by Mark Reaman 

The initial direction from the Crested Butte town council to the staff following hours of council and public discussion Monday evening, was to begin crafting ballot language for an excise tax on so-called “non-primary residential homes” and possibly vacant lots in town. While the council was split with two councilmembers, John O’Neal and Gabi Prochaska opposed to the idea, one councilmember, Kent Cowherd, said he would prefer to prioritize a reallocation of the Real Estate Transfer Tax (RETT) but could support a vacant home tax if it included provisions addressing the “fairness” issue. Mayor Ian Billick along with councilmembers Beth Goldstone, Mallika Magner and Kate Guibert were strongly in favor of putting the issue on the November ballot.

The council direction ultimately included targeting $1 million in new annual revenue with an inflation index; earmarking the revenue for capital expenditures and not operating funds; imposing the tax on a graduated basis depending on square footage so a smaller house would pay a smaller flat tax than a larger house; and detailing exemptions in a supplemental ordinance that might include things like second homes that have had the same family owner for at least 20 or 30 years, if a home is short-term rented a certain number of days per year, or if a second home provides a long-term rental in an Accessory Dwelling Unit (ADU). Exemptions would not be part of the ballot language.

There are approximately 465 eligible “non-primary” or second homes out of 1,291 total residential units in Crested Butte. There are 53 vacant residential lots in town.

Crested Butte finance director Lauren Hawcroft opened the meeting explaining that “the long-range financial review process effort responds to the reality that rising costs for personnel, infrastructure, and services are outpacing revenues under the town’s existing funding model.” She indicated there was approximately $26 million in needed capital projects over the next five years.

Council had ordered a $15,000 public poll to gauge the appetite of voters for either a second home tax or a reallocation of the Crested Butte RETT that already provides funding for capital projects along with open space. That poll was conducted in late June.

Pollster Chris Keating said 66% of the 103 respondents supported the second home tax while 58% backed reallocating the RETT to provide more money for capital spending. He indicated both were strong numbers indicating good support for such a ballot issue. “It’s not often we see such high intensity support in such a poll,” he said about the second home tax. In response to a question from O’Neal he indicated 57% of those questioned said the idea of whether it was fair to single out one group for a tax could be a reason for some to vote against the issue.

Council takes

During initial council comments, Prochaska said the need for a new revenue source was inevitable, but she was leaning against the vacant home tax idea and preferred that other Colorado communities jump into the second home tax pool first and let Crested Butte learn from the process. “The divisiveness of this idea within the community is also very real,” she said. “Our second homeowner community is so varied from old-timer families to new wealthier homeowners. I think it is something that could be used in the future but not now. I support splitting the RETT open space contribution with capital. It’s a conservation element for the community and affordable housing.”

O’Neal agreed. “I’m against it. I’ve never agreed with the attempt to value what a household brings to the community. It can be so many things. I don’t agree with the logic,” he said. “I do agree with the RETT reallocation. The community has done a tremendous job preserving open space, now it is time to preserve community.”

“To the counterpoint, this community is a gift but also a responsibility,” said Guibert. “The less exciting part is paying for it. I see it as bringing second homeowners into the full community. I value second homeowners, many are my neighbors. But there are challenges to second homes. It is reasonable to ask them to share. We could go back to dirt roads, but that will cost us more in the long haul.”

“Having been in Crested Butte for decades, I value the open space and how the RETT helps pay for it. It makes it beautiful and more valuable,” said Magner.  “I’d have a hard time stomaching it if we stopped funding open space. I also agree with the contributions from second homeowners. We all appreciate them. But we are struggling financially. Crested Butte’s not a good place with more potholes. So many of my friends are feeling assailed by the increased cost of living. Town must look for other sources of revenue. The polling said residents of Crested Butte want to see it on the ballot, so it is incumbent of me to put it on the ballot.”

“I no longer support reallocating RETT funds,” said Goldstone. “It’s important to not mess with that right now. The poll results were surprising at how strong they were, so I think it is important to let the voters decide. I still see it as a sales tax equalization measure. I don’t see it as trying to be divisive.”

