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HomeMy WebLinkAboutAgenda - 02-19-2008-6dORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: February 19, 2008 Action Agen a Item No. -d SUBJECT: Resolution in Support of the Orange County Visitors Bureau Request for 1% Occupancy Tax Increase DEPARTMENT: Economic Development PUBLIC HEARING: (YIN) No ATTACHMENT(S): Proposed Resolution 1/7/08 Memo from the Visitors Bureau Board Binder Attachment with Letters of Support for the I% Occupancy Tax Increase (Previously Provided Under Separate Cover) INFORMATION CONTACT: Laurie Paolicelli, (919) 968-2060 PURPOSE: To consider a resolution based on a request from the Chapel Hill/Orange County Visitors Bureau Board that the Orange County Board of Commissioners increase the County's hotel occupancy tax by 1%, from 2% to 3%, as authorized in Senate Bill 622 of the 1991 Session laws (the legislation includes provisions for the Board of Commissioners, by resolution, to levy a room occupancy tax of up to three percent (3%) on the gross receipts derived from the rental of accommodations in the County). BACKGROUND: With a 1% County occupancy tax, the Orange County Board of Commissioners created the Chapel Hill/Orange County Visitors Bureau in 1991. In the 1996/97 fiscal year, at the request of the Visitors Bureau Board and local industry, the tax was increased to 2% where it currently remains. It is the request of the Visitors Bureau board of directors, Orange County hotels, suppliers, stakeholders and industry partners to raise the tax to its full 3% to meet the demands of increased competition for tourism and a desire to service the extraordinary interest in Orange County, among travelers, meeting planners and sports event organizers. The additional revenues would equal approximately $250,000 based on past performance, bringing the Bureau's total budget to $900,000. The 1% increase in occupancy tax would result in a 6% total occupancy tax on Orange County guests, which is on par with most North Carolina counties and is not a deterrent where decision making among hotel guest are concerned. Currently, Durham funds a Visitors Bureau at $2.5 million; Raleigh at $4 million; Pinehurst at $1.5 million; and Greensboro at $4 million. The local tourism industry has been thrust into greater competition as the result of 1,000 new hotel rooms in Durham; and 175 new rooms in Chapel Hill. Two new hotels are slated for completion the next three years. Hoteliers have become concerned about dipping occupancy rates. New restaurants, soccer fields, the University's basketball museum and tours have given the area more marketing opportunities and hopes for increased economic development through new revenues, increased sales taxes and recreational and sports marketing. FINANCIAL IMPACT: The hotel occupancy tax does not impact residents. The Visitors Bureau is funded through this special tax, which also does not impact the general fund. The additional funds derived from the occupancy tax (estimated at $250,000) will be allocated to tourism marketing and would bring the Bureau's total budget to $900,000. RECOMMENDATION(S): The Manager recommends that the Board approve the attached resolution detailing support for the 1 % increase of the County's occupancy tax. 3 ORANGE COUNTY BOARD OF COMMISSIONERS RESOLUTION IN SUPPORT OF INCREASING THE ORANGE COUNTY HOTEL OCCUPANCY TAX WHEREAS, tourism is the number one industry in the southeast and the second largest industry in the state of North Carolina; and WHEREAS, according to NG Department of Commerce, tourism revenue in our county has increased from $67 million in 1992 to $137 million in 2006; and WHEREAS, a National Chamber of Commerce study compared the relationship between 100 manufacturing jobs to a community and 100 tourists and found that tourism produces significant revenues and is a clean industry because it requires little infrastructure, water or sewer and is a clean, non-polluting, non-consumptive industry; and WHEREAS, the Orange County region has seen a steady increase in hotels and now is home to more than 1,400 hotel rooms; 60,000 square feet of meeting space; 300 restaurants and 21 sightseeing venues and points of interest; and WHEREAS, marketing to the tourist and leisure traveler; selling our community to the conference, sporting and special event community; and servicing the leisure travelers and conference attendees has shown to provide a strong return on investment for our tax base and sales and occupancy tax revenues, while employing more than 1,700 residents; and WHEREAS, increased funding through a 1% occupancy tax. increase will provide an opportunity for marketing initiatives that will increase tourism and hotel and ancillary spending in our county; and WHEREAS, Orange County is being significantly outspent by competing tourism agencies in surrounding and regional counties and the addition.of new hotels in the Triangle has begun to erode occupancy and revenues for Orange County properties; and WHEREAS, the funding of the Visitors Bureau does not impact property owners but is funded through a tax collected at hotels from visitors; and WHEREAS, Orange County hoteliers have lent their support to this I% occupancy tax increase; and WHEREAS, Senate Bill 622, Chapter 392, of the 1991 Session laws makes provisions for the Orange County Board of Commissioners, by resolution, to levy a room occupancy tax of up to three percent (3%) on any accommodation in the County; NOW, THEREFORE, BE IT RESOLVED, that the Orange County Board of Commissioners strongly endorses a 1% increase to the Orange County Hotel Occupancy tax , bringing the tax up to three percent (3%) on the gross receipts derived from the rental of any room, lodging or similar accommodation in the County. This the 19'h day of February, 2008 Barry Jacobs, Chair Orange County Board of Commissioners WITH CARRBORO & HILLSBOROUGH The Feeling Never Leaves You January 7, 2008 To: Orange County Board of Commissioners: Carey, Jacobs, Nelson, Gordon and Foushee CC: Laura Blackmon, County Manager Fr: Chapel Hill/Orange County Visitors Bureau Board of Directors Re: Orange County 1% Occupancy Tax Please accept this letter and packet of support as a request of the Orange County Board of Commissioners to increase the county's 2% hotel occupancy tax by 1 %. This request is rooted in Senate Bill 622, Chapter 392, of the 1991 Session laws, which makes provisions for the Orange County Board of Commissioners, by resolution, to levy a room occupancy tax of up to three percent (3%) on the gross receipts derived from the rental of any room, lodging or similar accommodation in the county. The Chapel Hill/Orange County Visitors Bureau was created in 1991 by the County Commissioners with a 1 % county occupancy tax. In the 1996/97 fiscal year, at the request of the board and the local industry, the tax was increased to 2% where it currently remains. It is the request of the Visitors Bureau board of directors, and industry partners to raise the tax to its full 3% to meet the demands of increased competition for tourism and a desire to service the extraordinary interest in Orange County, among travelers, meeting planners and sports event organizers. The'additional revenues would equal approximately $250,000 based on past performance, bringing the Bureau's total budget to $900,000. The additional funds will be allocated to tourism marketing. The I% increase in occupancy tax would result in a 6% total occupancy tax on Orange County guests, which is on par with most North Carolina counties and is not a deterrent where decision making among hotel guests are concerned. Orange County hoteliers have made inquiries with guests. The increase in budget would place the Visitors Bureau overall budget at $900,000 and although it to implement more tourism campaigns in an ever increasing competitive industry. As a side note, Durham's total budget is $3.5 million; Raleigh is $4.65 million; Pinehurst $1.5 million; Greensboro is $2.3 million. The Orange County Visitors Bureau is meeting the demands of the area's hospitality industry; has contributed to double digit growth of tourism in our county the past five years and has shown vigor for ideas, increased sales and an efforts to strengthen our economy through tourism, including conferences, group tours, extended stays among loyal visitors and an increase in overall new visitation. Thank you for your consideration. 501 West Franklin Street, Chapel Hill, NC 27516 info®chocv" Pw4&,A4-s '3C)Cc 919-968-2060 visitchapelhill.org