Should Breckenridge exempt small businesses from workforce housing requirements? Officials are divided as owners share concerns.

With new, up-to-date statistics on its workforce, Breckenridge improves its policies that require certain businesses to provide housing to workersbut officials are divided on how the mandate should work for small businesses.

Like the mountain towns in the Colorado high country. find themselves looking for ways to provide housing their employees can affordmany have taken on similar demands. Aspen and Telluride have similar policies, but they require new businesses to do more than Breckenridge to contribute to the affordable housing stock. Other towns, such as Vail, require less than Breckenridge.

Breckenridge’s policy, known as 24A, requires two different types of new businesses to provide housing for a certain percentage of their employees. The requirements came into effect in 2020.

The first type of new business covered by this policy is the construction of a new building or storefront in the city. Other businesses covered by this policy are those that are relocating to existing premises, which will result in an increase in the intensity of operations. For example, this would apply to a cafe moving into a storefront that was previously a clothing store. The Breckenridge Code assumes that food and beverage establishments have more “intensive” operations than retail establishments.

The Breckenridge City Council has long toyed with the idea of exempting small businesses from the policy, and after learning more about the impact of the requirements at its Oct. 22 meeting, the council had differing opinions on what should be done moving forward.

The city requires these businesses to provide affordable housing for 35% of the employees it will add to the workforce, and uses a nuanced formula to determine what a business’s contribution to the community should be.

Because the city takes many factors into account when quantifying the number of employees a business generates, it is often left with a number that includes decimals. For example, a small retail space of approximately 1,000 square feet is estimated to have 2.4 employees.

The requirement to provide workforce housing can be met by building new apartments, purchasing existing apartments and placing restrictions on them, or in some cases by paying workforce housing fees.

Small businesses with only a few employees typically pay the fee in lieu of other requirements. At the Oct. 22 council meeting, an example was presented that demonstrated that a small business falling into the fast food and counter service category that added 0.9 employees to the workforce would be on the hook for approximately $31,300 in fees.

Council members previously expressed concern that it would deter small businesses from coming to Breckenridge, especially since businesses have expressed concerns to the city about what they say are huge fees associated with parking and water use.

Councilman Todd Rankin has repeatedly expressed concerns that the policy could stifle small businesses and wondered if there was another way to meet the requirement.

“In my personal opinion, we are approaching this in the wrong way,” he said.

As for the strategy for charging small businesses must pay, he said the city needs “a lot more dollars than this will ever bring in” to ensure an adequate supply of workforce housing.

He asked staff if it would be possible to use a metric such as the amount of business a given establishment is estimated to bring to town, rather than basing it on the number of employees. He said he was thinking in particular about businesses related to the tourism industry.

Board members reflected that spots like Helly Hansen USA and The North Face may not bring many new recruits into the community, but given their popularity, they might generate a decent amount of income. They discussed how such stores are branches of larger corporations and have more resources than a small business owner.

Small business owners agreed with Rankin’s sentiments and said that if they were subject to this policy, it would make it difficult to open a new business in Breckenridge and could deter them from doing so. Anna Higgins opened her shop, Higgles Ice Cream, in 2017, three years before Section 24A came into effect. The storefront that Higgins moved into had previously been a retail store, so she was increasing the intensity of her work in the storefront by introducing food products.

Higgins said parking and water fees were already enough of a burden on her that if she had to pay the fee, it could “put her out of business.”

Council members Carol Saade and Marika Page floated ideas about giving the owners a break and making one employee “at-will.” This means that if the city were to find that a business produced 4.8 employees, the city would only require the business to provide housing for 35% of the 3.8 employees instead of 4.8. This will ultimately result in small businesses with one employee being exempt from this policy.

Mayor Kelly Owens asked city staff if some kind of small business lending program could be implemented.

Assistant Director of Community Development Julie Puster said it may be difficult from an administrative standpoint, but she said it can be done.

Councilman Dick Carlton said if the city grants certain business exemptions, it could become “really problematic” because officials would have to determine where they draw the line on a case-by-case basis.

Mayor Kelly Owens said the discussion and concerns about the stifling of small businesses can be a conversation that goes beyond the city’s 24A policy.

City Manager Shann Haynes agreed and said the topic could fit better into the larger conversation about economic development in Breckenridge.

Business that has recently had to comply with this policy was Breckenridge Grand Vacationswhich recently received planning approval for seven sites which includes various types of houses and residential units, as well as a new hotel. As part of the plan, Breckenridge Grand Vacations provided 92 employee housing units, even though it was responsible for housing only 40 employees under city policy.

No decisions were made at the October 22 meeting.