Council proposes using resort tax to fund community housing

The Whitefish City Council voted unanimously to review a proposed financial plan which reallocates resort tax funds to include community housing. Staff was directed to schedule a public hearing on Aug. 7 to consider adopting the plan.

The plan, called “Community Housing: Resort Tax”, designates 10% of the 3% resort tax to be used specifically for community housing projects and programs beginning in February 2025. The plan is estimated to generate about $27 million over 20 years.

Whitefish’s 3% resort tax is collected on “luxury” retail sales, lodging, at restaurants and for prepared food and alcoholic beverages. Funds generated from the 3% tax go to property tax relief, streets, parks and beginning in 2025, maintenance of the Whitefish Trail.

In 2015, voters approved increasing the resort tax rate from 2% to 3% for additional tax relief and to purchase the Haskill Basin Conservation Easement to protect the town’s water quality. That bond will be paid off in early 2025.

“The Haskill Basin Conservation Easement will be paid off in January 2025 so this is opening up more funding for streets, paths, parks, the Whitefish Trail and potentially, community housing,” Whitefish City Manager Dana Smith said. “All will continue to see an increase in funding with this proposal.”

Voters will be asked to vote on the “Community Housing: Resort Tax” plan in the November 2023 municipal election.

Proposed uses of the funding include development of community housing and community housing programs like rental and down payment assistance. All expenditures will be approved by the city council on a project-by-project basis.

After in-depth discussions and review, both the Resort Tax Monitoring Committee and the Whitefish Community Housing Committee approved the plan and recommended its adoption by the city council. City staff recommended the plan as well.

Five speakers during public comment were all in favor of the proposed reallocation.

Nathan Dugan, President of Shelter WF, encouraged residents to vote in favor of this plan.

“Ten percent, this $27 million over 20 years is a great first step and… we need that for sure,” said Dugan. “We don’t have any permanent funding for housing or housing initiatives at this point – that’s a good funding source.”

Daniel Sidder, Executive Director of Housing Whitefish, spoke in favor of the plan and asked the council to approve it and put it on the ballot.

Last year, the Whitefish Housing Needs Assessment noted that the city needs 1,310 new housing units by 2030, 75% of which need to be priced below market rate to meet the needs of the community.

Shortly thereafter, the Whitefish City Council adopted the Whitefish Community Housing Roadmap to increase the number of community housing options and provide strategies to meet the need for additional units.

According to the city staff report, a top priority of the Housing Roadmap is to secure local funding for community housing initiatives by asking voters to approve a portion of the city’s 3% resort tax for community housing development and programs.

The use of resort tax as funding for community housing is just part of the strategy for securing funding. Other options include grants, philanthropic contributions and business community buy-in which will further leverage funds provided by the resort tax.

The resort tax began in 1996 and has been extended and modified often. Most recently, in Nov. 2021, voters approved a 20-year extension of the resort tax to 2045 and a new allocation of the resort tax for the Whitefish Trail.

The allocation voters approved in 2021 was 25% for property tax reduction, 58% for the repair, maintenance and improvement of streets, storm sewers, all underground utilities, sidewalks, curbs and gutters, 10% for the maintenance of bike and pedestrian paths and parks, 2% for maintenance of the Whitefish Trail and 5% for administrative costs.

Currently, streets receive about 43% of the funds. If the community housing portion is approved, streets will still fare better, with 48% of the allocation.

Should voters fail to pass the ballot item allocating 10% to community housing, the use of the resort tax, beginning in February of 2025, will adhere to what the voters approved in 2021.

Council voted unanimously to approve the plan and schedule a public hearing at the next council meeting on Aug. 7 to adopt the plan and ballot language for the election in November.

The council and staff discussed at length how to get property tax relief back to residents rather than to out-of-town homeowners. Ultimately, it was agreed the focus stay on this reallocation for community housing and the topic of property tax relief is best left for another time.

“I am very hesitant to try to ask the voters for two completely separate issues at the same time,” said Councilor Ben Davis. “I’d like to see us follow through with that but maybe not today.”