CB council to continue Empty House Tax discussion

No one wants to divide the community

by Mark Reaman

While not wanting to sow division within the broader community, the Crested Butte Town Council will gingerly continue its discussion on whether to pursue a so-called “Empty House Tax” in town or look at alternatives to potentially tap into the revenue stream that second homeowners could provide for affordable housing or climate mitigation projects.

The council listened to some second homeowners and local businesspeople who generally expressed skepticism about the concept during an hour-long work session on the topic on January 6. But the council will continue having the conversation about whether to continue the conversation about the concept in February.

During the January 6 meeting, mayor Jim Schmidt said the council members had all received a lot of feedback on the proposal in the preceding weeks.

In a memo to the council, town manager Dara MacDonald outlined a potential way forward to have the council place an empty house tax on the November 2020 ballot. She suggested appointing a stakeholders’ group to add details to the concept and report back to the council with more specifics of how it would work. In her memo, MacDonald estimated that if 400 eligible “empty homes” paid a $3,000 excise tax it would generate $1.2 million annually. That money could be used to help subsidize another housing project like Anthracite Place or a solar farm that could power town operations.

Given the recent feedback, the council in general appears to want to look at more big-picture ideas and see how the concept might fit into long-term planning for the town. Many stated they want to look at possible alternatives to the tax but were still willing to listen to ideas for the tax that might bring more people on board.

Council member Will Dujardin was the biggest advocate of continuing the effort for such a vacancy tax. “This is the beginning of something that will benefit the entire community in the affordable housing and climate action areas,” he said. “We need to find a way to pay for that. The comments we’ve received are not keeping me from wanting to implement a tax in whatever form. But we haven’t decided any details. That’s where the stakeholder group would come in.

“I think many of the arguments are based in emotion and not facts,” Dujardin continued. “We are in a housing crisis. I continue to worry that in a few years there won’t be enough people living here to run for council. There won’t be enough people to work in the businesses that are already shutting down a day or two a week because of not enough workers. This tax is a potential tool to implement the efforts we are working on.”

“The idea was originally brought up at the Candidate’s Forum to fund affordable housing or climate mitigation projects,” said council member Mona Merrill. “I am disappointed it already seems to be divisive in the community. I want to have the discussion within the community but am concerned it will be an ‘us against them’ attitude. So I think we need to first figure out where we want to be as a community in 10 years and figure out how to get there. I feel the discussion of detail hasn’t really started but it is an emotional thing. We need to work on the big picture together and find creative ways to get there.”

“I agree we need to get creative,” said council member Laura Mitchell. “We’ve already done some things like implement a short-term rental tax that goes to affordable housing. The only way I’d consider this is to blend it into the Climate Action Plan and maybe use some of the money to make houses in town more energy efficient. At the moment I’m pretty uncomfortable with it. This community needs and appreciates second homeowners and I see a lot of grumpy faces right now with this idea.”

Council member Mallika Magner said when asked during the recent council election if she would be open to the topic, she said she would like to hear more from the public and she intended to keep that promise. Council member Candice Bradley agreed that the topic of an Empty House Tax should be discussed more in depth before moving ahead.

Bringing revenue…but conflict?

Council member Chris Haver had mixed feelings on the proposal. “I appreciated that we could explore another funding option,” he said. “As we solidify the vision of the town we will need to make some tough choices and this could be one of them. But I didn’t realize how far-reaching it could be. The polarization it has generated bothers me. A beauty of our town is that everyone comes together and I want to preserve that. I can’t say I’m super comfortable with it right now.”

Mitchell said there was a trust set up in Telluride that catered to second homeowners who want to contribute to various causes. “I think something like that would go over better,” she said. “I think it could be successful as a volunteer thing rather than a requirement through a tax. Are we really going to put a lien on someone’s house if they don’t pay the excise tax? And think of the old-timers like the Ruggera family. They have had the house in the family for generations and yes, it is vacant, but they helped build this town. There’s a lot of moving parts with something like this.”

Mayor Jim Schmidt reiterated his concerns with the concept. “I have had reservations with this since the beginning,” he said. “The Telluride trust idea could be a good one. I hope the Valley Housing Fund looks at that as a possibility. But my basic feeling is the problem of the divisiveness. Is it fair to just tax the second homeowners? The town of Crested Butte has done a lot for housing and I’m glad other entities like Mt. Crested Butte are stepping up with its lodging tax. But the problem with a flat tax is that it is regressive. It hurts people like the old-timers. And different people have different second homes. Some are humble and others are outlandish. There is also no doubt second homeowners have made great contributions to the town. I’ve met many of them and they have become friends. As one suggested to me, put a face to the people who will be impacted by this.”

