The Crested Butte News Serving the Gunnison Valley since 1999
Looking at numbers, concepts and restrictions
by Mark Reaman
Instead of settling on definitive direction for ballot language at their meeting Tuesday evening, the Crested Butte town council members focused on receiving more options from staff to evaluate how best to implement a “non-primary home excise tax” ballot question this fall.
What was decided was to ultimately raise $1 million annually through the new tax if it is approved by voters in November. The council majority wants to include taxing vacant lots in the measure but couldn’t agree at what level. Town staff will prepare different scenarios of taxing different sized second homes differently depending on square footage. The other option would be to impose a flat fee on all non-primary homes in Crested Butte whether it is an 800-square-foot condo or a 3,000-square-foot luxury home. The council will look at financial modeling to determine if the tax should be applied to individual parcels or in the rare case where two non-deed restricted dwelling units are located on the same parcel, if both units should be subject to the tax.
Exemptions that will apply to the tax won’t be determined until September. So, the ballot language will likely ask voters to approve a tax that collects up to $1.25 million given that it is expected that eventually, up to $250,000 in exemptions will be applied to the tax, based primarily on whether a second home has been owned by the same owner or family for 20 or 30 years. Council also indicated it is willing to engage a citizen subcommittee during the 2027 budget process to get feedback and suggestions on how to improve town finances.
Crested Butte finance and administrative services director Lauren Hawcroft reminded the council that the “town faces significant capital needs to sustain a vibrant, year-round community. This measure,” she said, “is one piece of a broader response that include things like cutting expenses and implementing a staff hiring freeze.”
Town manager Dara MacDonald told the council the goal was to make sure the homes not subject to the tax are primary residences for someone, either an owner or renter, for at least six months a year.
She said, “Exemptions will be hashed out in September in an ordinance that will be approved by council before the election, so voters understand those exemptions. The proposed ballot language takes an occupancy number out of the equation.”
Town attorney Karl Hanlon said he originally worked on language requiring occupancy at least 183 days a year but felt this shift was a cleaner path for easily understandable ballot language. “This seems a better way to do it,” he said.
“I struggle with this change,” said councilmember Gabi Prochaska. “I still have the idea of a sales tax equalization goal in my head.”
“I’m struggling with logic too,” said councilmember John O’Neal. “People felt this was about sales tax equalization tied to occupancy. Now it feels different with a focus on non-primary residences.”
“It doesn’t change the intent to me,” countered councilmember Kate Guibert. “It makes sense to me and is simpler getting verification through things like a driver’s license or voter registration.”
“We have to come up with something not overly complicated,” said mayor Ian Billick. “This way it doesn’t get into business about how many days they stay at a home. Counting days is a big mistake. It’s not perfect but it strikes a balance. No matter what we do or don’t do, we will get criticism. Nothing about tax measures is fair.”
“The polling used the term non-primary residents,” said MacDonald. “Individuals coming to a rationale for or against the tax have different viewpoints.”
“This is similar to giving a homestead exemption for those people whose primary home is here,” added councilmember Mallika Magner.
“And that’s important for the affordability piece for residents,” said Billick using rising health care premiums as an example of major cost increases. “A sales or property tax would hit them hard. I don’t feel the new language is a significant change”
O’Neal was assured by Hanlon that a specific definition of non-primary home would be clear in September and before the vote.
Hawcroft told the council the ballot language would ask for $1.25 million to take into consideration the exemptions ultimately approved by the council in an ordinance. The idea that with the exemptions, the council goal of collecting $1 million would be accomplished. She said roughly $1.25 million could be raised before exemptions with a flat $2,500 fee imposed on the approximately 450 non-primary homes, the 53 vacant lots and 15 non deed-restricted Accessory Dwelling Units in town.
Hanlon said the ballot language would ultimately include two limits — the amount charged on the individual units, and the maximum amount collected in the first year. An inflation index will also be involved with the tax.
Responding to councilmember Beth Goldstone’s question about whether or not having the exemptions on the ballot would lead to legal issues, Hanlon said that under the state’s TABOR regulations, the cap is set in the ballot language and cannot be changed by council. “It is legal to have the exemptions in an ordinance rather than ballot language,” he said.
“While legal, it doesn’t help with clarity on how it works,” said O’Neal.
“That’s why the implementation ordinance is done in September with plenty of time for voters to understand it,” said Hanlon.
While the majority of the council was in favor of taxing vacant lots, they were split on whether to charge a high or low fee, especially given that vacant land is charged a substantially higher property tax rate to begin with. Staff will run various scenarios.
While the council shied away from taxing condos differently than single family homes, they did want to consider charging a fee based on square footage. Staff will run modeling showing what fees work if there is a break for units smaller than 1,200 square feet. They will also model two breaks with higher fees implemented on units above 1,200 square feet and again when a unit is larger than 2,200 square feet.
The council was also unsure on whether to charge the tax only on an individual parcel or in the unusual case where two ADUs without deed restrictions on the same parcel whether each unit should be taxed or just the parcel. Magner argued that taxing both could incentivize a property owner to long-term rent one of the units.
The council declined the idea of phasing the full tax in over two years and staff estimated administrative costs to get the tax up and running if it is approved would be around $20,000 but did not anticipate the need for a new fulltime employee.
The council will also consider a resolution supporting the ballot issue and urging citizens to vote for it. They are allowed to do that once under the Colorado Fair Campaign Practice Act. Council was generally comfortable with the draft prepared by staff and the resolution, which will lay out the council reasoning for the tax, will be considered officially by council in September.
During the public comment section of the meeting, several citizens spoke against the proposal. The concerns voiced from dealing with unintended consequences that would be better analyzed if another municipality in Colorado took on such a tax first, to providing a hard number for administration costs associated with the new tax, to lack of transparency for the public since the implementation ordinance is not what the voters see on the ballot so as a practical matter they don’t know about material exemptions when making their decision, to the consequences of being first to implement such a tax, the divisiveness being stirred up within the community with the proposal, to the fairness of not taking into account the nuance of different properties.
On a separate but related note, the council did seem to agree with Caren Carroll’s idea of appointing a budget oversight committee made up of citizens to provide independent analysis of town finances.
Staff will be busy the next two weeks laying out the different scenarios requested by the council. The council will then expect to decide on official ballot language at the August 17 meeting in order to get it on the upcoming fall ballot. As has consistently been the case, the council appears split 5-2 on the measure with councilmembers Prochaska and O’Neal opposing the idea.
