Lawsuit on CB tax ballot language dropped by resident

Town indicates more lawsuits expected as part of non-primary resident housing tax

by Mark Reaman 

The day after a special two-hour Crested Butte town council meeting last week, the plaintiff who filed a lawsuit over the language of a ballot issue on a proposed tax of non-primary homeowners and vacant land in town dropped the suit. During that August 26 special meeting councilmembers strongly indicated they would fight the lawsuit, but they also agreed to hold off on any so-called “implementation ordinance” that would detail things like exemptions to the tax, until after the November election.

Crested Butte resident Marcus Martin had filed the suit in Gunnison County District Court stating that the council’s approved ballot language violated Colorado’s TABOR regulations because it was not clear on the ballot what exemptions the council was approving in a separate implementation ordinance (see letter on page 3). The council has for months discussed providing tax exemptions to longtime second homeowners based on the number of years they have owned the property.

“Despite the characterization of some staff and council, this action was never an attempt to take the question away from the voters but instead was an effort to make sure that the voters had a clear ballot that described everything they would be agreeing to in the tax,” Martin said. “It was based on the fact that the voters wouldn’t know about those potential exemptions when they were voting because they weren’t spelled out in the ballot language, unlike all of the other details that are specified. But council’s action to agree by resolution to not take further legislative action with an implementation ordinance before the election satisfied the concern addressed in the lawsuit.”

In the special meeting called to address the lawsuit on August 26, the council voted unanimously to proceed with putting its proposed excise tax on non-primary residences and vacant land on this fall’s election ballot despite the lawsuit. The council did not change the ballot language as the legal complaint requested nor was the vote postponed, but they did formally agree not to craft a so-called implementation ordinance outlining potential exemptions to the tax until after the election.

During the meeting, members of the public argued for why the council should press pause on the initiative. They cited the ability of the soon-to-be-formed financial advisory task force to analyze and make recommendations to the town budget; they cited the expense of legal fees associated with litigation; they said other solutions could be generated to tackle long-range town budget struggles; they said collaboration was better than divisiveness; and they asked for the town to learn how such a tax works from other towns starting a similar process before doing it themselves.

“I’ll repeat the request to hold off putting this tax on second homeowners on the ballot,” said resident Caren Carroll. “We’ve seen one consequence of this and there could be more. Community cohesion is important to me, and I don’t like the divisiveness this has brought.”

“I understand the struggle with this,” said Lis Collins. “Let’s pause and take the time to explore other, real solutions. Consider other alternatives that aren’t so polarizing.”

“Let’s take a deep breath and work collaboratively,” suggested Doug Fields. “It’s a mess. We can do better than this.”

“I believe the council relies too heavily on the town attorney for guidance,” said John Simmons. “I urge the council to press pause and look closer at the other ideas suggested to bring in revenue. I reiterate the advice to first do no harm.”

Rich Doce advocated that if the tax was implemented, the council should not implement any exemptions and the revenue raised should be at the $1 million mark.

“The town shouldn’t spend one dollar in litigation costs,” said Kyle Gauthreaux. “Go first with giving the financial task force the opportunity to make suggestions over the long-term budget. Given town reserves, the immediacy of this is not an issue.”

Town attorney Karl Hanlon provided background to the council on the lawsuit and said after talking to the plaintiff’s attorney, he felt the goal of the lawsuit was not so much to line up the language, but to stop the ballot issue from getting to the November election at all.

Hanlon recommended going into executive session that would not be recorded given attorney-client privilege so he could answer legal questions from the council, which they did for approximately an hour. Upon returning, he then answered several council questions in the public meeting.

Hanlon was clear that given the nature of the situation, if the council chose to continue with the ballot process, he anticipated additional lawsuits being filed every step of the way. He said the council should consider increasing the next year’s legal budget by approximately $100,000 to $150,000. He said that increased budget item could be the number expected to cover costs for his firm’s defense of the town. He said his firm charges a lower hourly legal fee for municipalities. If the town loses the anticipated lawsuits and must pay for the plaintiff’s legal expenses as well, he said the town could incur legal fees two or three times that amount. Hanlon indicated he has charged approximately $5,000 dealing with this specific lawsuit.

Hanlon advised the council that the town could alleviate the main charge in the legal complaint by not acting on an implementation ordinance before the election. He said it is common for municipalities to craft such legislation detailing things like exemptions to the tax either before or after the election. By not doing one until after November 3, the ballot language as it stands would be exactly what voters would be voting on.

After hearing about the potential future scenarios and future potential legal fees, the council was clear they intended to continue with the ballot issue, and it was not a matter of money, but principle. Some of the councilmembers were obviously heated over the perception of the town being intimidated and “bullied” by a group with money trying to, in their view, stop the democratic process.

“I don’t see how we can’t proceed with defending the town,” said councilmember Kent Cowherd. “We can’t just fold our cards.”

“People want a chance to vote on this,” said councilmember Kate Guibert. “I really struggle with the idea that someone with a bit of money brought a lawsuit to stop voters from having a chance to vote. Democracy should have a chance.”

“I disagree with the tax but stand by the process,” said councilmember John O’Neal. “The lawsuit appears an attempt to stop the vote and the democratic process. Even though I expect more lawsuits, I stand by the process.”

“I too have been against putting it on the ballot, but the council voted to put it on the ballot and the language was approved,” said councilmember Gabi Prochaska. “This is an attempt to keep this issue off the ballot and like John, I too stand by the process. This seems an attempt to bully the council.”

“I’ve been thinking hard about postponing it for a year,” said councilmember Beth Goldstone. “But I don’t think that would solve the issue and change anything. When it comes to divisiveness, this lawsuit is pretty divisive. Trying to stop an election is pretty disheartening. Let’s let the voters make the final decision.”

Mayor Ian Billick was out of town and not at the meeting. Mayor pro tem Mallika Magner indicated she took issue with any implication the council had not carefully considered the non-primary homeowner tax issue. “And we decided to do it. You can disagree with the decision, but it hasn’t been hasty,” she said. “As to divisiveness, it’s not the town trying to take away the democratic process from voters, it’s a group of people with money.”

Magner summarized the council position saying that “It would be a bad move for the town of Crested Butte to bow down to threats of litigation. If every time people with money threatened litigation and we stopped taking action, we’d never get anything done. It is important to not bow down to this threat. The right thing to do is proceed.”

And they will. In the end, council voted 6-0 to proceed with the ballot issue.

A hearing in Gunnison County District Court originally scheduled for September 1 was cancelled after Martin dropped the lawsuit.

“The council could have put the longevity exemptions directly in the ballot for voters to decide, which would have been perfectly legal, transparent and something that was asked for in early August,” said Martin. “Instead, they decided not to take that route. In fact, council could have voted to put them on the ballot at the time of the suit being discussed. They still had time. Instead, they chose to punt the whole exemption thing until after the election if the measure passes in November.”