Lawmakers breathe life into real estate transfer tax

A WyoFile story by Mike Koshmrl

JACKSON HOLE, Wyo. — A legislative committee has resurrected a many-times-failed real estate transfer tax, a levy that proponents say could help turn the corner on a workforce housing crisis that’s fraying the community fabric of Wyoming’s costliest locale.

The idea behind the county-optional 1% tax, which has been repeatedly introduced by Teton County’s delegates, is to assess a sales tax on real estate transactions above a certain threshold. In its current form, the bill being carried forward by the Wyoming Legislature’s Joint Revenue Committee could generate perhaps $20 million annually for subsidized, deed-restricted housing or for other community needs, Rep. Mike Yin (D-Jackson) estimated.

“It could do a lot, it could really do a lot,” Yin said.

Real estate sales in Teton County are projected to top $3 billion in 2021, roughly doubling taxable retail sales in the tourist-swarmed community.

“Real estate is to Teton County what coal is to Campbell County, except that we get to sell it again and again and at a higher price each time,” Wyoming Association of Municipalities lobbyist Bob McLaurin said, testifying in support of the bill.

The tax structure being considered would allow counties to exempt up to the first $1.5 million of any real estate transaction. So if a home sold for $3 million, only half of that total might be taxed at the 1% levy if the county sought the full exempted amount. But the proposed legislation also allows counties to set the threshold lower, making the tax a viable option for counties where home prices aren’t so exorbitant.

Counties could pursue the optional tax if half the incorporated municipalities plus county commissioners agree to it, or if 5% of the electorate petitions for it. If that happened, the real estate tax would be put to voters in the county. How the funds would be used would be spelled out on the ballot “in a clear and appropriate manner,” according to the draft bill.

People whose jobs involve housing Jackson Hole’s workforce say the infusion of funds a real estate tax could return could dwarf public dollars currently going toward the cause. Over the past five years, the Teton County government has put $37 million in public funds toward housing, an investment that resulted in 241 new units and leveraged about $100 million in additional private capital, according to Jackson/Teton County Housing Director April Norton.

“That’s about all we can do, because we don’t have a funding source,” Norton said. “We are constantly vetting new potential projects, and our major limitation is funding. We have four [affordable housing projects] in front of us right now, but we won’t be able to afford four. We might be able to afford one.”

In the meantime, hourly wage laborers and salaried professionals who provide Jackson Hole’s most basic services are increasingly being priced out of the place where they work. That’s been an issue for decades, and it has been exacerbated by an aging workforce that’s retiring, cashing out on their high-dollar homes and leaving. Wealthy newcomers with location-neutral jobs are often taking their place.

“We are losing our employees,” Jackson Hole Chamber of Commerce President/CEO Anna Olson told revenue committee members. “My No. 1 issue for employers is the lack of employee housing here, and it’s getting worse by the day.”

New support

Olson urged the committee members to advance the proposed tax so it could be considered in the Legislature’s February budget session, and they did. The committee advanced the 18-page draft bill Dec. 15 by a 8-to-4 vote. A year ago, the Legislature’s Joint Revenue Committee killed a statewide 0.5% real estate tax 7-to-6. More than half that committee’s membership turned over, but there was also one vote that flipped: that of Rep. Tim Hallinan (R-Gillette).

Hallinan was swayed by a new provision in the bill that sweetens the pot for the state of Wyoming, he told WyoFile. Specifically, the Office of State Lands and Investments distributions to local governments exercising the real estate tax would be reduced by 50% — and those funds deflected to the general fund.

Hallinan is also not certain he’ll vote in favor of the real estate tax bill once the entire House convenes in February, he said. Because it’s a budget session, bills require two-thirds majority support to be considered in that chamber.

Two-thirds support is a “high bar” in Wyoming’s tax-averse Legislature, said Rep. Andy Schwartz (D-Jackson), who has introduced a real estate transfer tax several times without committee support.

“My hope will be that, even if it dies in this session, that it will come back as a committee bill in the general session,” Schwartz said.

Simple majority support is needed during the general session, a “huge difference,” he said.

Newspaper archives show there have been discussions about a real estate transfer tax in Jackson Hole since the 1980s, and attempts at bringing the idea to the Capitol in Cheyenne for 30 years.

A similar Teton County-led effort spanning decades was employed to pass another county-option tax now commonplace in Wyoming.

Lodging tax bills were introduced as long ago as 1965, according to old editions of the Jackson Hole Guide, but they were contested by the likes of the Jackson Motel Association, and it wasn’t until 1986 that then-Gov. Ed Herschler’s signature enacted the tax. Today, there’s a 5% bed tax on all short-term lodging in Wyoming, and counties have the option of assessing an additional 2% tax.

Old foes

Likewise, there has been steady opposition to the prospect of a new real estate sales tax. Laurie Urbigkit, government affairs director for the Wyoming Association of Realtors, relayed her position to lawmakers bluntly.

“Obviously we are opposed to this bill,” she said. “We always have been, and probably always will be.”

The Teton Board of Realtors has not taken a position on the bill, according to the Jackson Hole News&Guide. Some individual real estate agents, however, have come out in support, including the owner of Jackson-based Prugh Real Estate.

“I am for a transfer tax,” Greg Prugh said, “or at least counties having the option to pursue.”

Urbigkit dubbed the real estate tax “unconstitutional.” The 1% surcharge imposed on speculative real estate investments is not fair, she said.

“Putting a sales tax on those investments is not equitable when we do not tax stocks or bonds,” she said.

The private sector, Urbigkit added, can come up with solutions to workforce housing shortages in Jackson Hole and beyond. That’s being attempted. Jackson Hole realtors recently conceived a “Community Housing Fund,” a nonprofit that funnels donated real estate agent commissions and home seller proceeds toward affordable housing. The effort raised some $200,000 in its first month, the News&Guide reported, most of which was gifted to the Jackson Hole Community Housing Trust.

Although a real estate tax is thought of as a Teton County tool, the idea has generated interest within other Wyoming communities struggling to house their workforces. Greater Cheyenne Chamber of Commerce President/CEO Dale Steenbergen, who testified in support of a county-option real estate tax, told WyoFile he believes the bill could benefit southeast Wyoming.

“We’ve got to set the bill up so that it can serve a larger percentage of Wyoming,” he said. “I bet I have a bigger housing problem in Laramie County. Jackson would have a stroke if they had to deal with the housing problem I have. I need 5,000 housing units today.”