Our View: Second homes and taxes
At a symposium last week in Vail, officials from resort communities throughout Colorado gained a better understanding of the value second-home owners contribute to their economies as well as the challenges they present.
In Steamboat Springs, such information should generate greater respect for second-home owners and the role they play in the financial health of the community. But the information also underscores that the city is doing the right thing in re-examining its tax structure and trying to develop tax policies that are more equitable and more stable. Simply stated, second-home owners are not paying a share of taxes equal to their contributions as long as the city of Steamboat continues to rely almost solely on sales taxes for its revenues.
In 2002, a study conducted by the Northwest Colorado Council of Governments evaluated the economic and social effects of second homes in Eagle, Grand, Pitkin and Summit counties. Using census data, surveys of homeowners and other information, the study found second-home construction and owners’ spending made up 34 percent of outside dollars pumped into the region. The impact of that economic activity was 31,621 jobs — 11 percent more jobs than were created from winter tourism.
While the study did not include Routt County or other ski resorts such as Telluride, Jackson or Durango, it is clear that similar trends are applicable.
The upshot? Tourism and skiing, while important to ski resorts, serve more to feed, rather than drive, resort economies. Sustained economic impact comes from resort visitors who take the next step and invest in property here. Typically, such visitors are Baby Boomers nearing retirement who have amassed significant wealth. Their ability to affect the economy greatly outweighs that of the average tourist.
But the positive impact of second-home owners does not come without problems. Most important, the regional study showed that each second-home owner generates a few jobs, mostly in the service sector, to support these part-time residents and their new homes. Each new job requires new housing, but often workers in those jobs can’t afford housing in the community, in large part because second homes drive property values upward.
We have advocated for affordable housing in Steamboat Springs and supported the creation of the Yampa Valley Regional Housing Authority as the most practical approach to addressing the area’s affordable housing issues. But the authority, on its own, will never be able to mitigate the ever-escalating costs of housing dictated by a resort economy. Nor should it. What the community can do is address other costs of living, including taxes.
For instance, an analysis of the city’s tax structure performed by the Pilot & Today last year showed that most residents — those with housing valued at $400,000 or less — would benefit if the sales tax on utilities and groceries were eliminated and they were required to pay a corresponding property tax instead. Such a move would shift a greater tax burden onto second-home owners.
The Council of Governments study shows how important second-home owners’ contributions to resort economies are. In Steamboat, there are steps we can take to help working families by shifting more of the tax burden onto this largely untapped resource. That’s something the city’s Tax Policy Advisory Group should consider.
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