Thursday, July 18, 2024

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Cities strike deal with county to collect new municipal hotel tax

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Burlington, Mebane, Graham, Elon agree to let county collect new municipal occupancy tax – for a fee; three hotel members of tourism board appointed

Just as the summer travel season gets underway, a number of local municipalities have firmed up one of prerequisites for a new tax that they’ve agreed to impose on visitor accommodations.

Last week, the cities of Mebane and Burlington became the first to cross these procedural hurdles when their city councils signed off on an agreement that will allow Alamance County to collect this so-called “occupancy tax” on their behalf. Since then, the elected leaders of Elon and Graham have also accepted this deal with the county.

The foundation for this new compact was set earlier this year when each of the four municipalities decided to impose this 3-percent levy on hotels and motels in their respective municipal limits. The foursome obtained state-level approval to adopt this new tax in 2023 as part of an “omnibus” law which extended the right to collect occupancy taxes to jurisdictions across North Carolina. In the case of Burlington and its three municipal peers, this tax will be tacked onto an existing 3-percent impost that Alamance County already collects to bankroll programs and activities which promote travel and tourism.

The provisions of the state’s omnibus law require the proceeds of the new municipal occupancy tax to be doled out in much the same way as the county’s existing levy. In both cases, the lion’s share of the funds must go toward a semi-independent visitors and convention bureau, while local government officials will parcel out the remainder to programs and organizations that attract visitors. The main difference between the county’s tax and the municipal equivalent is that, in the latter case, the proceeds not earmarked for the visitor’s bureau will be entirely under the control of the municipality in whose jurisdiction the funds were collected.

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The agreement with Alamance County will enable county officials to take in the new municipal occupancy tax in exchange for a share of the proceeds. Under the agreement, the county’s cut is set at 3 percent for the first $500,000 of the overall collections, and 1 percent for anything it collects beyond that point.

Burlington’s city council ultimately gave its unanimous nod to this collection agreement when it appeared on a so-called “consent agenda” of presumably routine or noncontroversial items during a regular-scheduled meeting last Tuesday. A day earlier, Mebane’s city council approved the same deal as part of its own consent agenda. This Tuesday, Graham’s city council signed off on a comparable consent item, while Elon’s town council followed suit with a 5-to-0 vote that came up as a regular item of business that evening.

Under this interjurisdictional agreement, the county will pass the proceeds of the municipal occupancy tax, minus its fee, to a new municipal tourism development authority that Burlington has established to administer these funds. Earlier this year, Burlington’s city council appointed the managers of the four participating municipalities to hold four of the authority’s seven positions. The council also assigned Burlington’s finance director to serve as the group’s ex-officio treasurer.

State law requires that the balance of the authority’s seven seats go to representatives of the local hospitality industry. Last Tuesday, Burlington’s city council assigned these three positions to Corine Hollingsworth, the general manager of the Inn at Elon;

Corine Hollingsworth, the general manager of the Inn at Elon

Michelle Strunk, the area director of sales and marketing for Hampton Inn & Suites and Tru by Hilton in Burlington; and James Wallace, the general manager of the Fairfield Inn & Suites in Mebane.

James Wallace, the general manager of the Fairfield Inn & Suites in Mebane

 

 

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