SYRACUSE — To curb unfair competition between huge government fitness centers and private health clubs, proposed legislation would eliminate the sales tax that private health clubs pay on membership fees.
Sen. Scott Jenkins, R-Plain City, says the potential bill is only fair since huge municipal recreation centers don't pay property or income taxes and are pushing private gyms, which are burdened with such taxes, out of business.
Case in point is in West Valley City, where Gold's Gym co-owner and Plain City Councilman Gary Nielsen said the gym lost 30 percent of its membership when the city opened its chic $13 million, 96,000-square-foot fitness center 1 1/2 years ago.
For further evidence, Nielsen, a member of the International Health, Racquet and Sportsclub Association (IHRSA), points to Breckenridge, Colo., where three tax-paying athletic clubs went under six months after the city opened a multimillion-dollar fitness center.
Without tax restrictions, then, government is out-competing the private sector.
"They can and do charge below market prices" for membership, Nielsen said. "They undercut the pricing of all competing health clubs."
It's a nationwide concern, and Jenkins wants it to stop in Utah before the private health-club business grinds to a halt.
"There's places for government to be involved in our lives, and there's no question recreation is one of these fronts that governments want to be in, but that's government being in the wrong place," he said. "I mean this is ridiculous."
The issue is coming to a head in the small town of Syracuse in northern Davis County. There the city of 12,000 will vote in a special bond election May 8 to decide whether a property-tax hike will fund a $9 million state-of-the-art recreation center.
The new place would include a rock-climbing wall, a lap pool, a recreation pool, a water slide, racquetball courts, aerobics, basketball courts, weightlifting and a meeting hall for seniors.
City leaders plan for an airy, open mall center that would mirror the health complex in West Valley City.
"There's nothing like it in the area," city planner Roger Worthen said.
But before breaking ground on the 72,000-square-foot fitness center remotely situated near 3000 West and Bluff Road, residents must decide if they can stomach the extra property taxes.
The $9 million bond would be paid over 20 years (fewer if the city keeps growing by leaps and bounds) and an owner of a $150,000 home will pay an additional $84 in property taxes yearly to fund construction, Worthen said.
Given the popularity of tax hikes, then, Worthen said there is some concern that residents will vote the bond down.
Nielsen, the owner of four Gold's Gyms in nearby Layton, Roy and Ogden, wants the bond to fail. He says the fitness complex will cripple private gym membership. He, along with others, plans to campaign against the bond.
And with support of IHRSA he might be able to sway opinion.
"It is not advantageous for government organizations to allow taxpayer money to be spent for services that are readily available in the private sector," Kevin Buckley, government relations manager for IHRSA, wrote in a letter of support to Nielsen. "Dry cleaners, restaurants and bowling alleys all provide services to the community, but no one would seriously consider them to be government functions. So why is the health-club business any different?"
Besides unfair competition, Nielsen doubts the small city can support the 72,000-square-foot fitness paradise. The bond, after all, only pays for construction, not facility upkeep, staffing or equipment.
Syracuse leaders, however, are confident that they can draw business and membership fees from across northern Davis County and southern Weber County since there is nothing in the area comparable to the architectural masterpiece that could establish Syracuse as the industry leader in the local fitness business.