Whitefish Council Approves Proposal to Reallocate Portion of Resort Tax for Community Housing

The Whitefish City Council voted last week to approve a plan that, if also approved by voters, would guide the reallocation of a portion of the community’s resort tax revenue towards community housing.

The only member of the council not to vote in favor of the plan was Councilor Rebecca Norton, who was absent from the meeting. The council will now have a public hearing on Aug. 7 in which city staff will present them with language for a ballot question that would appear before voters during this fall’s municipal election.

The plan calls for 10 percent of the resort tax revenue, an amount estimated to reach $27 million total over a 20-year-period, to go towards funding community housing projects and programs. As City Manager Dana Smith explained at the recent council meeting, for certain programs, like rental assistance, the council would approve an amount of funding on an annual basis, whereas in approving funds to go towards supporting projects, the council would approve each on an individual basis. 

“We need that $27 million yesterday,” said Councilor Steve Qunell.

Whitefish remains in the midst of a housing crisis. A community housing needs assessment commissioned by the city and published last summer showed a need for 1,310 new units of housing by 2030 with 75% of those units needing to be priced below market rate. From 2016 through 2021, the city added 1,069 new units of housing, but just 7% were below market rate.

The plan approved by council estimates that currently a community housing rental unit priced at 70% of the AMI (area median income) requires $169,000 in funding, and an ownership united priced at 100% AMI requires $350,000 funding.

“Housing is particularly difficult problem to deal with in this town. The numbers are really depressing. If you look at how many units you need and how much it costs to produce a unit, the numbers are absolutely mind boggling. And no doubt what’s in here isn’t enough to solve a problem and it’s not our role necessarily to solve the problem,” Councilor Ben Davis said. “But if you talk about where does the money come from and what is the most equitable way to raise funds to help those in our community that need this, if you ask me the resort tax is really the best possible place. It’s the only tax we have that’s somewhat targeted at our visitation economy, which is what drives a lot of the problems.“

The changes would not go in effect until February 2025. Voters in 2021 already approved reallocating a portion of the resort tax once the Haskill Basin Conservation Easement Bond is paid off, which is expected to happen prior to any reallocation. Under the proposed plan, instead of increasing the amount of resort tax funding currently allocated towards street repair and utilities projects by 15%, the amount for those projects would only increase by 5%. Currently, 43.34% of resort tax revenue is dedicated to funding street repairs and utilities projects.

The plan does not call for any change to the 25% in property tax relief that the resort tax revenue goes towards, but it became clear during the council’s July 17 meeting that in the future multiple current members of the council would support exploring possible changes to the way the city executes property tax relief through the resort tax, including by finding a way to send that money towards residents, as opposed to property owners.

State law requires that at least 5% of resort tax revenue goes towards property tax relief to taxpayers regardless of residency, meaning the remaining 20% currently allocated towards property tax relief could go elsewhere if voters were asked at some point to approve a change.  Councilor Giuseppe Caltabiano indicated that taking action on property tax relief is not something they need to wait on, and that he believes the council could successfully ask voters in this fall’s election to approve a change that would direct that relief towards residents, instead of property owners. But other members of the council, city staff, and the leader of one nonprofit that could receive funding from the community housing funds, outlined concerns with bringing a proposal involving property tax relief before voters this fall, including the fear that such a move could jeopardize votes needed to approve reallocating resort tax money towards community housing.

“This election cycle, the issues that have shown up with the DOR (Department of Revenue) sending out valuation changes, and that property taxes are going up—this would be a push coming out right about when the bills come out,” City Manager Dana Smith said.

Councilor Andy Feury, who was the last member of the council to speak on the issue, said that based on his past experiences with ballot questions related to resort tax “simplicity is the best message we can take out there every time.”

Of the current proposal, he said, “It’s probably the most amorphous expenditure of resort tax fund we’ve ever had,” and encouraged proponents to focus on the issue at hand, rather than questions of what to do with property tax relief.

Members of Shelter WF, a nonprofit that focuses on housing inequality, including its president and city council candidate Nathan Dugan, urged the council to consider taking action on property tax relief so that it’s more beneficial to locals. Dugan referenced some of the property tax relief amounts he said were going out of state, including thousands to Whitefish property owners with out-of-state addresses, as he tried to make the case that a change is needed. Still, Dugan said that the 10% of resort tax revenue reallocation towards community housing “is a great first step” and urged people to vote in favor of it.