Posing Some Pertinent Questions about 16-Foot-Wide Park Models, Overnight RV Parking & Other Stuff
As we roll into summer 2009, there are all kinds of news impacting the park industry: some from our friends in the state and federal government, some from the RV industry and some from RV parks and campgrounds. I thought it would be fun to offer some comment on a few of these recent developments.
Look Out: Here Comes the
16-Foot-Wide Park Model
A recent release from Athens Park Homes announced its new 16-foot-wide recreational park trailer. The Athens, Texas-based manufacturer says the “Rental Cottage” has a large living and sleeping area and no hallway.
The announcement did not specify the total square footage, but I suppose we can assume it will stay within the 400 square foot maximum for a recreational park trailer.
However, some issues do arise for the park side of the business. First of all, siting the 16-foot-wide unit on a standard RV site with a 39-foot width is going to reduce separation from units on either side. Secondly, local zoning and regulatory folks now have some new ammunition in their efforts to classify this park model as something other than an RV or mobile home. And perhaps most importantly, the 16-foot-wide unit is sure to raise some questions about licensing the park model as an RV and its placement in an RV park or campground.
And, of course, there are the potential problems for older parks designed or re-designed to accommodate the standard 12-wide park models. Now obviously, not every park and every jurisdiction is going to accept a 16-foot-wide park model without some additional regulation and possibly shifting the RV park or campground operating license to something different. So whether this is the start of a trend in the park model business, or just a new niche of business remains to be seen.
Just another indication of how the current economic situation is changing the face of so many industries, including the park business.
Maine Parking Debate
Dredges up Touchy Issue
After a somewhat quiet period on the issue of overnight parking at Wal-Mart, the last few weeks have seen RVers rise up in a fury over two attempts to control overnight parking in public areas.
On May 12, the Maine House of Representatives killed a bill that would have banned recreational vehicles from parking overnight at commercial lots after legislators were inundated with e-mails from people opposed to the idea. Sponsoring State Rep. Anne Perry, D-Calais said she received an estimated 200 e-mails from irate RV owners (i.e. Escapees) around the country threatening to boycott Maine.
In a second instance, the city council of Hobart, Ind., was swamped with e-mail and letters from irate RVers when the council passed an overnight parking ban on the first reading in May. The council on June 3 decided to postpone a final vote on the parking ban and sent the proposed ordinance back for more study.
This issue never goes away. RVers demand their right to park essentially wherever they please for as long as they wish. Park owners are looking for equity and a level playing field and wonder why — if Wal-Mart or some other retailer can operate a campground without a license — hosting numerous RVers on a nightly basis — is it important for an RV park business to have a license? Commercial parks employ folks, pay local taxes and contribute to the economic base of the community. So too do the local businesses that permit overnight parking. How to meet the needs of RVers, park businesses and local commercial interests is the challenge and somehow this issue needs to be addressed by all concerned.
The Escapees and the Good Sam Club spearhead the opposition to any restrictions on overnight parking, including limitations on parking RVs in residential neighborhoods. Perhaps legal action based on the boycott threats by these RV clubs might help address this issue.
I’m not aware of any attempt to legislate against overnight parking in parking lots that has stood up against the onslaught of RVer anger. Maybe its time for park owners to exhibit similar outrage and anger and step up efforts to combat this viral form of unfair competition.
SBA to Guarantee
RV Floorplan Loans
The good news: with the availability of credit the RV industry’s No. 1 issue, the Recreation Vehicle Industry Association (RVIA) and the Recreation Vehicle Dealers Association (RVDA) have successfully lobbied the Small Business Administration (SBA) to provide floorplan lending for dealers through the SBA loan guarantee program. Congratulations to these associations for a significant win in Washington D.C. In order to achieve this victory, they convinced the SBA to change its small business definitions to allow a majority of RV dealers to be included under the SBA umbrella.
The small business community needs all of the support it can muster in the coming battles over tax gap measures and other attempts to extract increased taxes from small business. The RVDA in particular would benefit from a closer association with the small business community and I’d encourage that group to step up to the plate and get involved.
A good way to start would be if RVDA would join the Small Business Legislative Council (SBLC), an umbrella coalition of small business associations. SBLC’s sole objective is to assure that the views of small business are heard and acted upon on a variety of very important federal legislation.
New Tax Laws Should
Benefit Small Business
Small business won significant victories when the new tax and economic stimulus legislation extended through 2009 the special 50% depreciation allowance, also known as bonus depreciation, and increased limits on the very important section 179 deduction. Normally, businesses recover these capital investments through annual depreciation deductions spread over several years. Both of these provisions encourage investments by enabling businesses to write them off more quickly.
The bonus depreciation provision generally enables businesses to deduct half the cost of qualifying property in the year it is placed in service.
The section 179 deduction enables small businesses to deduct up to $250,000 of the cost of machinery, equipment, vehicles, furniture and other qualifying property placed in service during 2009. Without the new law, the limit would have dropped to $133,000.
The existing $25,000 limit still applies to sport utility vehicles. A special phase-out provision effectively targets the section 179 deduction to small businesses and generally eliminates it for most larger businesses.