“In this case, fairness is important,” said Cowherd. “I prefer not raising taxes by using a RETT reallocation but think it is something second homeowners should contribute to. I would want exemptions for some second homes. Fairness is important in life, and it is important here.”

“The divisiveness argument doesn’t sway me at all,” said Billick. “I have a problem that we can’t have the conversation. There are strong arguments against doing a second home tax, but divisiveness isn’t one of them. It is also not an issue if people are valued or not. Everyone in the community is valued. I will point out that Colorado residents pay income tax and some of that comes back to the local community. People filing taxes in another state don’t make that contribution. One disadvantage is that it puts the burden of a lot of services all on second homeowners and I struggle with that. Plus, I would insist it goes to a specific need, that being capital expenditures and not general operating.”

Billick continued that nationally, philanthropy tends to go to things like open space and the arts. “What matters to me is whether the additional revenue is well spent,” he said. “If we don’t have taxes, the town is in bad shape. There will be sacrifices but what sacrifices are needed is the question.”

The public weighs in

With almost three dozen people on Zoom and close to 50 in the council chambers, the overwhelming majority of comments from the public was against the idea of putting a second home tax on the fall ballot. There were also questions about the accuracy of the polling and charges that the town could do a much better job of cutting spending and living within a tighter budget.

“How is 103 responses indicative of what town voters feel?” asked Lis Collins. “It’s not fair to say town residents support this. To base your decision on this poll is not wise at all.”

Resident and CPA Caren Carroll had presented the council with a letter/petition signed by 218 residents asking them not to put a tax increase on the ballot and instead take a super close look at spending and other ways for town to raise revenues. “The question is whether town is focused on core services,” she said. “My concern is that town chose to undertake these projects and is now looking for money to run them. I respectfully implore you to listen to your constituents and look inside your budget not outside to new revenue.”

Todd Lieble said he was concerned about the polling given what he saw as simplistic questions with no alternative options. “I think a second homeowner tax should be a last resort option,” he said.

Jim Day said his family was lucky to get a home in Crested Butte years ago. “We’re not rich. We’re on a retirement income. It’s beyond hurtful to be marginalized and segregated from these decisions,” he said. “Be bold. Be brave. And be inclusive.”

Paula Martin said she supported Carroll’s sentiments and guessed some second homeowners paid more sales tax in a year than she did as a full-time resident. “When saying second homeowners need to pull their weight and contribute their fair share, those are charged words,” she said. “Painting them with a broad brush is dangerous. A lot of livelihoods in this valley depend on the people not living here full time.”

Doug Fields said making policy is always slow and sometimes brutal and shouldn’t be rushed. “Listen to the voices tonight,” he said. “And the whole premise of taxation without representation is a valid discussion.”

“The poll feels biased and flawed,” said Haden Spencer. “What’s the difference in sales tax? Should that be the fee? Closer to $1,700 instead of $3,400. Almost 220 of your constituents signed a letter asking for more financial transparency. Don’t sweep the questions in Caren’s letter under the rug.”

Mark Kaufman strongly urged the council to not put the measure on the ballot. He said the analogy of the three-legged stool was a good one and council should not damage one of the legs. “We can do better. We are Crested Butte,” he said.

“It is penny-wise and pound foolish to go down this path,” said Bill Miller. “I suggest a spending freeze for one year. Potholes are free speed bumps.”

John Spencer asked council to organize an independent financial oversight committee with no staff to look at the town budget and determine where cuts could be made. “There is a lack of transparency with the town budget,” he said. “If this goes through, I’m afraid long-term second homeowners will leave and be replaced by new people with no sense of this community.”

Jim Starr spoke in favor of the tax. “I think a majority of the residents will support this in the fall,” he said. “I think it is a fair tax. When you buy a second home, you already do not vote in town. The services are needed and we need to keep people in the community. I’m afraid reallocating the RETT could be fraught with legal consequences. I wouldn’t want to lose that if it is challenged. Let the community decide on the second home tax by putting it on the ballot.”

Former councilmember Jason MacMillan said he supported the idea in 2021 and supported it now. “The increase in costs like paving the roads, labor and building costs are skyrocketing,” he said. “The cost of living has gone up, and this is one way to deal with that.”

