As lockdowns and public COVID restrictions ensue, cities across the country are looking for ways to combat the tax revenue dips over the last year. Sadly, many destinations have struggled to overcome the exponential loss of tourism dollars. But the city council in Steamboat Springs, Colorado claims timeshare exchange taxes can help bridge the gap. City attorney Dan Foote was tasked to explore its effects.
Why Tax Timeshares and Who’s Opposed?
According to a local news outlet, the definitive goal of the city’s council surrounded the idea of fiscal sustainability. Since Steamboat Springs relies heavily on taxes from property ownership and sold goods (that have slowed due to pandemic-led restrictions), it was only a matter of time before they started looking for ways to overcome the losses of 2020.
The problem is, not many members have been eager to support the notion. In fact, only four were present at the latest meeting earlier this month. President John Lacy and two of his members (Sonja Macys and Robin Crossman) cited a “conflict of interest” as their reason for avoidance.
Is Progress Being Made in Steamboat Springs?
Despite the complication of the concept and lack of cohesion, members Heather Sloop, Michael Buccino, Lisel Petis and Kathi Meyer want to work with Foote to weigh the pros and cons. During a recent press conference, he told reporters, “There’s definitely an equitable component to this [and] an argument to be made,” he expressed. “These transactions should be taxed in order to equitably distribute the tax burden.”
Petris supported Foote’s assertion. “In many ways, timeshares are used like hotels, but they don’t have to pay the fees that lodging communities have to pay. 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,” he said.
Those in attendance all agreed and pointed out that the timeshare industry has an “unfair loophole”. Ironically, the sales tax in Steamboat Springs does not apply to timeshare exchanges in the way it does to hotels and other lodging options.
Fair Taxation is the City Council's Goal.
In turn, the legal expert’s main argument to council members is that it’s time to make timeshares “pay up”. At the same time, Foote is showing discernment and not letting emotion and an opportunistic mentality misguide the city. He reminded those in attendance that there could be consequences to pursuing major hotel chains for timeshare exchange taxes. In other words, corporate backlash for increased tax obligations should be expected.
“The timeshare industry does have a very well-funded group that generally opposes efforts to tax the industry,” claims Foote. He went on to explain how the powerful presence is also heavily staffed with lobbyists. We know this too well as lawmakers have even had ties to the industry. This could explain why Lacy, Macy and Crossman wanted no part in the discussion.
While it was difficult for the council’s attorney to forecast the actual revenue the city would garner from the timeshare exchange tax, the meetings have helped members better understand what the transaction entails. Since timeshare companies already charge contracted owners for these types of services, it only makes sense to assess a tax in regards. After all, most owners aren’t even aware of the fees until they’re charged.
Still Much to Be Learned About Timeshare Exchange Taxes.
Immediately following the latest discussion, Sloop appeared to remain intrigued – but lacked optimism. “From my perspective, we’re going to be going up against big brother,” she said about the solution. “I’m wondering how much [of the city’s] money do we want to pay to go up against big brother. I think of this as an uphill battle.”
“There is some validity to [timeshare exchange taxes], but I just don’t know how much money we’re going to get out of it,” she continued. “[Will we] really get that big win in the city corner for our fiscal sustainability? We need to ask ourselves if we really want to be the first in the state to do this.”
Council member Buccino also didn’t seem too keen on the idea. “It seems like this is a tough one to sell to the community if I don’t even fully understand it myself.”
Possible Next Steps for Steamboat Springs?
From a legal standpoint, Foote said another tax jurisdiction ruled that exchange transactions are taxable. So city members were left with a little confidence in future possibilities. This would at least protect them to some degree if timeshares took legal action against Steamboat Springs.
While it may be almost impossible for the council, attorney or finance director to determine how many timeshare units are located and occupied within city limits, it’s still too early to shelve the proposition.
In turn, Foote was asked by those in attendance to reach out to city members in Vail and Aspen for feedback in case they’ve had similar considerations. While it may be an uphill battle, it could be a big deal for city development. When you think about this, it should be something that interests timeshare companies.
Nonetheless, if the timeshare exchange tax goes into effect, we’ll definitely have our eye on Colorado. Whether taxes are effective or not, we can expect vacation owners to see a good portion of the charges added to their annual fees.