Support heard for TDA tax increase

Archived News

Support heard for TDA tax increase

Supporters of a proposed hike in Haywood County’s room occupancy tax were silenced in the state legislature in 2013, but much noise was again made over the issue during the recent election. Now, with new players in place and old adversaries entrenched, is there a chance a room tax hike could pass?

Heartbreak hotel

Since the legislation enabling room occupancy tax levies was first enacted more than three decades ago, many counties and municipalities have changed their rates, which must be approved by the General Assembly.

Haywood County started off at 2 percent, but has since risen along with its neighboring counties.

Right now, Buncombe County’s rate is the highest allowable by law, 6 percent. Transylvania County’s is 5 percent, although the county has been authorized to increase that to 6. Madison County’s is 5, Swain and Jackson counties are both at 4, and Macon’s is 3 — with an additional 3 percent in the Town of Franklin. Yancey County’s rate is also 3 percent.

Although Haywood’s rate sits right in the middle of the pack, the total amount of revenue collected — more than $1.2 million dollars in 2015-16 — has a definitive local impact.

Back in 2013, a movement proposing an increase in the county’s occupancy tax rate gained momentum. Adding 2 cents to the existing 4 cents would naturally boost all room tax revenue by 50 percent, pushing the TDA’s gross collections to about $1.8 million.

Related Items

Advocates of increasing the occupancy tax increase make a salient point — even though it is a tax, it’s generally not a tax paid by locals. It’s a revenue injection from outside the county.

Detractors say a tax is a tax, and increasing the room occupancy tax could lead budget-conscious consumers to take their business elsewhere.

Regardless, almost every single elected official in Haywood County at the time supported — at least in principle — the proposed increase put forth during the 2013 legislative session, although there were minor disagreements as to how, exactly, the money would be spent.

On March 13, 2013, Rep. Joe Sam Queen, D-Waynesville, filed “An act to authorize Haywood County to levy a two percent room occupancy tax.”

On that same day, Sen. Jim Davis, R-Franklin, filed the identically bill in the Senate.

However, local bills have to make it through a legislative committee where the local delegation must testify that they all support the measure.

Obviously, Davis and Queen were on board; the lone holdout was Rep. Michele Presnell, R-Burnsville.

The long run

Since 2013, Haywood County has left probably $1.5 million or more in room occupancy taxes on the table, and any immediate rate increase would take additional time to pass, implement, collect and accumulate to a level where disbursements could be made — contributing to a growing sense of urgency among local officials that peaks every two years as the new legislative session convenes.

Currently, an increase in the rate, even without specific details on how the money will be spent, still has widespread support across the county and across party lines.

Prior to Election Day, some municipal officials openly bandied about the renewed possibility of rate hike, should Presnell suffer a then-expected loss to challenger Rhonda Cole Schandevel, D-Canton.

Not only did that not happen but the measure’s foremost supporter — Queen — suffered a close loss in his re-election contest.

So where does the delegation stand today?

The re-elected Sen. Davis — in true representative form — declared his support only for letting the people of Haywood County decide whether or not the rate should be raised.

“Yes,” he said when asked if he was agreeable to sponsor such a measure in the Senate again. “But I’m not willing to spend any political capital in a losing effort. It would have to be a referendum. I’m a local government guy, and I think people ought to have a chance to vote for it. If they want to vote to raise the tax themselves, so be it. That’s America at it’s greatest.”

The House bill’s sponsor, Rep. Queen, won’t be returning to Raleigh this January, and will instead be replaced by Mike Clampitt, R-Bryson City.

“I would want to meet with the TDA, the Chambers of Commerce, and the county commissioners and get their thoughts on that before making a decision,” Clampitt said of his feelings on advancing another attempt to raise the rate.

That leaves only Presnell, who said she was about to meet with Haywood County Commissioner Mike Sorrells to discuss the issue.

“I do not vote for any occupancy tax — not just in my district. It’s just an additional tax. It’s not a tax on the people that live there, but it is on the people that visit there,” she said, noting that consumers compare costs before choosing a vacation destination.

“But I’m willing to listen,” she said.

On the Haywood County Board of Commissioners, every commissioner, including the soon-to-be sworn in Brandon Rogers, supports the idea. Rogers is replacing retiring Commissioner Mark Swanger, who also supported it.

Executive Director of the Haywood Economic Development Council Mark Clasby said that the EDC hasn’t made any changes in its opinion since issuing a formal statement in support of the previously proposed increase.

President of the Haywood County Chamber of Commerce CeCe Hipps echoed Clasby, but with a caveat.

“We were in favor of it [in 2013], and we did support it. As far as a new effort, we would want to sit down and look what’s being proposed,” Hipps said. “I can’t speak for the board, but I feel positive they would support it.”

Waynesville Mayor Gavin Brown said that he would support the plan that was put forth several years ago, but Alderman Jon Feichter, who wasn’t on the board in 2013, said he hadn’t really studied the issue yet.

