After more than six months of discussion surrounding diversifying the city’s sources of income, Steamboat Springs City Council members are expected to make a decision next week on what path to take.

Council members can opt to move forward with one or more forms of a tax, table the conversation for a later date or vote not to move forward with the issue, which has been further illustrated through the pandemic.

City Manager Gary Suiter and City Finance Director Kim Weber first presented council with several options for expanding revenue sources in November 2020. This was necessary, they said, because the city had long been too reliant on sales tax.

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Options to diversify revenue include a property tax, a lift tax on Steamboat Resort, a timeshare tax, a sin tax on tobacco, cannabis and alcohol or repurposing the 2A trails accommodations tax.

Council members have shown disinterest in any form of sin tax, but they were not opposed to a lift tax down the road; however, they want to wait until Steamboat Resort has a more successful year without COVID-19. Rob Perlman, the resort’s president and COO, told council he is not opposed to a lift tax if it was used for a large project that benefits both entities, such as mass public transit or a citywide gondola running from downtown to the mountain.

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Property tax

Six of the seven council members have shown support for a 2-mill property tax, though they’ve expressed varying opinions on where the money collected should go. Council member Heather Sloop voted to discontinue her support for the measure at council’s February work session.

Most said their primary reason for supporting a property tax is because it’s stable, easy to measure and feel it disperses the tax burden equally, as those with more expensive property would pay more in property tax.

However, former council member and local economist Scott Ford presented the city with data showing 60% of lower-income people in Steamboat own their homes, though they may have bought them decades ago when the house was worth a fraction of what it is today. If city voters were to approve a 2-mill property tax, the amount council has been discussing for months, many in the community would not be able to pay it, Ford said.

“You put a property tax on this group, and it’s going to be super regressive,” Ford said in an interview. “The higher-income households won’t even notice, and the lower-income households won’t be able to afford groceries.”

Ford said he believes sales tax is sustainable enough, and 2020 was just an “outlier year” due to impacts of the pandemic.

“Our sales tax that we have right now is based on consumption,” Ford said, arguing sales tax is actually more equitable than property tax would be. “Sales tax is a consumption tax, so more affluent people spend more.”

Council members also argued in favor of a property tax because they believed it would force second-home owners, who tend to be more affluent, to pay for the city services they use while they’re in town.

“When someone is only here for a few days or weeks out of the year, they’re not paying their fair share for the amenities they use in our community,” council member Robin Crossan said. “Those folks just let those big houses sit, and then they sell them at 10%, 20%, 30% more than they bought it for because we have taken care of the amenities that they’ve used to own that house.”

Crossan said she’d like council and the community to explore how “the upper half” would pay their share.

Timeshare tax

Following an in-depth presentation by Kara Stoller, CEO of the Steamboat Springs Chamber, council members voted to consider a 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.

Four council members directed City Attorney Dan Foote to continue research on the topic, with council member Sonja Macys absent from the meeting, and President Jason Lacy and Crossan both having recused themselves from the topic due to conflicts of interest.

Council believed Steamboat would be the first in Colorado to enact such a tax, though Steamboat Pilot & Today was unable to verify that. The timeshare industry also has powerful national lobbyists, over which council members expressed concern.

Staff said such a tax would be more equitable and place a tax burden on the community’s more affluent residents.

Council, however, regarded the tax as confusing and believed it could be difficult to sell to voters. Ford encouraged council to look deeper into the issue.

“It’s time that we actually roll our sleeves up and figure out a way to do this,” Ford said. “It’s worthwhile for council to really pursue this.”

Repurposing 2A funds

Whether in addition to or instead of another tax source, some council members also suggested repurposing the 2A Trails accommodations tax, passed specifically to help build trails in the city, to help support the city’s general fund or another specific purpose outside of trails.

“Repurposing the 2A funds, to me, is a no-brainer,” council member Lisel Petissaid. “It won’t actually be detrimental to the community, because they’re already paying that tax.”

Other council members said they believed the 2A funds should continue being used to build trails, specifically to expand the Yampa River Core Trail to the west end of town.

“I’m not as happy repurposing the 2A funds,” Crossan said. “I would prefer for the community to benefit from the tourists that come here, and that 2A money could build the Core Trail west of town.”

Chamber’s proposal

On March 9, council members heard a multi-faceted proposal from the Steamboat Chamber to include a 2-mill property tax dedicated to Howelsen Park Complex, a timeshare tax dedicated to the air program and a repurposing of the current 2A lodging tax. Council was receptive to the proposal and wanted to discuss it further.

“A collaborative approach is a really good path forward,” Stoller told council members.

Stoller also proposed the property tax be designated specifically for the Howelsen Hill park complex, as Howelsen is most important to local residents, who would pay the property tax.

“It would set a path forward to ensure this asset is still here and thriving for the next generation,” Stoller said.

Several council members also expressed their support for a property tax being used to fund Howelsen.

“A property tax for Howelsen Hill makes a lot of sense, because we continually spend money on that, and I think that if we have a dedicated funding source, it has the potential of freeing up some money we’re already using from the general fund,” Buccino said.

Other council members said they believed the property tax should more broadly support parks and recreation.

“If you’re going to earmark a property tax, it needs to be broader than the Howelsen Hill park complex,” Sloop said.

To reach Alison Berg, call 970-871-4229 or email aberg@SteamboatPilot.com.