Thursday, August 24, 2000
Steamboat Springs There's been a change in a controversial excise tax proposed on new construction. The Regional Affordable Living Foundation wants to lower the tax rate across the board in hopes of making it more attractive to voters.
After getting input from the public, RALF's board of directors, which met Thursday, decided to reduce the tax on homes larger than 3,500 square feet, in an effort to make the proposal more voter-friendly. The big change on the tax proposal comes for single-family homes bigger than 3,500 square feet. RALF had originally asked City Council to tax the big homes at $3 per square foot. The board agreed that $2 per square was more palatable for voters.
City Councilman and RALF board member Jim Engelken disagreed.
"This size house justifies the $3 tax," Engelken insisted Thursday.
Alan Keeffe, RALF's attorney, reminded board members that if the voters pass this excise tax initiative in November, it only allows the council to go forward with creating a tax.
"The ceiling would be $3. The council can always use a lower amount," Keeffe said.
Nevertheless, the board didn't take any chances and voted to lower the amount to $2 per square foot for homes bigger than 3,500 square feet.
The proposed tax rate for buildings with three or more units and commercial buildings stayed the same $2 per square foot.
Of special interest was what the RALF board decided about accessory apartments, also known as caretaker units or secondary units.
"We need to exempt them since they are traditionally for affordable units," said RALF attorney Alan Keeffe.
Others argued that the homeowner makes money off the caretaker units and should be taxed.
A caretaker unit is traditionally rented out at a more reasonable rate.
The RALF board decided to exempt caretaker units.
That means if, for example, a homeowner is building a 3,000-square-foot house and 600 feet of it is a caretaker unit, he would only be taxed on 2,400 square feet.
It must also be noted that both the county and city have certain definitions for caretaker units. The units can't be larger than 800 square feet in the county, and 600 square feet in the city.
Garage and decks would not be taxed as well under the excise plan.
However, additions to a home will be taxed at the rate of $2 per square foot, unless it is a caretaker unit.
Some members questioned possible loopholes in the ballot language.
"What if someone wants to make this (caretaker unit) into a rec room?" board member Karen Riggio asked.
Since remodeling isn't taxed, a homeowner also could conceivably turn a garage into another room, then build a detached garage nearby. That would avoid a tax altogether.
The board members agreed that the ballot initiative for the new tax couldn't avoid some construction falling through the cracks, but agreed their final proposal would accomplish its goal: raising money to buy land for affordable housing.
Resort areas are notorious for their housing costs, which make it difficult for workers to find affordable housing. In Steamboat's case, the cost of land is often prohibitive for the average worker.
Also at Thursday's meeting, several members of RALF's board of directors argued it was only fair that everyone who was building should be taxed, including those whose homes were less than 1,300 square feet. Current ballot language exempts anyone who builds a home smaller than 1,300 square feet.
"I keep hearing 'why isn't everyone involved,'" said board member Karen Beauvais.
"I agree," fellow board member Karen Riggio said. "They shouldn't be exempt because they built a smaller house."
"Everyone needs to contribute to an extent," agreed contractor and RALF member, Ron Goodrich.
RALF director Rob Dick said he understands the argument that no one should get a free lunch, but in the end, the board voted to keep the exemption on smaller homes for a couple of reasons.
First, board members feared that making the ballot language any more complicated could turn off voters. They also felt that taxing small homes would be, at times, taxing the people they are trying to help.
Also, Dick noted that rebates are available to builders if their new construction includes affordable housing.
"If there are units for affordable housing, they're encouraged to come to RALF to seek rebates and or additional funding," Dick said. "It's not RALF's intention to tax buildings that are affordable units."
If passed by Steamboat voters in November, the excise tax could go into effect for those getting building permits starting Jan. 1, 2001.
The excise tax would raise between $500,000 and $800,000. The proposal will go before City Council in September.
The Board of Routt County Commissioners has promised to support a similar kind of construction impact fee in the county, to keep builders from avoiding the city tax, if the city's tax passes. Also, an impact study would be needed first to show a relation between new development and affordable housing.
The combined fees could raise more than $1 million.
To reach Frances Hohl, call 871-4208 or e-mail email@example.com