The Crested Butte News Serving the Gunnison Valley since 1999
RETT adjustment and vacant home tax still in play
by Mark Reaman
After several hours of discussion in a Monday evening work session over budget issues and the need for potential new revenue sources, the Crested Butte town council narrowed its revenue options to two and agreed to continue the conversation. While making no official decisions, the council indicated the desire to get more information and potentially pursue asking town voters to approve a vacant home tax this November or reallocate how current Real Estate Transfer Tax (RETT) revenues are spent. The goal is to generate between $1 million and $1.5 million in new revenue annually.
The majority of the council spoke against pursuing a high season sales tax increase given its administrative complexity and potential legal challenges. The majority of the council also felt adding another bump to the vacation rental excise tax that could take it close to 30% was too much. The council will pay a consulting firm $15,000 to poll a sampling of voters on the two ideas still in play, and another consulting firm $10,000 to help with strategy and public messaging. The next major work session on the issue will be held in July.
As might be expected, the council had varying approaches to the budget issues, and second homeowners voiced disappointment with the initiative that could impact 439 parcels in town. Mayor Ian Billick concluded at the end of the meeting that, “this is a hard conversation that we have to have as a community given our future budget situation. The emotional response is broadly felt. I appreciate the honesty and respect everyone has brought to the conversation.”
Capital projects in peril
Town staff presented a dire financial situation with the capital fund revenues not nearly keeping up with basic and aspirational capital expenses. Presented as “structural gaps,” the capital fund moves into deficit mode in 2027. Many capital maintenance projects have been deferred and new projects in the queue are likely to go by the wayside.
“Without new revenue, the consequences for residents are concrete and near term: Jerry’s Gym renovation cannot proceed,” a memo to the council stated. “Affordable housing development stalls for the better part of a decade. Late Night Taxi and transit services face curtailment. Paving falls further behind. These are not hypothetical risks, they are the direct result of the structural deficits documented (in recent reports to council).”
Crested Butte finance director Lauren Hawcroft said the town has taken recent measures to tighten its financial belt including capping employees and making operational cuts across the board.
Councilmember Kent Cowherd said he felt projects like a renovation of Jerry’s Gym and support for Mountain Express is a verification of what town needs to do.
“We have to take care of what we have. For me, it’s timing,” said councilmember John O’Neal. “Jerry’s Gym needs to be done but we need grants to help. We’ve started planning the marshal’s office expansion and keeping town safe is important. As for housing we should keep an eye on the Whetstone absorption.”
“I look at it long-term structurally with where we are with the budget,” said Billick. “We have about $1.6 million annually with capital coming in and half of that goes for operating. That leaves $800,000 for projects. With no new revenue, I figure we could use general fund money and do the marshal’s office renovation, maybe Jerry’s Gym if we use all of our spendable reserves, the roundabout and perhaps $1 million to Mountain Express. There is essentially nothing after that to care for facilities.”
“What he described would exhaust our current capital and general fund reserves,” said town manager Dara MacDonald. General fund spendable reserves in 2026 are anticipated to be $5.3 million but sales tax has been down since the end of last winter with a poor ending to the ski season.
Councilmember Kate Guibert said continuing to defer needed maintenance is not good public policy.
Billick emphasized he did not want to generate new revenue for new projects so aspirational projects like using $6.6 million to turn the old fire station into a community hub or building a senior center were not on his radar.
“As much as that pains me, I agree even though my dream is for a community center in the old fire station. It doesn’t fit this conversation,” said councilmember Gabi Prochaska. “The things that we have, we need to protect.”
Public works director Shea Earley said the town has a long list of needed maintenance for its buildings that include places like the Depot, Big Mine Arena, the Nordic Warming House and the Old Rock Library.
“I’m not looking to add new, shiny things. The facility maintenance worries me,” said councilmember Beth Goldstone.
“I wonder if we have too many buildings,” said O’Neal. “They are expensive to take care of. Maybe we reduce some of that inventory.”
“I agree generally but would like to entertain new opportunities at places like the old fire station,” said Guibert.
“I’m reluctant to ditch the old fire station. It was part of the Community Plan,” said Cowherd. “It could be a community hub as we grow into the town’s next phase.”
