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Town of Elon adopts its own tax on hotels and motels

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New tax will impact only one hotel: Inn at Elon

The town of Elon has joined Burlington in approving a new municipal tax on hotels and motels that aims to raise funds for tourism-related activities within each community’s borders.

Elon’s town council formally voted 3-to-0 to adopt this 3-percent “room occupancy tax” on Tuesday following a public hearing that drew nary a word from the public.

The town’s newly-passed impost will effectively duplicate an existing 3-percent levy that the county already tacks onto local visitor accommodations in order to bankroll programs and activities that bring tourists into the area. But unlike the countywide tax, whose proceeds are split between the county and a local visitors bureau, the haul from Elon’s occupancy tax will go directly into the town’s municipal coffers.

In adopting this new levy, Elon has become the second community in Alamance County to impose its own occupancy tax since the N.C. General Assembly authorized four local cities and towns to collect such an impost.

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Of these four municipalities, the city of Burlington was the first to act on this legislative authority in January when it imposed its own 3-percent occupancy tax and established a municipal tourism development authority to administer the new levy on behalf of any city or town that avails itself of the General Assembly’s permission.

Aside from following Burlington’s lead in imposing the tax, Elon’s town council has also agreed to join this new tourism development authority – a majority of which will consist of municipal administrators, with the balance composed of people from the hospitality trade.

At this point, no comparable decisions have come from either Mebane or Graham – who like Elon and Burlington have been empowered to implement their own occupancy taxes. Even so, Elon’s town manager Richard Roedner assured his town’s leaders that Mebane has a similar proposal in the works while municipal staff members from Graham have asked to see some of the documents he has prepared for Elon’s new tax.

In fact, Graham’s city council concurrently approved a provision at its meeting Tuesday night to schedule a public hearing on imposing the new occupancy tax within its municipal borders for its next monthly meeting, on March 12.

Meanwhile, Mebane city manager Chris Rollins says he thinks his council may begin discussing the issue at its next meeting, on March 4, but nothing has been finalized yet for that agenda that remains several weeks off.

Prior to its unanimous decision on Tuesday, Elon’s town council discussed the mechanics of the new municipal occupancy tax. One lingering question was precisely how the 3-percent rate had been attached to this levy. Roedner explained that, under state law, the cumulative total of any occupancy taxes in a given locality cannot exceed 6-percent – meaning that, with the county already collecting a 3-percent surcharge, Elon’s new tax is essentially capped at three cents on the dollar.

Another real poser for Elon’s town council was precisely how the new tax will be collected. Roeder said that this function could be invested in either the town or the new tourism development authority. He added, however, that Burlington is considering farming collections out to the county, which already has a system in place for extracting its own countywide levy.

Elon’s new tax will ultimately be collected from any hotel or motel within the town’s municipal limits. The only business that currently falls into the category is the Inn at Elon – a venture of the town’s eponymous university that apparently generates about $110,000 through the county’s occupancy tax.

As to whether the new impost will apply to Airbnb, Elon’s mayor Emily Sharpe conceded that these vacation rentals aren’t subject to any local occupancy tax under current state law.

“But it would be nice,” she added.

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