Steamboat could be 1st city in Colorado to enact timeshare exchange tax
STEAMBOAT SPRINGS — After a lengthy discussion Tuesday night, four members of the Steamboat Springs City Council directed City Attorney Dan Foote to explore making Steamboat the first city in Colorado to tax timeshares. Council member Sonja Macys was absent from the meeting, and President Jason Lacy and member Robin Crossan recused themselves from the discussion due to conflicts of interest.
Tuesday was the first time the council discussed the timeshare tax, which would be assessed when a timeshare owner or member trades with an owner or member of another program. Exchanges are often facilitated by third-party exchange companies, and the owner or member deposits their points and then books something else of equivalent or lesser value. The exchange company then charges a fee, and the owner or member pays an annual fee.
Foote told council the main argument supporting implementation of this tax would be to make timeshares “pay up.”
“There’s definitely an equitable component to this,” Foote said. “There’s an argument to be made that these transactions should be taxed in order to equitably distribute the tax burden.”
While council members Lisel Petis, Michael Buccino, Kathi Meyer and Heather Sloop liked the idea and wanted to explore it further, they all agreed it’s complicated to understand and explain to voters, who would ultimately have to give the new tax the green light.
“It seems like this is a tough one to sell to the community if I don’t even fully understand it myself,” council member Michael Buccino said.
In addition to exploring a complicated issue, Foote said if the council chooses to move forward, it would likely face significant backlash from the timeshare industry, which he said has a powerful national presence and is staffed heavily with lobbyists.
“From my perspective, we’re going to be going up against Big Brother, and I’m wondering how much city money do we want to pay to go up against Big Brother,” Sloop said. “I think of this as an uphill battle.”
From a legal standpoint, Foote said at least one tax jurisdiction has ruled exchange transactions as taxable, which council members said gave them confidence if the timeshare industry chose to attempt legal action against the city.
“The timeshare industry does have a very well-funded group that generally opposes efforts to tax the industry,” Foote added.
All four council members agreed the timeshare industry has an “unfair loophole” as city sales tax does not apply to exchanges in the way it does to hotels and other lodging options.
“In many ways, timeshares are used like hotels, but they don’t have to pay the fees that lodging communities have to pay,” Petis said. “I don’t think we should be going to our community asking for more money if we’re not trying to get the money that’s right in front of us.”
Foote and City Finance Director Kim Weber said it is nearly impossible to determine how many timeshare units are located in the city and how many are occupied, but The Steamboat Grand, Legacy Vacation Club, The Village at Steamboat and Sheraton Steamboat Resort Villas are the four biggest examples.
Foote said it’s difficult to estimate how much revenue the city would garner from such a tax.
“There’s some validity to this, but I just don’t know how much money we’re going to get out of it to really get that big win in the city corner for our fiscal sustainability,” Sloop said. “We need to ask ourselves if we really want to be the first in the state to do this.”
Council members directed Foote to communicate with staff from Aspen and Vail, who the council agreed would likely have discussed such a measure, to see if those cities had engaged in such discussions, and if they had, why they chose not to move forward with the tax.
The timeshare tax comes as part of a larger conversation around fiscal sustainability. The city has long relied solely on sales tax until 2019 when voters passed Steamboat’s first property tax in 40 years.
COVID-19 and ensuing drops in tourism brought the issue back to the forefront, and over the past several months, City Council has discussed various tax options, including another property tax and a lift tax on Steamboat Resort.
Kara Stoller, CEO of the Steamboat Springs Chamber, then proposed a series of combined taxes to solve the city’s need for a more diversified tax revenue stream. The series would include a 2-mill property tax, a tax on timeshares in Steamboat, a 1% lodging tax for destination marketing, which Stoller said would directly benefit the lodging industry, and a potential lift tax for transportation to match sales tax in later years.
While council members expressed concern about putting three tax measures on the November ballot, all three are still being discussed.
To reach Alison Berg, call 970-871-4229 or email aberg@SteamboatPilot.com.
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