LMD proposed to fund air program

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— Supporters and opponents of a proposed local marketing district agree a 2 percent accommodation tax to support airline programs could have a significant effect the community. They disagree on the logistics of implementing such a tax.

The Steamboat Springs Chamber Resort Association, the lodging community and the Steamboat Ski and Report Corp. are asking voters to establish a local marketing district and approve a 2 percent lodging tax that would raise about $1.2 million annually to help pay for airline flight guarantees.

The money would be collected from lodging properties within the boundaries of the local marketing district. Those boundaries snake through the mountain and downtown areas to include most of the city's nightly lodging properties but very few residential areas other than the Sanctuary subdivision. About 600 residents live within the proposed district, and those people are the only ones who will vote on the issue.

If the ballot question is approved, City Council would have the authority to approve the district's taxing plan, appoint and remove members of the board and would be able to dissolve the district at any time.

The tax would not have a sunset date. The ballot issue also includes a cap to ensure that no more than 7 percent of the total collected revenue would be used for advertising and other flight marketing.

The proposed ballot issue assures that Ski Corp. will continue its annual support of airline guarantees for at least the next five years at levels comparable to what it has contributed in the past five years. Ski Corp. will match funds generated by the local marketing district dollar-for-dollar up to $1.25 million, or 60 percent of the cost of the airline program, whichever is less.

Sandy Evans Hall, executive vice president of the chamber, has said the funding is needed to stabilize the money used to secure flights into the Yampa Valley Regional Airport. The flights are crucial in bringing visitors to Steamboat Springs and supporting the economy.

But those opposing the tax think it should be voted on by more than the 600 residents within the district's boundaries. Opponents also think it should wait until a more concrete tax policy is in place and worry it would continue the proliferation of city government. The city's Tax Board Advisory Group has said establishment of the local marketing district could take away from other uses of the accommodation tax.

"Based upon what we have studied, (an accomodations tax) is one of the most acceptable kinds of taxes to voters. It taxes visitors and not residents," tax group member Nancy Nagler said, noting that other important issues could arise in the next five to 10 years that could be funded through such a tax.

The chamber currently collects money for its flight programs on a voluntary basis from the lodging community, restaurants, retail stores and other businesses. The money is used to negotiate contracts with airlines to ensure flights are available to Steamboat Springs from key markets nationwide.

Evans Hall had told the council that, while the need for funding increases, local businesses' voluntary funding for the program has decreased.

She predicted a $50,000 shortfall for next winter's program, which would mean fewer ski season flights. The lack of funding also could damage the recently started summer Continental Airline flight from Huston and create difficulty in finding a match for a recently awarded federal grant that will provide daily fall jet service from Huston.

With summer flights from Huston, the total bill for year-round air service into YVRA is approaching $2 million.

If approved, the tax would free up about $100,000 the city gives to the air program a year.

Earlier this month, in a 4-3 vote, council approved putting the tax on the ballot. Council members supporting the question said it was not a perfect solution but a needed one to stabilize funding for the air programs. Council members Kathy Connell, Paul Strong, Loui Antonucci and Nancy Kramer voted for it.

Council members Susan Dellinger, Steve Ivancie and Ken Brenner voted against it, questioning whether the vote should be open to the whole city and objecting to the short time frame in which the tax was presented to the council. They also want to see the overall city tax proposal from the Tax Policy Advisory Group before opening to door to any new taxes.

In March, the tax group was formed to review the city's taxing structure, look at possible revenue sources and return to the council with recommendations. The tax group thinks the local marketing district proposal should have waited until the council approved an overall tax policy.

Nagler said the group unanimously agreed the council should have looked at other alternatives the accommodation tax could have been used for before approving the ballot question.

"Dissolving the LMD once established it is not an easy thing and it is harder to add on to the accommodation tax. It is not going to be an easy thing," Nagler said.

The group also is concerned that so few residents are going to vote on the tax, as opposed to making the local marketing district congruent with the city's boundaries and voting on it in a citywide ballot question.

Another concern from the tax group was the precedent the council's action could take in allowing other groups to come before the city and propose special taxing districts. Other groups have expressed interest in doing so and the tax group was concerned about a proliferation of government.

"The whole thing is bad government," tax group co-chair Ken Solomon said. "We are not opposed to the 2-percent accommodation tax. It is the precedence. It is not appropriate in our democratic process."

-- To reach Christine Metz call 871-4229 or e-mail cmetz@steamboatpilot.com

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