Billick said such a renovation would come with long-term annual costs as well. He then asked the council for their take on housing as a priority.
“It’s important but at the moment not a necessity,” said Goldstone. “I like the Good Deed program that uses money for houses that already exist. Building new housing right now is not where I would put capital money.”
“But we don’t want to resort to another Whetstone in five or 10 years,” said Guibert. “Putting some money aside for smaller projects is okay.”
“I’d agree with that and also prepare to use our lots over by Aperture when the time is right,” said O’Neal.
“Free market supply and demand will continue.”
“We will have need and will then need some reserves in the future,” added Prochaska.
“I agree that smaller, slower and better located (than Whetstone) is the right move at the moment,” said Billick. “Going back to the trailer park discussion, a lot can be done with existing buildings. More modest efforts are appropriate for probably the next five years.”
Differing opinions
The council generally felt the town should contribute to mass transit efforts like the Late Night Taxi and a new Mountain Express campus south of town.
“If we add 750 units just south of town in the next several years, we haven’t seen anything yet in terms of parking impacts to town,” said Billick. “It is going to suck.”
As for how to fund it, the council was not unanimous on any one mechanism. O’Neal liked the idea of reallocating RETT funding so that the half of the 3% that currently goes to open space projects outside of town would be split between open space and capital needs. He also expressed big push back on a second home tax. Billick took the exact opposite view and others on the council weighed in on the benefits and detriments of all the options proposed. Ultimately, the council felt a high season sales tax would not be passed by voters and came with great complexities. Raising the vacation rental excise tax was supported strongly by Cowherd and O’Neal but others didn’t like the idea of Crested Butte having the highest STR tax in the state at around 30%.
O’Neal was adamantly against the vacant home tax idea. “I don’t buy the logic,” he said. “Crested Butte is a complex ecosystem with locals, tourists and second homeowners. Is it in balance? I’m not sure. But second homeowners are very important to our community. There is a longstanding tradition of second homeowners in the community. I don’t think that’s how we should treat our neighbors.”
“To me the logic is that it equalizes the sales tax contributions with full-time residents,” countered Goldstone. “Equalization seems like the right thing to do if we need to raise revenue, since sales tax is such a large portion of our revenue.””
“I’d like to keep considering it but with the expectation we do it as minimally as possible,” said Cowherd.
“It is so emotionally fraught, I’m not sure I can get behind it right now,” said Prochaska. “But I think the idea is one of asking them to help us in a time of need. Maybe we can take a deeper dive into the budget. The town is a place we all love. We need to figure out a way to make it work.”
“I’m not a yes at the moment but am thinking hard about it,” said Billick. “The affordability gap is real, so it is hard for me to be sympathetic. I support the polling to see what the community thinks is important. For me, I would like to take the RETT alternative off the table. I worry about the potential legal challenges and think land conservation is a defining element of the community.”
But several councilmembers liked the idea of using the estimated $800,000 in annual RETT revenue that could be generated through reallocation being used to fund a Good Deed program.
“If we as a community and second homeowners get behind a RETT reallocation, that would be very meaningful to me,” said Billick.
“We need long-term stable revenues and RETT is not that,” said Guilbert. She suggested the council whittle the options down to two so better, more focused conversations could be had.
Exemptions and rebates too?
The council agreed to focus on the vacant home tax and possible reallocation of RETT revenues. They also asked staff to investigate granting a vacant home tax waiver to any second homeowner that has owned property in CB for 20 or 25 years. Another avenue in the discussion is to find a way to rebate general fund property taxes for those who have owned town property more than two decades. Councilmembers felt this was a good way to help with the affordability gap. That property tax is not very high and would result in rebates generally less than $200 per year per individual and cost the town about $80,000. Staff will also look at impacts of exempting some STRs as long as they fill the house with rentals a certain number of days each year.
The public weighed in as well, and they mainly spoke out against the idea of new taxes. (See story on page 12).
“No matter what we do, our capital hole is pretty deep, so I think this conversation won’t be going away,” concluded Billick.
The next major work session on the issue is scheduled for July 20.
