Steamboat Chamber seeks tourism improvement district to fund marketing, air program
If it moves forward, Steamboat would be the second community in Colorado to establish this type of special district
STEAMBOAT SPRINGS — The Steamboat Springs Chamber is exploring the formation of a special district — a tourism improvement district — to fund marketing and the air program.
“We’re embarking on a new opportunity that could really be a wonderful solution to two significant funding challenges that our community has,” said Chamber CEO Kara Stoller. “We are in the preliminary — very, very preliminary stages — but we’re excited that there is an opportunity on the table that we are not only researching, but taking steps forward to put into place.”
Since 1984, the city of Steamboat Springs has contracted with the Chamber to market the city as a destination. The city budgeted $800,000 for this purpose in 2018, $850,000 in 2019, and at a Steamboat Springs City Council budget retreat next week, council members will consider the chamber’s $900,000 ask for 2020, according to City Finance Director Kim Weber.
Weber said this arrangement originally came about to promote off-season tourism, first in the summer and now in the shoulder seasons, in order to build more steady revenue for Steamboat’s businesses.
Three years ago, long-existing efforts to find a way to get destination marketing off city ledgers kicked into a higher gear. That’s when the idea of a tourism improvement district was raised.
Last year, city voters rejected a sales tax to fund the Steamboat Springs Local Marketing District’s air program, which subsidizes flights to the area by paying airlines when there are empty seats on routes to the Yampa Valley Regional Airport. The TID (tourism improvement district) could be used to help fund these subsidies.
A committee of 15 business and chamber representatives analyzed different funding mechanisms, according to a chamber presentation at a City Council work session earlier this month. Stoller said this committee and past committees have looked at “every different funding avenue.”
“As we’ve analyzed all different options, (with) everything under the sun on the table, we determined that the tourism improvement district really seems like the ideal avenue to fund destination marketing efforts,” she said.
What is a tourism improvement district?
The tourism improvement district could levy a fee or assessment on tourism businesses within its boundary, which has not yet been determined. Tourism businesses within the TID, should it go forward, would be able to vote to essentially tax themselves by putting in place a fee or assessment.
There is only one other tourism improvement district in Colorado as of today, and according to a chamber presentation, there are only 177 nationwide as of March.
In Colorado, Denver’s TID levies an assessment on hotels in city limits that have 50 rooms or more, with revenue from the assessment earmarked for marketing, renovations and capital improvements to the Colorado Convention Center. Stoller said a TID implemented in Steamboat would “definitely” work very differently than in Denver.
The chamber has been gathering information about a similar district in Mammoth Lakes, California, which is located in the shadow of Mammoth Mountain Ski Area. There, a TID collects different assessment rates depending on lodging, retail, restaurants and ski area’s annual revenues and operations. That money is used to fund marketing of the area in the off season, according to the town of Mamoth Lakes’ website.
What has to happen for the chamber to collect revenue from a tourism improvement district?
While a tax, fee or an assessment on tourism-related businesses is a possibility, there are many steps of public process between now and that hypothetical revenue.
Last week, City Council approved an ordinance on first reading that would allow the Chamber to move forward in pursuing the TID. The measure passed 6-1 vote, with Council Member Lisel Petis opposed. The ordinance will go before council again for second reading Oct. 8.
This ordinance would essentially lay the framework for the Chamber to pursue a TID, city staff attorney Jennifer Bock explained.
“I think we’re still at the beginning here,” said Council Member Jason Lacy shortly before council’s vote on Tuesday. “Even if we get this enabling ordinance in place with two readings at some point, there will be a lot of outreach and work and at least two readings on the creation ordinance itself, so we still have months of process left to go.”
As written, the enabling ordinance would require that owners of businesses included in the district sign a petition supporting the formation of the district.
If City Council approves the petition, then the Chamber would pursue an ordinance creating the TID, which would spell out the specifics of the district boundary, what businesses would be included and the amount of assessments or fees that would be levied.
Then, managers of businesses within the TID would be allowed to vote in an election to determine whether assessments or fees would be levied.
Some council members were concerned about language currently written in the enabling ordinance, which would weight both the petition’s signatures and later — if an election occurs — their vote, based on the amount of fees or assessments that would be levied on their business.
“So, if I’m a big business and I contribute a lot, I would have a higher weighting than a smaller business,” Bock explained.
Council members expressed concern with a couple other elements of the ordinance and an interest in removing language about business excise taxes and adding more information about the nomination process to form a board of directors for the TID. At the recommendation of the Chamber, the council also directed staff to include language that will require that electors representing businesses in a TID election be registered to vote in Routt County.
Petis opposed the measure because she did not approve of weighting electors’ votes, something that other council members also expressed concern about. Council member Sonja Macys said her vote might change on second-reading depending on community feedback.
What businesses would be included in the tourism improvement district?
Stoller emphasized that formation of the district is in the very early stages, so what businesses — or even what industries — would be included in the district hasn’t been determined.
“Preliminarily, we’ve been discussing with lodging and restaurants as the two business industries that would be included,” Stoller said. “However, by no means is that solidified. There may be other industries that come in or vice versa, so it is very, very preliminary, and nothing has been set in stone by any stretch.”
Stoller also said the Chamber would seek a way to balance what it feels is equitable and what would be successful.
“We’re lucky to live in a place where people want to come visit and spend their money, and those dollars that they spend here, either directly or indirectly, benefit our community,” Stoller said. “Finding the equity in where should the funds be generated through has really been the challenge.”
In a town where tourism contributes to a significant sector of the economy, a visitor’s dollars can end up in a resident’s pocket, which is in turn spent at another resident’s business. With indirect and direct tourism dollars benefiting the area economy, part of the challenge of determining what businesses would be included in the district will be figuring out where to draw the line of what is a tourism business.
In addition, visitors to area lodging business already pay the city’s 1% lodging tax, which funds the construction of trails and other amenities intended to promote tourism in the area. Lodging properties within the boundaries of the local marketing district also pay a 2% accommodations tax, which partially funds the air program.
Stoller didn’t provide a revenue goal of what would be needed to support these programs.
“It’s preliminary to share specific budgets at this point,” she said.
How can businesses and individuals provide input on the concept of a TID?
Stoller said the best way to give feedback or learn how to get involved is by contacting her directly at firstname.lastname@example.org.
As the enabling ordinance works its way through the Steamboat Springs City Council, people can submit public comment on the ordinance in person at the Oct. 8 meeting or online at steamboatsprings.net/council. Should formation of the TID proceed, there will also be opportunities to comment on subsequent TID ordinances.
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