A Special Tax Refund
For Struggling Firms
Although based on what I’ve heard in recent months, most RV parks and campgrounds have remained profitable even during the recent economic downturn. But just in case you’re one of the many small businesses that had expenses exceeding their incomes for 2008, you can choose to carry those losses back for up to five years, instead of the usual two. For small businesses that were profitable in the past, but lost money in 2008, this could mean a special tax refund. The option is available for a small business that has no more than an average of $15 million in gross receipts over a three-year period.
- Exclusion of Gain on the Sale of Certain Small Business Stock. The new law provides an extra incentive for individuals who invest in small businesses. Investors in qualified small business stock can exclude 75 percent of the gain upon sale of the stock. This increased exclusion applies only if the qualified small business stock is acquired after Feb. 17, 2009 and before Jan. 1, 2011, and held for more than five years. For previously acquired stock, the exclusion rate remains at 50 percent in most cases. Good time to purchase another park? Maybe.
- Estimated Tax Requirement Modified. You may be able to keep a bit more money in your pocket for the balance of 2009 – and use that extra money to continue to invest in your resort. Many individual park owners may be able to defer — until the end of the year — paying a larger part of their 2009 tax obligations. For 2009, eligible individuals can make quarterly estimated tax payments equal to 90 percent of their 2009 tax or 90 percent of their 2008 tax, whichever is less. Individuals qualify if they received more than half of their gross income from their small businesses in 2008 and meet other requirements.
Tax Gap Proposals
The Green Book is prepared by the Department of the Treasury and contains its proposals for revision to the tax code and its proposals for funding the federal government. Some pretty frightening proposals are contained in the current Green Book, and I can tell you that the outlook for new and onerous tax reporting paperwork is not good for smaller business.
- Require Information Reporting on Payments to Corporations. The most significant proposal on the table at this time would require a business to file a 1099 for any corporate payment exceeding $600 for the calendar year. The goal is to increase compliance by increasing third party reporting. The proposal is projected to raise about $9.1 billion over 10 years and would place a significant new paperwork burden on businesses.
- Require a Certified Taxpayer Identification Number from Contractors and Allow Certain Withholding. This proposal would require a business making payments of $600 or more to a non-employee service provider (lawn or landscaping service, payroll company, accountant or lawyer, etc.) to verify the Taxpayer Identification Number (TIN) of the service provider. If the service provider fails to provide an accurate TIN (purposely, inadvertently), the business would be required to withhold a flat-percentage of the gross payments under the contract. This places a new burden on the contracting business that now must verify the TIN with each contract. Then, it raises a potential negative cash flow problem on the service provider since a certain amount of their payment could be withheld.
Senate Finance Chairman
Requests More Tax Gap Info
At a recent Senate Finance Committee hearing on the nomination of a deputy treasury secretary, Committee Chairman Sen. Max Baucus, D-Mont., requested that the Treasury Department (the IRS is housed in the Treasury Department) report back to the Finance Committee within two months with a proposed system of metrics and accountability to track efforts to close the tax gap. This is almost certain to mean even more proposals to try to improve tax compliance in the near future – and based on the recent focus on small business, it’s almost a sure thing that many of the proposals will add to the costs and obligations of small business. Watch out.
Check this Out: A Proposal
to Mandate Paid Vacation
A Florida congressman recently introduced the Paid Vacation Act – legislation that would be the first to make paid vacation time a requirement under federal law. While not likely yet to impact on smaller firms, some companies in the park business that own and operate multiple parks may be affected and, once in place, it’s not out of the question to see the employee threshold lowered to capture more and more businesses.
The bill would require companies with more than 100 employees to offer a week of paid vacation for both full-time and part-time employees after a year on the job. Three years after the effective date of the law, those same companies would be required to provide two weeks of paid vacation, and companies with 50 or more employees would have to provide one week.
The premise is that more vacation time will stimulate the economy through fewer sick days, better productivity and happier employees.
Not surprisingly, some in the travel industry are salivating over the bill. The U.S. Tour Operators Association and the Adventure Travel Trade Association are both on board. Other tourism and labor groups are expected to sign on in the coming days. The U.S. Travel Association has not yet endorsed the measure, but an executive of that organization has said that Congress does need to consider new ways to stimulate the vacation industry and travel economy.
A Perfect Example of
How Washington Works
The House May 20 gave final congressional approval to legislation that would force the Interior Department to authorize concealed weapons in national parks and national wildlife refuges. That would jibe with a Bush administration rule that is temporarily held up by a federal court injunction.
The rider was attached to a bill (HR 627) that would protect credit card holders. The Senate initiated the amendment and approved it by a 67-to-29 vote.
The House followed when it accepted the Senate version of HR 627. The House held an unusual vote on the guns-in-parks amendment, approving it overwhelmingly by a 279-to-147 vote, with 105 Democrats joining 174 Republicans in favor.
President Obama signed the credit card bill into law with the parks weapons provision, even though his administration did not take a definitive position on the issue. I guess signing the bill is a pretty clear statement of its position.
Credit card abuse. Concealed weapons in the national parks. Sure, let’s roll both into one law. That’s Washington at its best.