Beaton: Corruption resides in Aspen’s taxpayer-subsidized housing
March 18, 2017
There's a crime wave here in Aspen, and local government is an accomplice. I'm not exaggerating.
It's rooted in the taxpayer-subsidized housing program. That's the program where locals with incomes as high as $186,000 get taxpayer-subsidized housing in Aspen for dimes on the dollar if they win a housing lottery (or if they are insiders who bypass the lottery).
Most economists say such schemes make housing less affordable overall, not more. Indeed, four decades of taxpayer-subsidized housing in Aspen has produced the most expensive real estate in the country.
Economists also say these programs harm the intended beneficiaries by enabling employers to keep wages low, and that such schemes are rife with cronyism and inefficiency.
But now, more than 3,000 residents of Aspen receive this housing welfare out of a population of only 6,500. Reform is politically impossible — even as the projects fall into disrepair because the residents don't maintain them.
All of that is not criminal, standing alone. It's merely foolish. Aspen residents have the prerogative to get drunk on something-for-nothing economic elixirs, at least until the money runs out.
But here's what's criminal.
The residents of these taxpayer-subsidized units often re-rent their units at market rates through vacation rental websites. For the week of Christmas alone, they can realize a cool five-figure windfall.
The net result is that the taxpayers subsidize the residents' illegal off-the-books lodging business.
That blatantly violates the laws governing the program. It's also tax fraud, because the residents don't pay the city lodging tax on the sub-rentals. And it's tax fraud a second and third time because the residents don't report the income on their personal federal and state tax returns.
Some of these taxpayer-subsidized units are multimillion dollar homes. Some are adjacent the ski mountain, or even ski in/ski out.
Some are so nice that the purported residents don't live in them at all. They just illegally rent them out full-time at market rates to realize a tax-free profit of 300 to 400 percent.
I've written a lot about this scam. But nothing ever happens.
Then I received a call this winter from an award-winning investigative reporter with the CBS affiliate in Denver. He visited Aspen with his cameraman and interviewed me. He also found and interviewed a resident who had engaged in illegal sub-rentals.
The resident told the reporter that he engaged in this fraud because he "needed the money." Besides, he said, "a lot of people do it."
The report aired on Channel 4 in Denver and is available at http://bit.ly/2ndQ8pY.
Although this was deemed newsworthy 212 miles away in metropolitan Denver and caught on with national social media, no mention was made of the report in any of the local Aspen media.
While politicians feigned shock, many commenters just shrugged their shoulders: "Everyone does it."
I personally contacted several elected and appointed city officials including City Council members and candidates. In fact, I offered to meet with each to share my ideas about addressing the matter. None has accepted my offer.
Maybe I should not be surprised. Many of the Aspen elites participate in the program themselves. A few years ago four of the five City Council members — including the mayor at the time — were on the housing dole. So are many of the other opinion-makers in this town. Rumors abound that some professional real estate agents are happy to broker the illegal rentals.
Here's my assessment.
The Aspen establishment not only tolerates this fraud, but embraces it. While masquerading as ordinary socialist wealth redistribution, it is actually a political pay-off to a constituency of criminals. The corruption in the program is therefore not a flaw, in their view, but a feature.
Anyone who dares to call them out gets name-called, as I do every week. Or he's invited to leave town, as the mayor at the time suggested to me in his Facebook posting a few years ago.
Or, unrelatedly, I hope, his windshield gets smashed, as mine was in broad daylight. Or he's the target of physical threats, as I frequently am, to the point that friends urge me to install cameras at my house and carry a gun.
No matter. Attacks on me will not defuse this bombshell. It's much bigger than me.
Can't you imagine a new Trump-appointed prosecutor in Denver or elsewhere making a name for himself with a political corruption and criminal racketeering case against the elites of a resort town that votes 75 percent Democrat and is a favored stage for liberal Hollywood types and Democrat politicos?
So as a former lawyer, I have advice for the Aspen establishment who countenance this criminality: You can choose to straighten up or lawyer up.
Choose wisely. Conviction under the federal racketeering laws carries a jail term of 20 years.
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