Tuesday, March 5, 2024

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Burlington first to adopt new hotel occupancy tax, to establish new governing authority

Burlington councilman who doubles as Graham city attorney won’t be involved in that city’s challenge to hotel occupancy formula preferred by larger municipality

The city of Burlington has become the first municipality in Alamance County to adopt a new municipal tax on hotels and motels to fund tourism-related expenditures within its own borders.

Burlington’s city council formally signed off on this so-called “room occupancy tax” on Tuesday, clearing the way for the new 3-percent levy to be imposed on the visitor accommodations within the city’s municipal limits.

This new impost, which is scheduled to take effect in July, was authorized by a “omnibus” taxation law that made its way through the General Assembly in October. Among other things, this law allows Burlington, Mebane, Elon, and Graham to collect an occupancy tax comparable to an existing 3-percent surcharge that the county already assesses on the hospitality industry. But whereas the proceeds from the previous tax are split between the county and a local visitors and convention bureau, the revenue derived from the additional tariff would pour directly into the coffers of the municipalities where the hotels and motels are actually located.

“I call it an eat what you kill approach,” Burlington’s city attorney David Huffman explained before the levy’s adoption on Tuesday, “and the money would go back to the municipalities where the tax is generated.”

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The council went on to vote 5-to-0 in favor of the new 3-percent levy after a state-mandated public hearing drew nary a peep from the general public.

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Burlington takes the lead

In addition to approving the levy itself, the council also voted to form a new municipal development authority that will be responsible for administering the revenue this tax will bring in.

According to Rachel Kelly, Burlington’s assistant city manager for administrative services, the creation of this new authority is stipulated by the state legislation which permitted the levy.

“As the first agency to adopt that tax,” she added, “the legislation directs us to create the tourism development authority.”

The assistant city manager noted that this appointed body will make sure that each member city receives the portion of the municipal occupancy tax collected from its own hotels and motels. Under state law, two thirds of these funds must be used to promote travel and tourism within each community, while the remainder can go toward programs and facilities which bring visitors into the area.

Kelly said that the actual membership of this new body will vary depending on how many other communities join Burlington in approving the levy. These potential participants include Mebane, Elon, and Graham, although only Elon has scheduled a public hearing as a precursor to passing the tax.

Kelly said that, if all three of the other municipalities decide to follow Burlington’s lead, the new tourism authority will consist of seven members. Four of the seats on this appointed body would be reserved for the municipal administrators from those respective cities and towns. The other three will be doled out to representatives of the hospitality industry, who are legally entitled to at least a third of the seats on any local tourism development authority.

Kelly told the council that if only two of Burlington’s peers adopt the new tax, the authority’s membership will comprise five seats – three of which would be assigned to municipality administrators and the other two for local hoteliers. If the number of participating municipalities is fewer than three, the new authority will consist of three seats, with municipal appointees outnumbering hoteliers two to one.

 

Not so fast…

The prospect that this new authority may not include all four of the eligible municipalities was recently hinted when Graham’s mayor Jennifer Talley publicly blasted the distribution method that the General Assembly has authorized for the new municipal occupancy tax.

Last month, Talley told The Alamance News that she had assumed a population-based method would be used to divide up the haul from this tax. She went on to argue that her community would be shortchanged by a “eat what you kill” strategy, given that Graham only has one hotel within its municipal limits.

Although the rest of Graham’s city council has not yet weighed in on the matter, Talley’s objections were nevertheless potent enough to draw a formal reply from the county’s legislative delegation.

In last week’s edition of The Alamance News, the delegation’s members defended their support of the provisions which the General Assembly ultimately passed. Even so, they held out the hope of a compromise on behalf of municipal leaders like Talley who didn’t get the proverbial memo about the proposed distribution method.

 

Conflicting loyalties?

Graham’s possible challenge to the new levy has presented a bit of a conundrum for Burlington councilman Bob Ward, who also doubles as one of Graham’s city attorneys. Ward publicly acknowledged his conflicting loyalties before Tuesday’s public hearing in Burlington.

“In light of some recent articles about this particular subject,” the councilman attorney announced, “I discussed this matter with Mr. Huffman as to whether or not I have a conflict.”

Huffman, for his part, confirmed that the councilman had brought the issue to his attention. He went on to note that he had assured Ward that he could still have his say as a Burlington councilmember as long as he delegated the handling of a potential wrangle with Graham to that municipality’s other city attorney, J. Bryan Coleman. Ward proceeded to cast his vote for both the new levy and the tourism development authority that will administer it.

Aside from Ward’s potential conflict, Burlington’s mayor Jim Butler also acknowledged a possible entanglement of his own regarding an unrelated joint venture with Alamance Community College.

Butler, who serves on ACC’s board of trustees, told the rest of the council that he had previously recused himself from the college’s deliberations about a new burn tower for firefighter training that’s poised to be built on land that belongs to the city of Burlington. Butler went on to join the rest of the council in approving this enterprise as part of a so-called consent agenda of routine or noncontroversial items that was adopted en bloc on Tuesday.

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