02 Aug JUNE/JULY REPORT – From the TAR Government Affairs Department
This Article was written By Nick Bokone, TAR Government Affairs Consultant
June/July Article, 2018 |
Telluride Council Considers Tax Questions to Improve Affordable Housing Crisis
The Town of Telluride may ask voters in November to levy new taxes on property owners and short-term rentals (STR) of private homes to assist in the problem of providing attainable housing for the workforce.
In an early July work session, town council continued a discussion from February about possible funding mechanisms to bolster affordable housing opportunities. Although the Town of Telluride has not scheduled, nor budgeted for, a municipal election in 2018, the town has until September to decide if it wants to create special ballot language requesting a mill levy on property owners and a 2.5-5 percent excise tax on STRs.
After a healthy discussion about what other ski towns around Colorado do, council members entertained a mill levy on property, which Council member Geneva Shaunette said, “might be a more stable source of income than a (STR) tax.” No further action was taken on the issue at the work session, but we’ll monitor the issue closely.
After that, the meeting turned to taxing short term rentals (STRs). Town Attorney Kevin Geiger again reported on how other ski towns handle this issue, and he stressed that he wasn’t suggesting a lodging tax that would involve hotels and other commercial accommodations, but rather an excise tax on vacation rentals of private homes. Geiger said a 5 percent tax on AirBnB and VRBO hosts could deliver $1 million to the town’s affordable-housing coffers.
Since no motion was made to raise a ballot question, Murphy instead took a straw poll to gauge the feelings of council members. Council members and the mayor seemed to agree in the end that a combination of a mill levy and STR tax could help affordable-housing efforts.
Affordable Housing Project Moving Forward
As reported in the Daily Planet, Telluride Town Council addressed several issues concerning the development of new affordable housing projects during its regular meeting last week. First, the Town Council approved a motion to transfer the property known as Lot B, Pearl Subdivision to the Block 23 Housing Corporation, which will use the land to break ground on a new affordable housing project in the Carhenge, Coonskin Area and Pearl Property region by the end of July.
Following the recommendations of the Telluride Housing Authority, council approved the motion to continue with construction of the proposed Lot B affordable housing project and accept the estimated contract sum for the project, which should not exceed $7.52 million. After completion, the estimated revenue for the housing subdivision should be around $6.38 million. Construction may take up to 14 months, depending on the availability of subcontractors, according to Lance McDonald, town program director.
Town Council also voted to permit the planning stage of the development of town-owned parcels of land in the southwest portion of Telluride. They noted the potential impact on nearby stakeholders during development. In that light, council decided that the consultants for this project must be familiar with the Telluride community and land use codes.
The area known as Lot B has been a point of contention for citizens over the years. In 2014, voters decided against using the area to house a new town medical center. It was then decided that the land could be used for future affordable housing development, as long as the wetland area was transferred to the Valley Floor.
Council also approved an update to the Telluride Affordable Housing Guidelines to clarify classifications for rental income. Under the new definition, regular, earned income is defined as “income derived from one’s own labor or through active participation on a regular, continuous, and substantial basis in a business and including retirement funds from deferred income earned from employment. Unearned income is labeled as “passive activity.”
State News – CAR Supports “Let’s Go Colorado” Ballot Effort to Address Statewide Transportation Woes
The Colorado Association of REALTORS, together with the Denver Metro Association of REALTORS® and the South Metro Denver REALTOR® Association, has contributed money and is seeking financial assistance from NAR to support a ballot effort that could possibly bring relief in a very equitable and fair way to roads and transportation issues across Colorado.
Let’s Go Colorado! is the group supporting a possible ballot initiative in November that would raise the state sales tax .62% and establish structure to specifically dedicate this money to state and county transportation projects. If passed, the idea to raise the sales tax just over a half penny per one dollar value could raise around 35 billion dollars in the 20 year lifespan of the tax increase, thereby providing much needed funding to help alleviate the congestion all over our state.
A small increase to the state sales tax is an attractive solution for a number of reasons: It is shared by tourists and out of state visitors who vacation in CO and use our roads, it is more attractive to the real estate industry than a “mileage tax” since our members spend significant amounts of time driving for their jobs, it is more effective than a gas tax since MPG has gotten much higher on almost all vehicles and some use very little gasoline at all.
For more information on the possible ballot measure, click here: https://www.letsgocolorado.com/
National News – Uncertainty Ahead for Consumer Financial Protection Bureau
The U.S. District Court for the Southern District of New York has ruled that the Bureau of Consumer Financial Protection lacked the authority to bring an enforcement action against a New Jersey company “because its composition violates the Constitution’s separation of powers,” and as a result, terminated the Bureau as a party to the litigation.
The case concerned allegations of violations of the Consumer Financial Protection Act (CFPA), where the defendants, a company that offers cash advances to consumers awaiting payouts from settlement agreements or judgements, was charged with engagement of deceptive and abusive acts or practices. The Bureau claims the defendants were scamming retired NFL players suffering from brain injuries and September 11 First Responders anticipating large settlements by enrolling them in high-interest loans. The defendants argued that the Bureau is unconstitutionally structured and therefore lacks the authority to bring claims under the CFPA. The court agreed with the defendants’ argument and further held that the Dodd-Frank provision creating the Bureau should be eliminated.
This case followed in part with the dissents in PHH Corp. v. CFPB, citing that the Bureau is “unconstitutionally structured because it is an independent agency that exercises substantial executive power and is headed by a single Director.” Recall in this case, the U.S. Court of Appeals for the D.C. Circuit held that the unilateral authority of the Bureau vested in a single person who is not subject to dismissal in the discretion of the President was not unconstitutional and the provision in the 2010 Dodd-Frank law, which limited removal of the director only “for cause,” was held as consistent with the President’s constitutional authority.
With the split in circuit court decisions on the constitutionality of the Bureau, it is likely the Supreme Court could weigh in and determine the future of the Bureau structure. In the meantime, Kathy Kraninger, associate director at the Office of Management and Budget has been nominated as the permanent Director of the Bureau. Acting Director Mick Mulvaney has been leading the Bureau since former Director Richard Cordray left and fighting claims for the position by Cordray’s appointed acting director, Leandra English, since that time. The litigation on that issue is still pending before the U.S. Court of Appeals for the D.C. Circuit after oral arguments where held in April. Kraninger must be confirmed by the full Senate, which may not occur until at least the fall.