In Clyde, Mayor Jerry Walker said he’d probably support an increase, as did Alderman Jim Trantham, who said the current tax “doesn’t help Clyde much” but that he’d be for it, if only to support the rest of the county. Alderman James Mashburn, however, said he “wasn’t in favor of any tax right now.”

In Maggie Valley, Alderman Janet Banks said her position in favor of an increase hadn’t changed. Alderman Mike Eveland — also a member of the TDA board and co-owner of the Maggie Valley Inn — said he was in favor of it, as long as spending concerns were addressed. Alderman Clayton Davis expressed a similar opinion, saying he was “cautiously supportive” of an increase.

Alderman Phillip Wight, however, continues to oppose an increase. In 2013, he and Mike Matthews, who is now Waynesville’s tax collector, were the only aldermen in Haywood County to oppose it.

“I would be against it,” Wight said. “I’m not generally for that type of taxation. We’re growing, and I don’t really see a need for it.”

However Wight, who himself owns a Maggie Valley motel, doesn’t think the tax hurts local business owners, as some claimed in 2013.

“Not really,” he said. “Maybe for long-term stays, three or four days or more, it certainly eats into your budget, and your enjoyment of the area.”

Draft document discusses room tax hike

The Haywood County Tourism Development Authority staff has developed a draft plan for how an increase in the room tax could be implemented and used, but the document is preliminary and has not been discussed by the TDA members or won their approval.

Although it’s a draft, the document has been through four versions and is current as of Aug. 16. In summary, it explains how a new, separate 2 percent tax could be spent. The new money would be for capital projects rather than marketing, and so it could provide a different kind of boost to Haywood’s tourism market than what the current room tax provides.

• The TDA will allocate funding for “tourism-related product development,” or capital investments only — bricks and mortar projects, or design work in support of those projects.

• The TDA will retain 5 percent to cover administration.

• The TDA does not have to spend all of the money each year.

• The TDA cannot promise ongoing financial support of a project.

• Projects must be located in Haywood County.

• Projects located on the property of an occupancy tax-collecting entity are not eligible for funding.

• Projects must serve as “drivers of visitation” to the county, enhance the visitor experience or meet demonstrated tourist needs while also improving quality of life for residents.

• Revenues in the 1 percent fund will henceforth be used only for marketing and promotion.

• Funded organizations must be nonprofits or governments and must have a minimum 50 percent match for any monies requested;

• Funded organizations may receive a grant, loan, or monies supporting debt service.

• All usual application procedures and procedural check-ins can still be expected.

Be our guest

Since 1983, the North Carolina General Assembly has allowed counties and municipalities to collect room occupancy taxes from any lodgings that also pay sales tax.

In theory, every cabin, condo, rental home, bed and breakfast or hotel room rented in 81 of the state’s 100 counties or in 96 of the state’s 533 municipalities includes a small tax. Guests pay a percentage of their lodging’s rate to the renter, who in turn remits the collected money to the appropriate local government unit monthly.

Usually, that money is administered by a Tourism Development Authority, as is the case in Haywood County. Over the past 33 years, this tax has generated billions of dollars statewide in revenue, all of which stays at the local level.

Haywood County’s room tax rate currently stands at 4 percent.

In essence, that 4 percent is split into two different accounts: into the first goes 75 percent of all room tax revenue, of which two-thirds must be used for promotion of the county as a whole, and one-third for tourism-related expenses in the county; the final 25 percent goes into an account that is further divided up into five separate accounts — one each for Canton, Clyde, Lake Junaluska, Maggie Valley, and Waynesville. Each zip code’s revenue is based on how much is collected within its boundaries.

In each of those zip codes, two-thirds of the revenue must be spent on promotion of that jurisdiction and the final one-third must be spent on tourism-related expenses, also within the respective jurisdiction.

For the 2015-16 fiscal year running from July 1, 2015, through June 30, 2016, the Haywood County TDA collected $303,818 in the 1 percent account alone. All five zip codes saw double-digit growth compared to last year, with the county’s smallest — Clyde and Lake Junaluska — posting 82 and 41 percent growth, respectively.

Tourism juggernaut Maggie Valley — which by far accounts for the lion’s share of room tax revenue — collected $163,932 on growth of 8 percent, and Waynesville likewise grew 20 percent, collecting $94,751.

In Waynesville alone, some of that revenue helped fund events like Art After Dark, Folkmoot, the Haywood Chamber’s Gateway to the Smokies Half Marathon and Apple Harvest Festival, and a number of Downtown Waynesville Association events like the street dances and the Church Street Arts and Crafts fest, all of which are designed to increase the number of overnight stays in town.

Year in and year out, these events attract tourists to the area — many of whom pay the tax, which helps pay for more events, which hopefully helps attract more tourists. More than $600,000 in 1 percent occupancy tax has been collected in Waynesville since 2008 alone.

Tags: