Steamboat Springs City Council on Tuesday agreed to consider asking voters in the fall to pass a lift tax (a tax tied to ski resort ticket sales) and/or a tax on vacant homes — two proposals intended to address a predicament that “inevitably, our expenses are outpacing our revenues,” said Finance Director Kim Weber.

The need for the discussion, Weber said at the council meeting, stems largely from the city’s reliance on sales tax, which can account for almost 70% of general fund revenue. 

“Diversifying would be a smart thing to do,” she said, especially in light of a recent slow down in sales tax revenue growth, increasing expenses related to inflation, population growth and “expected service levels of the community.” 

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In 2020, sales tax revenue grew by 1%. In 2021, it grew by 22%, then by 14% the following year as the COVID-19 pandemic brought with it a surge in visitors and residents. However in 2023, the increase went back to 1%, followed by a 2% increase from in 2024. 

Council member Bryan Swintek said he had no doubt voters would support both taxes — one of which would tax owners of homes left vacant for a certain number of days per year and the other which would tax the Steamboat Resort’s ticket sales.

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Also discussed as a revenue-generating strategy were impact fees on new construction. Council decided to have city staff gather additional information on the tax options required to meet summer deadlines for certification of ballot language.

Lift tax

While there was overall support among the council in support of a lift tax, there was disagreement on the quality of the partnership between the city and the Steamboat Resort.

Weber detailed the history behind the partnership in terms of financial contributions to the city, beginning in 1984 with a $100,000 annual donation, followed by a 1994 update that taxed 4.5% of sales outside of city limits but within resort boundaries. 

Today, the agreement puts 4% of those sales taxes into the city’s general fund for transportation, open space and employee housing purposes, and gives .5% to the Education Fund Board. 

Since 2018, the total contribution from the agreement ranged from $237,000 to $523,000 annually.

Council member Steve Muntean noted there are other ways and dollar amounts through which the resort contributes, referring specifically to a recent pledge from the resort to put $1 million annually into a proposed Regional Transit Authority. 

“$500,000 is nothing,” said council member Amy Dickson. “$1 million to RTA does not solve Steamboat’s transportation problem.”

Dickson expressed frustration at what she described as an insufficient partnership regarding potential impacts from a 25% increase in capacity on the mountain following recent expansion projects. 

Muntean advocated for sitting down to “talk about what’s in our best interest and what is in their best interest, and have negotiations which hopefully would come to a win-win around all of these things.”

Council President Gail Garey talked about “lots of opportunities through this partnership to be able to solve our community’s problems,” but also acknowledged Dickson’s point that as the resort’s “impact increases, so should their contribution.” 

Swintek “disagreed vehemently” with restricting lift tax revenue, advocating for directing it to the city’s general fund. He noted the resort is, “owned by a private equity firm and a very wealthy family — so we are not talking about a family friendly resort anymore — we are talking about a multi-billion dollar company. So this negotiation should be something that is in our benefit and if they are willing to negotiate they can come and negotiate with us. I’m happy to publicly say here — we have the upper hand.”

Steamboat Resort Communications Director Loryn Duke said in a Feb. 12 interview: “We have always been willing to sit down and talk to the city about a lift ticket tax — and have made our position clear. We are supportive as long as it goes to innovative transportation which at this time is the RTA. . . It’s not a matter of yes or no on a lift ticket tax, it’s a matter of where a lift ticket tax best serves our community.”

Some council members expressed concern about tying the tax to daily lift tickets, from which they said many resorts are moving away from. 

“That’s not the only way to do it,” City Attorney Dan Foote said. An alternative would be taxing “skier days,” he added, thus putting something like a $1 tax per daily visitor. While the resort does not release those numbers, Foote said it may be possible to access those numbers through the U.S. Forest Service. 

Asked why the resort doesn’t release those numbers, Duke answered: “Because we are not a publicly held company and the guidance from the parent company is that we don’t release those numbers.”

Weber gave the example of Breckenridge, where voters passed a lift tax in 2015 that includes a guaranteed base minimum amount of $3.5 million per year. It is tied to single and multi day tickets, and designated for transportation and parking improvements.

Vacancy tax

Taxing properties that are occupied only for a minimum number of days per year is a relatively new concept, especially in the United States, explained Foote. He said most vacancy taxes require a home to show they are occupied more than 183 days per year in order to be exempt, noting that precisely defining “vacancy” would be a critical part of the process. 

Crested Butte attempted to pass a vacancy tax in 2021 but failed, Foote said. However that ballot measure included a bond issue and a sales tax increase, and “it may not have been the vacancy measure that caused it to fail.”

“I think it’s something you should really look at,” Foote said to the council. “We have a bit of an unusual taxing structure here in Steamboat in that we have very small property tax and we are highly reliant on sales tax. A vacant home that doesn’t have people in it is not generating a lot of sales tax revenue, and is probably not generating enough property tax revenue to pay for the kind of services that even a vacant home requires.”

The city levies 2 mills on properties for fire and EMS services. Foote said vacancy taxes always include exemptions, and that, while somewhat complex, “I think there are effective enforcement measures we could take to enforce this tax if we wanted to.”

There was some debate on whether a vacancy tax could increase incentive toward short term rentals, but the majority of the council agreed that most homes currently not being rented were unlikely to convert to short term rentals. 

The council agreed the goal for a vacancy tax would be revenue generation, not regulation. 

Foote was directed to put together projections on potential revenue and administrative costs from a vacancy tax, and informed the council of state legislation being considered that could allow vacancy taxes to be classified as property taxes. 

A second fiscal sustainability work session will be held March 11.