Schmidt also said enforcement could be problematic and if lawsuits were filed it could be expensive for the town, especially if the town’s insurance company chooses not to cover the litigation expense.

“I don’t feel it’s us versus them, it is us for all of us,” said Dujardin. “When our community is figuratively dying we need to do something that is an ‘us for us’ thing. In this case I think we need a specific project that the tax money would go for and a sunset might be a good idea. But are we here for our community or just because people got a good deal on a house compared to other ski towns?”

Public response

Members of the public filled the council chambers. “I feel like I’ve been mistaken for someone else,” said Jeri Sullivan Graham. “I’m not a multi-millionaire. I don’t have a large house. I’m all for climate action and one of the first things I did when I bought the house was make it more energy efficient. But I would rather spend the $4,000 or whatever this tax would be on going out to restaurants or shops that employ people or supporting the Nordic Center.”

“Higher taxes in town increase the costs to live in town for everyone,” said Reggie Masters, who moved to the valley in 1971. “It’s always been that way. A lot of people want to live in town. Not everyone can. I can’t afford it. I’ve never been able to afford town. I live in Crested Butte South, which is a great community. It was my choice to recreate more instead of working to make more money and live in town. I like the idea of asking for voluntary participation for something specific like a solar farm. That is a good idea.”

“I agree with some of the things Will is saying, but I question his assertion that businesses support this,” said Joe Garcia. “Not the ones I have talked to.”

Bill Hayes suggested implementing a small tax similar to the 1% for Open Space effort that could raise funds for needed projects “and that way all three legs that hold up the community stool [working locals, second homeowners and tourists] would contribute. Even the tourists would pay into it.”

Alan Peterson noted that his property tax bill in Crested Butte is pretty small compared to other states. He said his extended family pays a lot more in property taxes for a home in Vermont that is valued at a fraction of his house in Crested Butte. “It is ridiculously cheap here. Taxes are cheap but the town is struggling to pay for needed things.” He suggested people might be okay to pay a similar amount to property tax in, for example, Texas.

“People with strong ties to the community will be negatively impacted through no fault of their own,” said Steve Ryan. “The need is for 12-month rental housing and you guys just turned down such a project [Brush Creek] that would have paid for it privately. Now you want to raise taxes for something you voted against. I also fear the second homeowners will reduce their contributions to local non-profits. If you want to do something that isn’t an ‘us versus them,’ give second homeowners the right to vote on something like this since it impacts them. It’s been done in places like the Mountain Village in Telluride. Think of the unintended consequences of another bad tax in Crested Butte.”

“My take is that in 10 and 20 years I want Crested Butte to still be vibrant,” said Merrill. “I don’t want it to be gentrified. It was an idea brought up at the Candidate’s Forum and I would prefer to look at it in the context of the Community Compass long-term planning effort. How do we get to a place where 75 percent of the houses have people living in them? That will take money but I’m more excited to have that discussion in the context of long-term planning. So right now we’re discussing whether and how to discuss it. There are no details yet.”

“I appreciate you are having the dialogue about having more dialogue,” said Mindy Sturm. “Maybe you look at cutting some of the fees on commercial property so those owners can go out and buy affordable housing. But I feel this conversation will probably lead to lawsuits and is very divisive. Focus on something else.”

“One thing special about our community is we are all there for each other and we all want to see that continue,” said Magner. “I am perplexed at the idea this is an ‘us versus them’ idea. That’s not from the council. We all appreciate the contributions of the second homeowners. I think before considering the tax we should identify what the money would be used for. Figure out what is the impact of second homes on the community and then we can determine a specific amount of money for mitigation. Let’s talk about exactly what we are looking to do and how much that would cost.”

“There is no way I want to polarize the community over this,” said Merrill. “That cost is too high for me.”

“I think we have a pretty solid hit list that includes costs of projects we want to accomplish,” said Dujardin. “A second Anthracite Place or a solar farm for the Climate Action Plan. There’s a lot of stuff going on here. The more we have an open, public process about this the better shape we’ll be in. I want to continue pushing this somehow to do something. I don’t want to back away from doing something bold. I’ve seen too many of my friends leave.”

He also said that if the council didn’t guide the issue, a citizen’s group could petition to have such a tax put on the ballot without the council’s blessing or input.

After more discussion at the end of the regular council meeting, the council decided to continue its discussion at another work session that will take place Monday, February 10 from 6 to 8 p.m.