Monday, July 22, 2024

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Graham adopts new “hotel tax”; does it include Airbnbs?

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Graham became the third county municipality to impose a new 3 percent hotel occupancy tax , based on legislation enacted by the General Assembly last fall, and to become a part of the local tourism development authority that will oversee the tax.

Earlier this year, both Burlington and Elon had adopted the tax; further, Burlington, as the first local municipality to act, also established the Alamance County Municipal Tourism Development Authority to oversee the collection and distribution of the occupancy tax revenues.

This appointed body, with members from each jurisdiction that imposes its own tax, 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.

According to the legislation, each municipality will get to keep the proceeds from revenues generated within its own jurisdiction.  A countywide occupancy tax, also 3 percent, is collected by the county government; the proceeds are split between county government and  through the local visitors and convention bureau.

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Mebane, the fourth county jurisdiction eligible for the new tax, will resume consideration of the issue at its next city council meeting, on April 8.  This newspaper’s publisher objected last week that inadequate notice had been provided because a hearing notice had been printed only in an Orange County newspaper, while all of the affected hotels are in Alamance County.

 

Are Airbnbs/Vrbo covered?

A new wrinkle in Graham’s discussion was mayor Jennifer Talley’s contention that the new occupancy tax would also apply to short-term rentals such as those of Airbnb and Vrbo, two national companies that coordinate with local homeowners who rent out all or parts of their home for guests often on vacation.

In Elon, the assumption had been the opposite.  There, Elon mayor Emily Sharpe had conceded during that town council’s discussion about the new tax that the vacation rentals weren’t subject to local occupancy tax under current state law, although she said, “it would be nice.”

[See separate story this edition about interpretation of the occupancy tax application to short-term vacation rentals such as Airbnbs: https://alamancenews.com/do-airbnb-rentals-pay-occupancy-taxes-the-answer-appears-to-be-complicated/]

Elon’s discussion involved one hotel, the Inn at Elon, run by Elon University.  In Mebane, the assumption had been that there were three existing hotels – a Holiday Inn Express, Fairfield Inn, and a Hampton Inn – located off N.C. 119 near I-85/40 that would be subject to the tax.  A fourth hotel is currently under construction near Lowe’s Home Improvement on the other side of N.C. 119.

Earlier jurisdictions have stated their hope that, administratively, the county government will collect the tax – which is parallel to the existing 3 percent county occupancy tax – with proceeds from the new tax to be distributed based on the source of each hotel’s location.

Talley had earlier objected when the legislation first passed last fall that the distribution formula for the new tax was supposed to be population-based, but legislators explained that the language of the new statute was aimed at allowing each jurisdiction to keep all of the revenues generated by hotels within its jurisdiction, not what Talley felt had been promised.

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