UPDATE: A House legislative committee voted to reject House Bill 1036 on Feb. 9.
Leave it to government to try to improve quality of life by proposing a law that would actually degrade it. Democrats don’t have a monopoly on this sort of legislation, but their philosophy of scarcity, especially artificial scarcity, makes them especially susceptible to its charms.
Rep. Brianna Titone (D-Arvada) and Rep. Elizabeth Velasco (D-New Castle) are seeking to extract money from out-of-town property owners to subsidize “affordable” housing with House Bill 26-1036. The bill would allow municipalities to tax residential properties that they define as vacant, based on the number of days of physical occupancy by their owners. Short-term rentals would be excluded.
The bill would also allow local governments to band together to form special taxing districts for this purpose, even if they were in different counties, as long as they had shared or contiguous boundaries.
Assault on property rights
How awful is this bill? Let us count the ways.
First, it’s an assault on property rights. Yes, according to the US Census, a couple of Colorado counties – Summit and Eagle – have a substantial number of vacant dwellings. But this isn’t the Soviet Union during Dr. Zhivago. You can’t simply tell people that their houses are nice, but they could be used for so many more people.
The municipalities encouraged development of particular types of housing in order to benefit the ski market, and people obligingly bought those condos for their own use under those terms. Now, the Colorado Association of Ski Towns (or CAST, for what happens in a skiing accident), sees a chance at a money grab, and is lobbying in favor of this bill. Changing up the rules to charge some people for the privilege of using their own houses the way they like is a violation of the implicit agreement among citizens.
Moreover, those property owners most directly affected by the tax wouldn’t even have a chance to vote on it. By definition these are not their primary residences, meaning that they’ll be voting in their home districts, not where their get-away condos are. The tax would be imposed on those who have no real opportunity to oppose either the creation of the taxing district or the tax level.
The ‘affordable’ housing shuffle
In theory, this money could only go to so-called affordable housing projects. The problem is that “affordable” housing programs and projects almost never produce much in the way of actually housing affordability, but rather subsidize the existiing cost of housing for a fortunate few.
The bill sponsors claim that the purpose isn’t to punish the absentee owners, but to encourage them to convert their properties into rentals, by which means they could avoid the tax altogether – perhaps. The bill proposes no standard for “vacancy,” leaving that to the locality to decide. Politicians proposing such a radical solution to an alleged issue should at least be able to put forth a working definition of the problem.
Having a mountain get-away at their disposal is a long-term dream of many Front Range citizens, most of them middle-class and a little later in life. Additional taxes put that further out of reach than regulations and existing taxes already have.
As Randal O’Toole has noted, the real problem here problem is land-use restrictions, not a dearth of subsidies for housing people don’t really want.
The solution lies not in increasing taxes but in increasing supply. Many of these towns are surrounded by federal land that’s unavailable for development. Indeed, the federal government owns well over half of Colorado west of the Continental Divide.
But many of the same politicians who clamor about affordable housing publicly opposed selling any federal land to free it up for development, calling instead for even more protected land. The raw populations involved are relatively small, and could easily be accommodated by allowing mountain towns to expand along their borders.
Affordable housing in Colorado mountain towns is a complex issue, and it will only be solved by increasing supply and increasing homeownership, not by unfair gimmicks like HB 1036 that benefit only local governments at the expense of property rights.
Joshua Sharf is senior fellow in fiscal policy at Independence Institute, a free market think tank in Denver.
