Elizabeth Milias: Words of war against Aspen’s second-home owners
The Red Ant
Oops, he did it again. In a recent social media post, Councilman Skippy Mesirow passionately proclaimed his excitement about the phasing and financing of Burlingame 3 and the Lumberyard, and notably about “new revenue streams” to fund these subsidized housing projects including through the implementation of a “vacancy tax.”
But this time, I picked up the phone. I called Mesirow to gain an understanding of his exuberance and to hear his rationale for potentially taxing the same local property owners who have already paid a 1.5% real estate transfer tax (the RETT), two-thirds of which goes to housing, if and when their homes are left vacant for six months or more.
Mesirow’s thinking is that it’s about “community displacement,” loosely defined with the example, “The West End used to be a neighborhood with 75% full-time occupancy; now it’s like 25%. The difference is the number of locals displaced who have had to find housing elsewhere.” It’s the acknowledgment of a long-known Aspen real estate reality where former rentals have been purchased and fixed up as second homes, removing them from the rental pool. (This has been happening in Aspen since Walter Paepcke rolled into town in the 1940s.) It is Mesirow’s thought that this “community displacement” might now be countered through a punitive tax.
But that would be to ignore rational behavior. To avoid a vacancy tax, people would either stay in their homes longer, or their friends and families would. Mesirow idealistically offered that owners also could house their landscapers or housekeepers, fulfilling council’s goal of a “full, lived-in community.” While viewing this action as a “class neutral” solution while also raising additional housing funds, and ignoring the fact that those who pay the RETT are the same people whose private property will be taxed when vacant, Mesirow, it dawned on me, is referring to the end game of a utopian “class neutral” society where everyone is properly and locally housed, not how we get there. Words matter, and in this case, I’d say a vacancy tax is the furthest thing from “class neutral.” It’s more like class warfare.
The vacancy tax discussion was recently initiated by Councilwoman Rachel Richards, the godmother of Aspen’s housing program, who cited the enactment of vacancy taxes in Vancouver, Los Angeles and Oakland. In these examples, a 1% vacancy tax is meant to increase housing supply, thereby reducing the cost. But the root causes of those housing shortages are far different than Aspen’s. In Vancouver, it’s about empty condominiums. Not just vacant, but empty. These real estate investments are never furnished nor rented out, just held as appreciating assets. In LA and Oakland, it’s more about blight. Empty lots, buildings and houses hit with a vacancy tax create the incentive for owners to either fix them up or sell to someone who will. Aspen has neither of these problems, and we should never wade into waters where we’re telling private taxpaying property owners how or how often to use their homes.
The preposterous money-grab could look like this: A home is sold in the West End for $8 million. The buyer pays the 1.5% RETT, which includes $80,000 to the housing fund. Then, potentially, if the owners don’t use the home six months or more of the year, that’ll be another $80,000 each cycle. Does our City Council have so little respect for second-home owners and their contributions to the community that this would even be a consideration? Apparently, yes. And that’s not to mention that the owner of a $8 million home also pays property taxes in the neighborhood of $20,000 a year, regardless of how often they’re here.
Never mind the Orwellian tactics needed to enforce such a tax that benefits an agency that still doesn’t know who lives where and whether they comply, my conversation with the councilman included the stark irony of a vacancy tax in Aspen coming from the same guy who just last winter went on an expletive-filled rant about how crowded Aspen is during the holidays. After all, a vacancy tax would create a perverse incentive for people to come far more often and stay much longer. Furthermore, council’s goal of a “full, lived-in community” would look exactly like what Mesirow freaked out about last winter.
I love living in a resort community, with the ebb and flow of the population changing in cadence with the seasons. Aspen is not Highlands Ranch, and council’s goal of a “full, lived-in community” is more than just a little frightening. Am I the only one who has visions of Omar Sharif’s “Yuri” returning to his Moscow home after the Russian Revolution to find it divided into tenements in Dr. Zhivago?
We do have specific housing needs, but the current influx of RETT dollars into the subsidized housing fund from Aspen’s red-hot real estate market continues to pile up. And no, this doesn’t imply using them to fix up units we’ve built and sold that have been neglected by their owners, as some would suggest. But that sounds like another phone call for another day.
Aspen needs to get its subsidized housing program in order and worry less about the tax-paying free market property owners who fund it. Contact TheRedAntEM@comcast.net
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