable housing projects.

“Some councilors have said they would like an increase in the STR (short-term rental) excise tax put on the ballot, and I feel very strongly we should not do that yet,” said councilmember Janet Farmer. “It has been in effect going on four years and when you compare our STR tax rate to other ski areas, we are one of the higher ones already. To increase that more is a problem, and I would vote no on that.”

A 2.9% excise tax went into effect in 2020 on STRs in Mt. Crested Butte and it brings in about $1 million annually. The total tax applied to STRs in Mt. Crested Butte is 16.8% between the different taxing entities. 

Councilmember Steve Morris said he too is no fan of increasing taxes, but the reality was that money is needed to do housing projects and the citizens would have the final say. “I’m not super gung-ho on a tax increase but I’m still stuck with the idea of the problem being the solution,” he said, referencing a potential increase in the short-term rental excise tax to fund the Mt. Crested Butte affordable housing needs. 

“I’m looking at the potential projects for attainable housing that need funding and for me offering the option and letting the constituents decide if they see value in a tax increase on STRs is okay. I personally don’t want to really raise taxes but for me it seems money is needed for projects,” Morris said.

Morris pushed back on Farmer’s worry that if Mt. Crested Butte has higher STR fees, people might choose to not come to the town. “I’ve polled a bunch of people and no one looks at their tax rate when they go on vacation. You pay it because you’re on vacation,” he said. “In my head, the logic is to put it on the ballot.”

“I agree no one really looks at tax rates before they go on vacation but they could be shocked and go ‘holy moly’ when they check out and feel like they’ll never come back,” said councilmember Alec Lindeman. “But I feel nothing is working appropriately enough at the moment to get us enough money for the potential upcoming projects.”

“My thinking is if we do anything it has to go on the ballot and be very transparent,” said councilmember Duane Lehnertz. “The council won’t be deciding the action, it will be the constituents’ decision. So, I support putting something on the ballot and letting the people weigh in.”

“If we do that it reflects what would be perceived as our opinion,” said Farmer.

Responding to a question from councilmember Roman Kolodziej, town attorney Gerry Dahl said the town could not propose a real estate transfer tax since such taxes were eliminated in the early 1990s in Colorado through a provision to the state constitution approved by voters. He also clarified to Kolodziej that any new impact fee needed to be studied and shown to have direct a solid nexus for being implemented.

Town manager Carlos Velado told the council that Mt. Crested Butte already has a $1,441 impact fee applied to building permits. He too said that fees do not have to be approved by voters, but a fiscal impact analysis has to be done to provide a nexus to the proposed fee increase. 

Kempin said that the discussion warranted enough support to have the council look at the idea of putting a potential excise tax increase initiative on the upcoming ballot and asked that the item be included on the upcoming agenda. Council would have to make a decision on ballot language by August.