Taxing second houses and pieds-a-terre, in addition to property tax
The September 6, 2023 letter by Jeni Tveten, “Locals Support Better Lives for Visitors” https://doorcountypulse.com/letter-to-the-editor-locals-support-better-lives-for-visitors/ prompted me to think of what could be done differently to at least work on the problems dealt with in the letter.
Switching back to a Visitor Bureau model from a Destination Marketing Organization model would help. When people are put in charge of Tourism Bureaus, their job description is narrower in scope when compared to people leading a Destination Marketing Organization.
DMOs are supposed to engage in a broader swath of management of things related to the tourism economy, while a Visitor Bureau is not. Statutorily, Destination Door County is not entrusted with authority to do all of the management a DMO is in theory doing. Rather the state, county, and municipalities do these things.
This puts heads of DMOs into a catch-22. They are told to do all of this management, but are not granted the authority to it. This tends to result in broad, aspirational messaging and urging for the public at least and presumably government officials to act in a certain way.
There are terms for people who are paid to influence the public (public relations), and for people who are paid to influence government (lobbyists). The stereotypes that come to mind about them: people often tune out PR, and denigrate lobbyists. That doesn’t sound so good, so why imitate them? Should tax money ever be used for lobbying?
But what about the rest of the letter?
Some of the problems in the letter are difficult to solve, and can't be solved in a manner which could be coordinated locally. I have no solution to the poor treatment, except reinterpretation. When others treat you as “less than”, it is reasonable to expect that God will humble them someday, since pride goes before a fall. David could take Shimei’s insults well in 2 Samuel 16, and it is likewise possible to reinterpret what is really going on when others treat you as “less than”. (Yet later on in 1 Kings 2, David instructs that Shimei is to be executed.) Looking through the following portion of 2 Samuel, it seems like David’s response for Shimei’s insults worked towards his advantage during the difficult time he was in.
I have no good advice to increased premiums overall. That is a problem.
Does the insurance company really expect a building-car accident from last year to repeat itself? If so, the company is acting irrational. Could there be another company out there with a lower premium?
The housing prices are solvable, but it would take a lot of time and effort to get state law changed.
Housing prices could be reduced with a combination of some of the existing restrictions on short term rentals, combined with a vacancy tax on second houses and pieds-a-terre. A pied-a-terre is a name for when a second house is a condo or apartment.
I searched around on the internet, and found a bunch of articles about vacancy taxes. Some of them are by special interest groups, and the links include articles biased on both sides.
A Tax Shift that Benefits the Vast Majority: the case for more annual (deferrable) taxation of housing wealth to rebalance the mix of revenue generation tools used by Canadian government
https://vancouver.citynews.ca/wp-content/blogs.dir/sites/9/2018/05/16/Tax_Shift_2018-05-15_website.pdf
The ‘empty homes’ theory of Hawaii’s housing crisis
https://www.grassrootinstitute.org/wp-content/uploads/2023/05/230416_pb_emptyhomes_e.pdf
Is taxing inhabitation effective? Evidence from the French tax scheme on vacant housing
http://master.sciences-po.fr/sites/default/files/Felix_Blossier_Memoire.pdf
Does the Los Angeles region have too many vacant homes?
https://escholarship.org/content/qt87r4543q/qt87r4543q.pdf
The empty house: a window into Europe’s vacant property problem
https://www.investigate-europe.eu/en/posts/the-empty-house-a-window-into-europes-vacant-property-problem
A vacant home tax could be in the works for Mississauga and Brampton
https://www.insauga.com/a-vacant-home-tax-could-be-in-the-works-for-mississauga-and-brampton/
Vacant House Taxes: One Tool to Ease Housing Pressures
https://www.smwlaw.com/2022/10/26/vacant-house-taxes-one-tool-to-ease-housing-pressures/
Is the new vacant homes tax designed to fail?
https://www.irishexaminer.com/opinion/commentanalysis/arid-40972844.html
Taxing Rich People's Empty Homes Isn't Helping The Housing Crisis
https://www.fa-mag.com/news/taxing-rich-peoples--empty-homes-isn-t-helping-the-housing-crisis-63566.html
San Francisco faces vacant homes tax lawsuit
https://www.axios.com/local/san-francisco/2023/02/14/vacant-homes-tax-lawsuit-san-francisco
After reading and going through them, I concluded that the taxes can work, so long as they are high enough and are not legally undermined somehow. Likewise they must not intended as a silver bullet, which alone will fix a housing problem.
Door County’s vacancy rate is a lot higher than most places, at 42.9%. To get to the correct tax rate for reducing this, would necessarily take some experimentation over a series of years.
Links to recent figures
Why is it so high? A 2004 land trust study on several Door County towns found that agricultural and commercial properties were subsidizing residential properties: https://www.doorcountylandtrust.org/wp-content/uploads/2015/09/COCS_FullReport.pdf
From this, it makes sense why people would build seasonal residences in Door County. It has to do with the tax situation. A similar problem is also ongoing in California, where the state income tax system subsidizes second homes.
So part of why the problem has gotten so bad for housing costs is the tax code at the state level. Likewise, a second homes tax could not presently be imposed by Door County, it would have to be at the state level. But because the ideal tax rate is unknown, and must be discovered by experimentation, it would not be good for the state to set the rate. Rather, the state would need to empower counties or municipalities to impose the tax or not as they please, and also to set the rate.
One danger of course, is that if you make something profitable to the government, you could get more of it. If the tables were turned, and seasonal homeowners started subsidizing the rest of Door County, local government officials might start preferring them over residents. Presently I don’t have a good answer for how to prevent it. A lenient attitude towards seasonal residents could cause a rush to build more luxury housing.
Another approach, from Chicago, is to tax more expensive properties at a higher rate:
Proposed ‘mansion tax’ will sink luxury home values
https://www.loopnorth.com/news/mansion0410.htm
That could also help out Door County, and it would be cheaper and easier to implement. Yet it would also require state legislation.
That the recent state budget allowed Milwaukee to raise its sales tax in light of its unique challenges, makes me wonder if a different sort of tax exception might likewise be made for Door County.
Beyond this, what can be done locally, now?
Fees for short-term rentals can be increased, and a greater percentage of room tax money can be diverted from marketing purposes towards tangible municipal development projects which are eligible due to them helping tourists.
It would be nice to see the percentage of total room tax receipts devoted to tangible municipal development increased somewhat year after year. This could be done as sort of an experiment, to see just how high of a percentage can be used for tangible municipal development until it starts to hurt tourism.
Lastly, is any of this fair? Don't some people back these things out of class-based animosity, with a desire to hurt the rich? Undoubtedly some do, and that is dangerous and short-sighted.
It is fair to experiment with taxes as long as Door County has a below-replacement birthrate. Door County has a basic responsibility towards the self-preservation of its population and the families which contribute to it.
That the birth-rate is not only below replacement, but has fallen in recent years, is concerning, and the harm done by letting this trend continue is worse than the unfairness of weighting a taxation system against wealthier people. And if some wealthier people cease coming as seasonal residents because of taxes, they are still welcome as ordinary visitors, and “Locals Support Better Lives for Visitors”.