The Crested Butte News Serving the Gunnison Valley since 1999
How much will make an impact?
By Kendra Walker
While the Mt. Crested Butte town council plans to move forward with a ballot measure to increase its current 2.9% excise lodging tax on vacation rentals in order to collect additional funds for the town’s affordable housing fund, the council is still undecided on the percentage tax increase to present to voters in November.
The town’s excise lodging tax is 2.9% and part of the 16.8% total of required Mt. Crested Butte lodging taxes. The town’s affordable housing fund is currently committed to paying for the Homestead affordable housing development over the next five years, and the town plans to finance $5,000,000 of the Homestead project to cover the town’s cash flow shortage. Therefore, the town does not have enough funds to support any other affordable housing projects or initiatives.
During their July 16 meeting, the council discussed how they would like to approach the ballot language when asking voters to decide on a potential increase on top of the 2.9%.
Town finance director Karl Trujillo explained that with the affordable housing fund tied up with Homestead, the town will most likely net approximately $500,000 a year for the next five years. “$500,000 won’t even buy you a condo. What are we going to do with that money?” he said. “There’s going to be stuff that comes up that we can’t be a part of.”
The council agreed they would like to include language on the ballot that helps explain the town’s need for additional affordable housing funds in order to make any impact. However, the council was split on the percentage excise tax increase amount, and whether or not that increase would sunset after a certain period of time.
Council members Janet Farmer, Michael Bacani and Dwayne Lehnertz have voted against putting an increase on the ballot in the first place, not wanting it to appear that the council is endorsing a tax increase. However, Lehnertz said he would consider a 1% increase. Mayor Nicholas Kempin, councilmembers Roman Kolodziej, Alec Lindeman and Steve Morris appear open to going higher than 1%. Morris was not at the July 18 meeting.
Trujillo explained a hypothetical, “Let’s say you increase it by 1.1% to make it an even 4%. That brings in $1 million a year, so over the next five years you’re saving $5 million.
“$5 million in five years wouldn’t address the fact that we’re having to borrow money,” said councilmember Alec Lindeman, referring to the Homestead financing.
“That doesn’t really do much for you,” agreed Trujillo. “If you’re going to the voters to raise it, you could go more than 1%,” he suggested.
“Looking at the financial reality of just what 1% will do and trying to be impactful, it’s like taking one Advil, it doesn’t do anything,” said Kolodziej. He suggested an increase of 2.1% for a total excise tax of 5%. He also suggested going for an increase that keeps the total Mt. Crested Butte lodging taxes under 20%.
For comparison, the town of Crested Butte’s excise tax on vacation rentals for affordable housing is 7.5%, with its total lodging taxes at 20.9%.
“The biggest concern for me is setting that number high enough to get us money,” said Lindeman. “It’s not about us being comfortable with a number, it’s about how to address this problem.”
“To me, there’s no clarity on what we are shooting for,” said Lehnertz. “What is our goal? How many units by when, how much money by when? Exactly what is it that we’re trying to accomplish?”
“That number you’re looking for is equally hard to define,” said Kempin, explaining that while the town’s affordable housing fund can be used for building or purchasing housing, it can also be used to help preserve deed restrictions and prevent foreclosures or help contribute to other housing projects in the valley.
Kempin noted several housing projects that the town could possibly help contribute funds toward, including Whetstone and the Villages at Mt. Crested Butte.
“Homestead is a top priority to get finished, but there are projects following on the heels of Homestead that would far exceed the money we’d have,” he said. “It seems like we’re so far behind in the problem that even if we had 1, 2 or 3%, the chances of fixing our problem are very slim to me.”
The council asked town staff to come back with different scenarios for different percentage increases, and what those amounts could go toward. The council will continue the discussion at their next meeting. Town clerk Tiffany O’Connell told the council that she must certify the ballot language by September 9 and asked that the council approve the ballot language by their August 20 meeting.
