The town of Elon has become the second local community to reserve a spot on a new, municipal board that would fund tourism-related activities through a new tax on hotels and motels.
This proposed municipal tourism authority was initially floated last week in Burlington as a potential counterweight to an existing countywide body that promotes travel and tourism throughout Alamance County. Now, officials in Elon have joined their Burlington brethren in endorsing this proposed new authority – as well as an accompanying 3-percent impost on the local hospitality trade within the four municipalities.
Like its countywide equivalent, this municipal authority would collect this so-called room “occupancy tax” from hotel and motels in order to bankroll programs and activities that lure visitors into the area. But in contrast to the existing authority, which splits its haul between the county and a local visitors bureau, the new municipal board would plow the proceeds from the new 3-percent levy directly into the municipalities where the hotels and motels are found.
This fundraising model has been made available to Burlington, Elon, Mebane, and Graham thanks to a newly-ratified state law that authorizes the expansion or increase of the occupancy tax within nearly two dozen localities across North Carolina.
This “omnibus” act was initially filed on February 23 as a purely parochial bill that would’ve only applied to unincorporated areas of Avery County. Over the next several months, however, this legislation would be extended in drips and drabs to include at least 14 counties and about half as many municipalities.
Yet, it wasn’t until the month of October that communities in Alamance County were finally folded into the text of the bill.
According to Elon’s town manager Richard Roedner, it was during this final stretch of the bill’s journey that state senator Amy Scott Galey alerted him and his colleagues about this potential source of new revenue for Elon’s municipal government.
“They haven’t considered occupancy taxes for many years in Raleigh,” Roedner recalled when he presented this option to Elon’s town council on Tuesday. “So, the call went around that if you want an occupancy tax, this is the year.”
Yet, even before the first, incipient draft of this bill had been filed with the General Assembly in February, a municipal occupancy tax was already something of a Holy Grail for officials in both Elon and Burlington.
According to Rachel Kelly, an assistant city manager in Burlington, her city’s leaders were interested in their own occupancy tax “for quite some time” before the recent, state-level push to make this option more widely available.
In fact, Burlington’s top brass made a public pitch for this levy when they convened an annual breakfast with their legislative delegation on February 6 of this year. According to the minutes from these special proceedings, Burlington’s mayor Jim Butler personally leaned on the city’s three legislators that morning to champion a municipal occupancy tax so that at least some of the tax payments from hotels and motels would “align with the city’s goals and priorities.”
In the meantime, Elon’s mayor Emily Sharpe recalled that her own introduction to this proposed tax came about five years ago when Galey, who was then serving on the county’s board of commissioners, broached the idea with Elon’s municipal leaders. Sharpe went on to argue that would be a waste for Elon’s town council not to avail itself of this opportunity now that Galey and the rest of the General Assembly have given it the legal authority to follow through on this option.
“We initiated this,” she stressed during Tuesday’s meeting of Elon’s town council, “and I think it would be very irresponsible to walk away from it.”
In the end, four of Alamance County’s municipalities would find their way into the General Assembly’s omnibus act when it passed through a legislative conference committee – whose members happened to include state representative Steve Ross of Burlington. The committee’s amendment was eventually enshrined into law when the omnibus act was ratified by the General Assembly on October 25.
Roedner informed Elon’s town council that the county’s finance department has previously estimated that the newly-authorized tourism authority would raise about $110,000 a year for the town’s municipal coffers. He added that this figure has struck him as a bit overly optimistic given that the only business he knows for sure would be affected in Elon is an inn owned and operated by the town’s eponymous university.
Even so, Elon’s proposed take pales in comparison to the $750,000 a year that Burlington hopes to rake in from the 15 hotels and motels within its municipal limits.
In theory, each community that benefits from this levy would be required to spend two-thirds of its annual take on marketing and promoting local attractions. The rest of the funds would be available for programs and facilities that visitors frequent within each municipality.
But unlike the funds that the county earmarks for tourism-related marketing, the corresponding share of the new municipal tax wouldn’t necessarily be handed over to a semi-independent visitors bureau. Instead, the revenue would be available for each city or town to spend as its elected leaders see fit.
During Tuesday’s council meeting in Elon, Roedner insisted that the four municipal partners can take steps to maintain their effective control over any funds that the new levy brings in. He went on to note that he and his fellow municipal managers have already worked out an arrangement that would guarantee this financial autonomy by omitting the creation of a new visitors bureau and by appointing municipal officials to serve on the proposed authority.
“What we agreed to is that this new tourism board would essentially be a pass-through board,” he explained, “and it would turn over whatever money is raised back to the [respective] communities.”
In the end, Elon’s town council instructed Roedner to draw up a resolution for a municipal tourism authority based on a document that’s apparently being drafted in Burlington.
Meanwhile, Burlington’s city council has agreed to hold a public hearing on its own proposed resolution when it holds its first meeting of the New Year on January 2.