Mt. CB council split on ballot measure, but will take it to voters

Increase amount still to be determined

[  By Kendra Walker  ]

In a 4-3 decision, the Mt. Crested Butte town council will move forward with a ballot measure this November to increase the town’s excise lodging tax to collect additional funds to the town’s affordable housing fund for future projects. The council will determine the percentage increase and ballot language later this summer.

The town’s current excise tax was approved by voters in 2019 and is collected when people stay at short-term rentals (STR) and lodging properties in Mt. Crested Butte. The excise lodging tax is currently 2.9% and part of the 16.8% total of required Mt. Crested Butte lodging taxes, which includes Mt. Crested Butte, Colorado and Gunnison County sales tax, the Gunnison County Local Marketing District tax and RTA Special District tax.

The 2.9% excise lodging tax goes toward the town’s affordable housing fund, which currently has approximately $2.5 million, according to town clerk Tiffany O’Connell. However, O’Connell confirmed that at this time almost all of those funds are committed to Homestead, and some council members are open to the idea of increasing the excise lodging tax to help boost the fund for additional projects. 

“The question is, do you think there’s an appetite from voters in building this housing fund by taxing rentals?” said mayor Nicholas Kempin during the June 4 council meeting. 

While some council members felt the only way to answer that question would be to put it on the ballot, councilmembers Janet Farmer, Michael Bacani and Dwayne Lehnertz were not sold on the idea. 

“I’m still opposed to even putting it out there,” said Farmer. 

Bacani said that the council would appear to be endorsing the tax increase by putting it on the ballot. “If you put this out there, this feels like it’s an applied approval for a tax increase,” he said. 

“All I can do is enable the voice of the public, and by us putting it on the ballot does so,” said councilmember Steve Morris. 

Bacani favored looking instead into how to disincentivize owners of short-term rentals and finding ways to help convert units into long-term housing. He noted that even with the 2.9% tax and the council’s implementation of more STR enforcement and long-term rental incentives, the number of STR licenses has continued to increase in town. As of May 2024, there were 736 active STR licenses in Mt. Crested Butte, compared to 665 in 2019 when the tax was passed by voters. 

“It doesn’t seem like any of these have deterred the consistent STR license numbers,” said Bacani. “With this tax, the owner just passes it on to the tourist. We’re looking at the tourists that come here as an ATM machine.”

“It’s passed on, but the STR owner has to do a certain calculus, they have to find a sweet spot for pricing,” said Kempin. “If the tax goes up then maybe they need to reduce the rate, etc.”

“We are having this conversation because we’re trying to do something with affordable housing,” said councilmember Alec Lindeman. “We don’t have money to do the things we actually want to do. We need more money for housing and thought this was a good option and we want them (the public) to decide. I am in favor of finding a way to spend money on affordable housing.”

“We could have the problem be a solution,” agreed Morris. “I just want to open it up and let voters decide.”

The council voted 4-3 to support putting a question to increase the excise tax on November’s ballot.. Councilmembers Roman Kolodziej, Morris, Lindeman and Kempin voted in favor, and Lehnertz, Bacani and Farmer voted against. 

The council next discussed the increase amount from the current 2.9% tax, but disagreed on a number. In 2023, Mt. Crested Butte generated approximately $43 million in taxable sales from STRs. The 2.9% excise tax generated $1,274,203 tax income for the affordable housing fund from those taxable sales. So, for example, if the excise tax increased by approximately 1% for a total of 4%, the town would collect approximately $1,757,521 for the affordable housing fund. If the excise tax increased by 2%, it would collect approximately $2,196,901.

Morris suggested a maximum increase of 1%, or an increase of 2% that would sunset over time. “I wouldn’t be comfortable going above 1% unless there was a sunset associated with that. I prefer to see it sunset and if there was a community belief that the needs had been met, then that’s the will of the voters,” he said. “Did all the projects we think needed to be met get met?”

“It seems like it’s just not enough. It doesn’t address the reason we came here to begin with,” said Lindeman. “I like 2.9%.”

“You want to double it?” said Farmer. 

“I think we need to make a decision that’s effective enough to address the decision,” said Lindeman. “What it took for us to have this conversation, what it took for us to run out of money didn’t take much.”

“I’m more in the 1% camp,” said Kempin. “I feel the most comfortable in changing it incrementally in a small chunk. If we don’t see the housing problem turning around, we have future ballot initiatives available to us.”

Kolodziej suggested 1.5%. Despite voting against the ballot measure, Lehnertz said he would be open to 1%. Farmer and Bacani stood firm with 0%. 

The council agreed to continue the discussion and determine a number at their July 16 meeting. In the meantime, the council plans to talk with constituents to gauge the community’s temperature. 

“I have not engaged the public well enough to have what I think is a well-informed decision, and I think we would all benefit from the opportunity to take it to the people,” said Lehnertz. 

The council also asked town attorney Gerald Dahl to help draft explanatory statements in the ballot language explaining the affordable housing needs behind the possible tax increase. The town must certify ballot language to the County Clerk by September 6.