The Crested Butte News Serving the Gunnison Valley since 1999
How much? Who? What’s lost if it doesn’t pass?
[ by Mark Reaman ]The Crested Butte town council spent more than two hours Monday digging deeper into the idea of placing a possible second home tax on the November ballot. No decisions were made, and staff was tasked with gathering more information on details of such a tax, and other alternatives that could generate revenue for the town. Councilmembers all expressed the need for more town revenue, and Monday’s work session centered on the vacant home tax but also drew some public pushback of the idea.
Crested Butte town manager Dara MacDonald told the council that there are consistent financial pressures on the town’s major financial funds, and current revenues are not keeping up with rising costs. The Crested Butte budget has a heavy reliance on sales tax and she said conservative projections show declining net spendable balances in five of the eight town funds going forward.
“Sales tax is considered a regressive tax since it is more of a burden to those with lower incomes. Property taxes can be regressive to those who have owned a house for a long time and seen increased valuations, and thus taxes, rise,” she said.
She presented numbers showing that based on financial models, year-round town residents pay about $2,000 more per year per household in sales tax than part-time residents. Visitors also make significant contributions to sales tax. There are 826 primary residences in Crested Butte and 465 non-primary residences. Of those, 182 are short-term rental units. Fifty-seven of the non-primary residences also have an accessory dwelling unit on the property.
Depending on which units the council decides to include in a vacant home tax and whether to implement a $2,500, $5,000 or a $7,500 annual fee, the proposed tax could generate between $707,500 and $3.4 million. While no specific projects were discussed as a use of the new funds, the council generally considered five areas including: transit and mobility; parks, recreation and trails; capital lifecycle needs; housing; and community spaces.
“Generally, the purpose would be to generate revenue for the fiscal gaps, protect year-round services, use revenues to align with the Community Compass and maintain a welcoming environment for residents, part-time residents and visitors,” said MacDonald.
Ramifications?
“If we don’t have additional revenue, what is the impact to the town?” asked councilmember Mallika Magner.
“There would be a severe cut to the five-year capital plan,” responded MacDonald. “We could accomplish a narrow band of capital projects. It would be similar with parks. We would need to keep subsidizing through the general fund. Specifically, the expansion of Jerry’s Gym would likely not happen. Any work on the old fire station would be postponed. There would be no new meaningful affordable housing projects for at least ten years when we could possibly sell some Paradise Park units that are currently used as rentals.”
John Simmons sent a letter to council suggesting the town sales tax rate be increased 1-2% during the busy tourist months of July, August, September and December to generate more revenue. He argued it would be more equitable and impact a broader demographic. Town attorney Karl Hanlon said the council could ask voters for a sales tax increase with the expectation that the tax would be vacated during certain months of the year. But that would have to be an annual council action, and the current council could not force future councils to follow the intent.
“My concern with more sales tax is that we could be over-relying on tourism,” said councilmember Kate Guibert. “If something drastic like a fire occurred, it could be hit extremely hard. Relying on one industry concerns me. Diversifying revenue sources in the future is not a bad idea.”
Mayor Ian Billick asked staff to model potential revenues with Simmons’ idea. Groceries would be exempted.
Billick also suggested the idea of possibly refunding some town property tax to full-time residents and those second homeowners who have held houses in Crested Butte for 10, 20 or 30 years. He pondered if it could be done with the proposed excise tax on vacant homes as well. “I think we should encourage continuity within community,” he said. “It is valuing people who have been in the community for decades. The point is to encourage people to connect with the community. The people hit the hardest would be those who purchased a home here a long time ago.”
Councilmember Kent Cowherd reminded the council that the last time a similar tax was proposed in 2021, it failed. He said that was in part because a “shovel-ready project” was not identified.
Councilmember Beth Goldstone said this time is different from when the last tax proposal went to voters. “We have developed several dedicated plans that have things the community has identified it wants,” she said. “For me, it is worth doing for things like transit and mobility, housing for sure, and maintaining what we have. As for community spaces, I’m interested in developing projects that bring back the vibe we have lost — things like the Brick Oven or a senior center. We have identified projects in the last five years.”
