Mt. CB considers STR excise tax increase

May explore impact study and fees in the future

by Kendra Walker

The Mt. Crested Butte town council continues to brainstorm avenues to bolster its affordable housing fund and is leaning toward a fall ballot measure to increase the town’s short-term rental (STR) excise tax for help. The council also expressed interest in pursuing an STR impact study to justify additional fees for revenue as well as a vacant home tax, but has decided to keep its focus on the excise tax increase for now leading up to November ballot deadlines. 

The current excise tax is 4.9%, which goes to the town’s community housing fund, and combined with sales and other local, regional and state taxes, STR guests pay a total tax of 18.8% in Mt. CB.

During a June 16 work session, the council discussed whether a tax increase would deter tourism. Council member Steve Morris supports a 5% excise tax increase and felt it wouldn’t impact tourism to Mt. Crested Butte. He noted the quality of the visitor experience is a more significant factor. “I’m not worried about this tax increase being the straw that breaks the camel’s back for people to come,” Morris said. “For me, it’s about product and experience. When a product degrades, oftentimes tourism numbers go down. I think our product has been degrading for years,” he said.

Morris continued “I think the cost of that experience is going up, while the actual experience quality is going down. I think scaring people off with a $37 chicken meal has a bigger impact than, say, a 1% sales tax increase or an STR increase.”

The council debated whether to tie the tax increase to only STR units outside the Downtown Development Authority (DDA). Some members argued that this could incentivize STR activity closer to the base area and transit hub, and decrease STR impacts in residential neighborhoods. Others worried that such nuances could confuse voters and wanted the increase to apply to all STRs across the board.

“I would be concerned about the complication of the ballot language. And I do think the wording of the ballot language can have a significant effect,” said mayor Nicholas Kempin. “I’m not saying it’s impossible. I’m just saying it’s something to really pay attention to.”

“I’m still on the fence with this, but one thing I think I really can’t get behind is the math that the voter has to do when deciding whether to vote on this or not,” said council member Roman Kolodziej. 

Council member Valeda Scribner felt voters could understand the differentiation in taxing outside of the DDA. “We can call it something super simple: the base area, places zoned for businesses.”

The council requested further data on the distribution of STRs inside and outside the DDA, and plans to continue the excise tax discussion and finalize ballot language this summer. 

The council is also interested in exploring a potential impact fee, tied to the specific costs of administering STR programs and findings from conducting an impact study of the economic impacts between STR guest spending and the number of jobs and employee households supported in the local economy by that spending. The impact fee would be charged to the STR owner, versus the excise tax being charged to the STR guest. The town of Telluride conducted a similar study and collected $1,243,507 from its impact fee last year, in addition to $1,098,650 from its excise tax. 

Town clerk Tiffany O’Connell estimated the impact study to cost between $35,000 and $60,000 based on impact studies done by Telluride and Breckenridge. The council agreed to hold a future work session regarding the potential impact study. 

“When we began the STR discussion, however long ago that was now, there was a lot of discussion on the impacts and locals being displaced. So there’s a lot of those things that I think are perceived, but we don’t have our data on them,” said Kempin. “And I wonder if this impact study, regardless of whether we actually implement an impact fee, would get us some good information. So many of these housing impacts we talk about, we assume are true, but we don’t have any hard data to back it up.”

And while the vacancy home tax remains a topic of interest, the majority of the council agreed to defer that conversation to the future to gather more information and insight to see how it might play out in the town of Crested Butte and other communities.

Kolodziej noted the driver behind all of these topics, which is to build more in the housing fund with the goal of creating more housing projects and development for locals to live in the town of Mt. Crested Butte. “What I keep coming back to is, what are we trying to do with these funds? And is it to punish STRs? Is it to force people to sell their places and not have them in the STR market? These are all things that we can’t do,” he said. “The only thing we think we can really do is to produce places for people to locally to live and make a difference. So that sort of narrows the needle.”