John Simmons agreed with Starr that touching the RETT would be a mistake but disagreed with Billick that divisiveness wasn’t a real issue. “The first rule of medicine is ‘do no harm’,” he said. “This community usually does that. I’m not impressed with the poll. It asked one group if another group should be taxed and there should be no surprise at the result.”

“As a second homeowner, we love this place and contribute what we can,” said Bill Hayes. “We gladly commit our time and resources. But I think this opens up a hornet’s nest of people being angry. There has to be a better way than us versus them.”

“The poll was taken to get a specific answer – to tax part-time residents,” said Sueann Nichols. “Town is fiscally out of control. Putting a flat tax on every part-timer seems uncaring to those residents. And not targeting a specific project just creates a slush fund. Focus on needs versus wants.”

Kyle Gauthreaux said he rode his bike to the meeting and suggested the councilmembers could do the same and get a better pulse of the community talking to constituents from their bikes rather than looking at results from a poll. “I don’t understand how I’m not paying my fair share,” he told the council. “I liked John Simmons’ idea of a consumption tax. While I can’t vote I still have a choice. A choice of where to live and a choice with my checkbook.”

Brandon Burns opined that he felt town had been fiscally responsible. And he was for the vacant home tax. “We are all going to feel this at some point,” he said.

Mark Ailing indicated more taxes and higher payments for things like insurance was squeezing the people in the middle like himself.

Greg Flesher said council should be dealing with a spending problem, not a revenue problem. “If you cut spending, you wouldn’t need this revenue,” he said. “Listen to the responses tonight.”

Mike Keig said 200 people, residents and part-time homeowners recently gathered together to support the Gunnison Country Food Pantry. More than 360 pounds of food and almost $100,000 was raised. “The same scenario plays out across the valley all summer,” he said. “Residents and part-time residents come together to support local non-profits. It makes no sense to treat part-timers differently from those of us living here full time. Part-time residents are just an easy target.”

Former councilmember John Wirsing said he was shocked at how the budget had grown since he was on council. He said the current board appeared to not understand how to live within a budget and make hard decisions.

Ellen St. Germaine said council should think about the impact of such a tax on local businesses.

Caren Carroll concluded during the council meeting public comment period that she couldn’t wrap her head around the big budget expansion of the last several years and said she really didn’t feel council had listened to her and her fellow citizens. “I feel dismissed and don’t feel this discussion reflected Crested Butte,” she said.

More opportunity for discussion August 4

Public comment closed and council reconvened to debate the issue further. No one on council changed their initial position but council generally pushed back on the idea that the town budget was irresponsible. They said while there were probably things that could be trimmed, it would not add up nearly enough to the needed revenue.

Magner said she was perplexed by the focus on the polling since an election would truly determine the will of the people.

Goldstone said the idea of sales tax equalization made sense, but she was disturbed by the divisiveness. She also reminded the crowd that when the vacant home tax lost in 2021, second homeowners indicated they would step up and help pay for things like housing. While some new contributions were made to the Valley Housing Fund, not enough was given to substantially pay for a project like Paradise Park.

“Philanthropy doesn’t do what towns do,” noted Billick.

Guibert said she and her husband own a second home in Moab so she understands the challenges. But she said she wouldn’t “blink an eye” if being asked for something like what was being proposed by council.

O’Neal said perhaps town did grow too fast and said yes to too many things. But he said a tax on second homes was not the solution.

Cowherd said he was confident the town budget was tight and would prefer taking the RETT to voters.

Prochaska said she would challenge people to voice what should be cut from the budget.

Billick too said the budget has been transparent and tight. “Tell us what we shouldn’t have done. That’s a real conversation,” he said. “And I see this as a type of homestead exemption which other states have but Colorado doesn’t allow. The more the state constrains us, the clumsier the solutions we have to find at the local level.”

Council then set the direction for staff including setting a target revenue of $1 million a year.

Town manager Dara MacDonald said staff would bring draft ballot language for the council to consider at the August 4 town council meeting.