“Plans are hard because they include good things but often there is an overreach, especially when costs aren’t considered,” said councilmember John O’Neal. “I go back to focusing on the basics, things like water and safety, then housing and community spaces. We need to stay lean.”
“I think the focus should be on capital projects that serve everyone in the community, including second homeowners,” said Guibert.
“I agree we have plans the community would like to see completed and they have to be shelved,” said councilmember Gabi Prochaska. “We also have basic infrastructure needs not being addressed. We can’t do much of it without a revenue stream to provide the services we’ve been providing.”
“I am hearing in the community that people don’t want to pay for things like a larger staff,” said Magner.
“If we do something with a new tax, it has to be impactful and we need enough revenue to make a difference,” said Billick. “I’d like to see us saving for housing so that five or 10 years from now we can do something meaningful for those under 100% AMI (Area Median Income). I’d like to have money to help catalyze things like a senior center or refurbishing the old fire hall.”
Cowherd reiterated that if he supported the proposal, he would be in favor of going for the low end of the $1 million to $3.4 million projected revenue stream. The rest of the council appeared to be in the same boat.
As for what units to tax, some on council felt that those with a deed-restricted ADU could be exempted. Others thought STRs rented more than 180 days a year should also be exempted from the new tax since they provided a place where people who generated a lot of sales tax stayed on vacation. Those ideas will be further refined as the process continues.
The council was open to spending $30,000 budgeted for a consultant to come in and poll residents about their thoughts on such a tax. They wanted to get public engagement and feedback, as well as provide educational opportunities for citizens to understand the town’s financial situation. “For me, communication should be about laying out the logic and not advocating for anything,” said Billick.
Public weighs in early
While appreciative of the open discussion, public feedback contained a lot of headwinds.
Mike Keig along with his wife have been living full-time in Crested Butte for two-and-a-half years but were second homeowners for 20 years before that. “First off, not to be cynical, I would suggest holding a meeting when second homeowners are in town,” he said. “It’s good to hear the conservative tone you had tonight, that would surprise a lot of the second homeowners. I’m also glad you are open to John Simmons’ alternative ideas. But the whole issue is difficult, and you’ve struggled with it tonight. It’s always difficult when you single out a particular constituency. It’s hard.”
“There are a lot of assumptions being made with the idea,” said Haden Spencer. “Not everything is the same. There are some very expensive second homes and others are townhomes or small 1,000-square-foot older mining houses. There is a big variety, but the proposal has the same monetary charge for each of them. And the idea of an STR being rented 183 days a year is not reasonable. Ask property managers how many of those there are. Please continue to talk about the John Simmons ideas and other options that aren’t as divisive and that can generate another revenue source.”
“I am always amazed at a group of people who believe second homeowners should pay for everything,” said Todd Hegstrom. “Of course, it’s always a good idea to pay for things when it comes from someone else’s pocket. And the 183-day STR cutoff? That’s ridiculous. People who do a few short-term rentals would never be able to enjoy Crested Butte in their home if they did that.”
“It was a thoughtful discussion, but you are missing the divisiveness of penalizing part-time residents,” said Brennan Reilly. “I don’t like being thought of as a second-class citizen, an outsider. That type of division is what the current president tries to do.”
“I don’t like it,” said Jim Day, saying it would be easy for residents not impacted by the tax to vote for it. “It could force a lot of people to have to sell. And then you attract the billionaires and this eventually ends up like Jackson Hole. I hope you consider alternative ideas to raise revenue.”
“Despite Jim Day’s comment that full-time residents will embrace the idea, I don’t at all,” said Lis Collins. “I agree it is divisive and demeaning. If you can’t pay for projects without new revenue, maybe they don’t get done. Taxes have doubled with the school expansion and new fire hall. The second homeowner tax is not a good path to go down. You are in a miserable financial place to be in, but I don’t want to be in a place of us versus them.”
As for timing, final ballot language has to be in the county’s hand by September 4 for the November election. That means the council must approve any ballot language at or before their August 17 council meeting. Billick said there would be discussions on the idea this summer when more second homeowners were in town. The next work session on the topic is scheduled for June 1.
