The Crested Butte News Serving the Gunnison Valley since 1999
Vacant land to get taxed as well
by Mark Reaman
In what should not be a surprise to anyone, the Crested Butte town council on Monday approved a resolution in a split 5-2 vote to ask citizens to approve a vacant home tax on the upcoming November ballot. Councilmembers John O’Neal and Gabi Prochaska voted against the resolution while mayor Ian Billick along with councilmembers Mallika Magner, Kent Cowherd, Kate Guibert and Beth Goldstone voted in favor.
Crested Butte finance and administrative services director Lauren Hawcroft told the council the tax idea was part of the town’s long-range financial planning process. She said the goal was to provide affordability for full-time residents while closing a structural financial gap with town revenues.
Given previous discussions over the tax structure, staff presented the council with nine options for an excise tax. They chose to go with a tax on vacant land, and residential parcels in town that are not a primary residence. Non-primary houses less than 1,200 square feet will be charged $1,400 annually, houses between 1,200 and 2,200 square feet will be taxed $2,400 a year and homes larger than 2,200 square feet will be subject to an annual $3,400 fee. The tax on vacant lots will be $3,000 each. Those fees will be increased annually based on an inflation index and the money will be earmarked for capital expenditures.
Ultimately, the council voted to ask citizens in town to decide whether to increase taxes $1.25 million the first full fiscal year with the idea that the council would detail up to $250,000 in exemptions in an ordinance to be considered starting in September. There are approximately 410 non-primary home parcels in town and 60 vacant lots.
When discussing whether to charge every non-primary unit in town, the majority of the council agreed to not tax houses on lots that included a deed-restricted accessory dwelling unit. Goldstone said she had heard from some ADU renters that they were told if that tax passed, their rent would have to absorb some or all of the tax increase.
“That’s disheartening to think non-primary homeowners would impose a rent increase because of this,” said Magner. “I think the tax should be per unit and if it is not used as a primary residence, it should be taxed.”
“I’ve heard examples of cases where rents would go up and we could lose some votes from the residents in ADUs,” said Goldstone.
“That’s a compelling argument,” responded Magner.
Billick said he would agree to tax parcels instead of units “to soften the approach” of the tax.
On vacant land, Prochaska wanted to tax the lots just $1,000. “They don’t require the same services as a house,” she said.
“Every property in town benefits from town amenities,” countered Billick.
Most of the council stood behind the $3,000 tax proposal.
Overall, councilmembers reiterated the positions they’ve had for the last month of discussions.
“There is no question the town is facing increasing financial pressure,” said O’Neal. “But a lot of homes in every subdivision in the upper valley use our town services. So do tourists. I think we need to look closer at our spending before going for a new revenue source. I see another 1% in sales tax as being fairer to everyone and we could rebate some of that to town residents to address the affordability issue. Over time, sales tax has been rock solid so I would prefer to spread out the tax impact instead of asking a small population of property owners to take the burden.”
“I still don’t think this is the time for our town to do it,” said Prochaska. “There is too much we don’t know about the implementation of this. We could learn from another community doing it first. Plus, over time, I think some of the houses will be sold to people moving here so I don’t think it will raise $1 million a year.”
“It’s a bold move for sure,” said Goldstone. “I really see this as the equivalent of a homestead tax that is prohibited in Colorado. I really hope we can get community members, including second homeowners, on board to see how this can work and be a fair way.”
Using a Townie Takeover example about the importance of retaining community, councilmember Kate Guibert said community is made up of particularly people that live here. “We’ve all had feedback on how hard it is to live in Crested Butte. Our budget is a reflection of the community,” she said. “There are gaps with services going forward and I feel this is a fair mechanism to address this.”
“Everyone here loves this community,” said Magner. “I hope the second homeowners can see how this benefits the community and things we all love. Crested Butte is different from other resort communities.”
Billick listed several reasons he was in favor of the vacant home tax to raise revenue. “The capital needs are real,” he said. “Things cost significantly more now than five years ago. The revenue gap is significant. Local taxes like sales tax are the most regressive. The question of how we maintain affordability in a community with a widening array of wealth is in front of us. We’ve looked at other options like reallocating the RETT or a sales tax premium, but sales tax will see a lot of pressure probably from other entities like the RTA and the county. The vacant home tax is basically a homestead exemption. For me we are a low property tax state and that invites people to come in for investments and pay higher prices for property. If this doesn’t pass, the conversation isn’t going away.”
The council voted 5-2 to put the measure before Crested Butte voters on the November 3 ballot. They also approved a resolution authorizing the town clerk to enter into an agreement with the county to have it on the November 3 coordinated election. The cost to the town is estimated to be approximately $6,000 at $4 per registered voter.
They will look at the first draft of an ordinance containing exemptions to the tax at the September 8 meeting. In previous discussions, the primary exemptions would be based on longevity of a person owning a second home in town.
