Court date set for lawsuit vs. city over short-term rentals tax question |

Court date set for lawsuit vs. city over short-term rentals tax question

An emergency hearing date of Tuesday, Aug. 16, has been set for the lawsuit between members of a petitioners’ committee and the City of Steamboat Springs.

The petitioners’ committee representing the Steamboat Springs Community Preservation Alliance filed its complaint on Aug. 1, to which the city filed its reply Monday, Aug. 8. The preservation alliance has been a sharp opponent of a proposed short-term rental tax.

The complaint was filed shortly after City Clerk Julie Franklin — who is named as a defendant in the suit — rejected the committee’s petition for a referendum on an ordinance that would put on November’s ballot the question of whether to levy a 9% tax on short-term rentals. The same committee also filed petitions to recall three City Council members, which the city accepted.

The city clerk denied the petitioners’ request for a referendum saying it was insufficient. In Franklin’s decision, she explained that the Steamboat Springs Home Rule Charter exempts “municipal legislature” — such as levying taxes and calling for special elections — from the rights of referendums.

“The right of citizens to submit referendum petitions on municipal ordinances is reserved in the Colorado Constitution and the city’s charter,” Bill Kyriagis, the attorney representing the plaintiffs, wrote in a statement to the Steamboat Pilot & Today. “The First Amendment also protects the right to petition the government for redress of grievances. These rights are fundamental.”

The committee seeks a declaratory judgment stating the preservation alliance’s proposed petition is valid, which would allow the petitioners to start gathering signatures. 

The city enlisted the services of Mark Grueskin for legal counsel.

The city’s reply cites several legal precedents arguing they confirm that town charters placing limitations on the power of referendums is permitted by the Colorado Constitution as long as they are “strictly construed,” meaning that any types of legislation determined as exempt from referendums must be specifically identified and narrow in scope.

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The defendants assert that the language in the Steamboat Springs Town Charter that excludes the“levy of taxes” from referendums is strictly construed and therefore compliant with the state constitution. 

The plaintiffs argue that the section of the town charter regarding referendums makes no mention of “municipal legislature.”

While a section of the town charter does exclude “the levy of taxes” from the powers of referendums, it doesn’t include the language “municipal legislature.”

Because of the Colorado Taxpayers’ Bill of Rights (TABOR), all taxes must be voted upon through a ballot question, so the committee argues that because the short-term rental tax ordinance would send the tax question to voters, it doesn’t directly levy any taxes. 

Another issue in the case could be the city’s and the plaintiffs’ conflicting definitions for “special election,” because the town charter excludes the powers of referendum ordinances that call for special elections.

In a written response, the city stated, “When the voters of Steamboat Springs adopted their charter, they agreed certain city ordinances aren’t subject to referendum, including any ordinance that calls a special election. The city charter was written to encourage timely public elections on public issues.”

The city argues that because this November’s election takes place in an even-numbered year — when no local offices are up for election — any local ballot questions would be considered special elections.

Like Steamboat, many municipalities limit referendum powers on special election ballot ordinances because a successful referendum petition simply prompts another special election, which many city officials find unnecessary and obstructive.

Because of this, city officials have accused the petitioners of employing tactics that would delay a vote on the short-term rental tax and potentially confuse voters.

The plaintiffs state in their complaint that “the ordinance did not ‘call’ the Nov. 8, 2022, election. It was already scheduled to occur.” The plaintiffs also pointed out that the ordinance describes the election as a regular municipal election.

It will be up to a 14th Judicial District Judge to determine if the ordinance’s language affects whether the ballot question is defined as a special election or not, as the town charter defines regular municipal elections as “held every two years at which candidates for elective offices of the city are voted upon.” 

The city wrote in its reply that the plaintiffs didn’t offer any definition of their own for a special election.

The judge could also have to determine whether putting a tax question on a ballot qualifies as a “levy of taxes.”

The hearing on Tuesday will give both parties their first chance to make their case before a judge. Beyond the hearing, there is no estimated timeline for how long the case may last.

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