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HomeMy WebLinkAboutAgenda - 02-20-1996 - VII-A 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT MEETING DATE: February 20, 1996 Action Agenda Item # V-=-A SUBJECT: Increase in Occupancy Tax DEPARTMENT: PUBLIC HEARING: Yes jC No O.C. Visitors Bureau BUDGET AMENDMENT NEEDED: Yes No-X ATTACHMENT(S): INFORMATION CONTACT: Ted Abernathy(ext. 2325) Proposal (pages 2 -3) TELEPHONE NUMBERS: Hillsborough - 732-8181 Durham - 699-7331 Mebane - (910)227-2031 Chapel Hill - 967-9251/968-4501 Purpose: For the Board of Commissioners to consider a request from the Visitors Bureau to increase the county occupancy tax from 1%to 2%. Background: In July of 1991, the General Assembly of North Carolina enacted a bill allowing the Orange County Board of Commissioners to levy a room occupancy tax of up to 3% on the gross receipts derived from the rental of any room, lodging or similar accommodation. The Board of Commissioners subsequently approved a 1% occupancy tax which took effect September 1, 1991. In the 1995-96 fiscal year, the 1%tax was estimated to generate $154,810. The Chapel Hill/Orange County Visitors Bureau has used the receipts from this tax to develop and coordinate visitor services in Orange County and to implement marketing programs that enhance the economic activity and quality of life in the community. The Chapel Hill/Orange County Visitors Bureau currently employs a staff of two who implement more than 50 programs and strategies each year to increase the amount of visitor spending in the community. Additional funding is sought by the bureau to provide for additional programs to better serve a client base that has increased more than 400% in three years. Area hoteliers collecting occupancy taxes from their guests also expressed their desire to see additional sales and marketing programs implemented by the Bureau. The hoteliers have agreed to support an increase in the county occupancy tax(from 1%to 2%) if the proceeds are dedicated to the Chapel Hill/Orange County Visitor Bureau. With additional funding, the bureau will implement new programs and strategies that will result in increased hotel occupancy(particularly during the shoulder seasons), increased visitor spending, and an increase in the amount of retail sales dollars returned to the community. Recommendation: As the Board directs. A Proposal to Increase the Orange County Occupancy Tax to 2% The Board of Directors of the Chapel Hill/Orange County Visitors Bureau would like to request an increase in the amount of occupancy tax collected on the rental of rooms in commercial lodging establishments from 1% (current) to 2%. They respectfully request that the proceeds of this tax continue to be dedicated to the Chapel Hill/Orange County Visitors Bureau for the operation of the bureau and implementation of sales and marketing programs that encourage visitor spending in the community. This increase is requested to take effect in the Spring of 1996. Background In mid-1990, the Public-Private Partnership (PPP)established a task force of 54 citizens to determine the feasibility of creating a visitor services bureau in Orange County. After several months of study, the group formally recommended the formation of a bureau,which was endorsed by the PPP, the Chapel Hill/Carrboro Chamber of Commerce, the Hillsborough Area Chamber of Commerce,the Chapel Hill Hotel/Motel Association, and the Economic Development Commission. In July of 1991, legislation was passed enabling the Orange County Board of Commissioners to levy a room occupancy tax of up to 3% on the gross receipts derived from the rental of any room,lodging, or similar accommodation in the county. In August(1991) the Commissioners approved a 1% tax on transient accommodations, which was to take effect on September 1, 1991. An interim Visitors Bureau Board of Directors of 11 members was subsequently appointed, and a Director was hired in June of 1992. The Board adopted the following mission statement in September of 1992: The mission of the Chapel Hill/Orange County Visitors Bureau is to develop and coordinate visitor services in Orange County and implement marketing programs that will enhance the economic activity and quality of life in the community. Some of the Economic Benefits of Encouraging Visitors to Orangg Countl i► Visitors have minimal impact on the existing infrastructure and government-provided services (schools, social services,etc. are not utilized by visitors). Visitors spend money in existing businesses($69.93 million was spent by visitors to Orange County in 1993). Visitors have a dramatic impact on the amount of sales tax that is collected and returned to local governments ($3.57 million in state tax receipts and$1.32 million in local tax receipts was collected from visitors in 1993). Visitors support over 1,300 jobs in our community. Property tax revenues are not used to support these efforts. The marketing programs and services provided by the bureau are paid for by visitors,through the proceeds of a county hotel occupancy tax. 3 Justification for Increasing the Tax_ The marketing committee of the Visitors Bureau(under the leadership of Chapel Hill council person Lee Pavao)met individually with area hoteliers in the spring of 1995 to assess the effectiveness of the Visitors Bureau. Hoteliers expressed overwhelming support and agreed the Bureau's programs had been effective. When asked whether there were other programs that should be implemented,hoteliers expressed a desire to see additional sales and marketing activities that would attract groups and individuals to the area. Hoteliers also agreed to support an increase(to 2%) in the occupancy tax to pay for the additional programs provided that all of the proceeds were dedicated to the Chapel Hill/Orange County Visitors Bureau. The staff of two at the Chapel Hill/Orange County Visitors Bureau currently implements more than 50 programs and strategies each year to increase the amount of visitor spending in the community. Additional sales and marketing activities would be impossible without additional resources to invest in both personnel and programs of a reduction in the number of existing programs. The number of clients served each year by the bureau has increased more than 400% in 3 years and will continue to do so as the bureau becomes more established as a resource for meeting planners and visitors. The following activities would be implemented with a dedicated 2%occupancy tax. These programs would help increase hotel occupancy during shoulder seasons(non-peak times)thereby increasing visitor spending in the community and increasing retail sales. • Hire a director of sales to attract state,regional, national and international conferences to the county, participate in trade shows, and manage sales promotions. • Increase participation in trade shows that are likely to generate group business. (We currently participate in two trade shows each year, this would likely increase to at least six.) • Coordinate community-wide promotions to showcase our facilities and encourage meeting planners to schedule conferences in our community. • Initiate a comprehensive advertising campaign to select markets. • Participate in state and regional cooperative projects that will increase our visibility as a meeting and visitor destination. • Devise and implement programs geared toward local meeting planners(UNC and other)to encourage them to hold conferences in Orange County. • Print additional collateral materials to service the visitors who are coming to Orange County. • Increase the number of services provided to groups,particularly in the area of coordinating local transportation from hotels to meeting facilities(to foster a hassle-free visit while minimizing impact on local roads.) • Increase public relations efforts to make the community aware of the visitors bureau and the services provided. We believe that if implemented, these activities will result in increased sales for existing businesses (particularly small businesses such as retail stores,gas stations and restaurants),increased visitations at local attractions, art museums,festivals and events, and an increase in the amount of tax dollars being returned to the community.