Running a small hotel in Western North Carolina isn’t the easiest way to make a living, particularly not in these penny-pinching times when prospective customers want a full range of amenities and a rock-bottom room price.

“It is hard for small businesses like this,” said Sneha Amin, who owns and manages the 22-unit Economy Inn in downtown Sylva. “People are not wanting to spend anything, because they don’t have anything.”

A plan is in the works to increase the tax on overnight lodging in Jackson County from 3 percent to 6 percent, as high as state law allows. The prospect has left Amin and other hotel owners in the area — large and small — on edge, worried that such an increase could further drive away the ever-dwindling number of visitors they depend on for survival.

But proponents say the room tax is needed to offset a decline in tourism revenue in Jackson County.  The increase will mean more money to market Jackson County as a destination, which in turn should increase tourism. That’s something supporters say Jackson County sorely needs as overnight stays are still off by 12 percent in Jackson compared to 2006.

Alleghany County, which is increasing its room tax from 3 to 6 percent this year as well, has experienced similar ups and downs, according to Alleghany County Manager Don Adams. Like Jackson, Alleghany hopes the extra money from the tax increase — which means more money at its disposal for tourism marketing — will turn the tide.

Most of the protests in Jackson County have come from the Cashiers and Glenville area, where posh inns, golf course resorts and B&Bs cater to a well-heeled, but increasingly frugal, crowd.

But the fear of hardship to come via any increase is the same in Sylva. A block or so from the Amin’s hotel at the Blue Ridge Inn, far from the Cashiers area, Pete Patel is equally worried. Patel and his wife have owned and operated the 33-unit hotel for eight years.

“The summer was OK, but the winter is going to be tough,” Patel said, adding that he hopes commissioners won’t move forward with plans to hike the tax.

Those fears might be overstated.

Linda Harbuck, longtime executive director of the Franklin Area Chamber of Commerce, said she hasn’t noticed any particular decline in Franklin’s hotel stays since that town went from a 3 to 6 percent room tax. While Macon County’s base room tax rate is only 3 percent, the town of Franklin tacked on an additional 3 percent in the town limits.

“They seem to do all right,” Harbuck said.

The story is the same in Henderson County, which a year-and-a-half ago raised its room tax from 4 to 5 percent. Karen Baker, spokesperson for the Henderson County Chamber of Commerce, said that the tourism group has not seen a visible decrease in room stays since the increase.

“There are always two sides whenever there is an increase in a tax, but it hasn’t seemed to hurt occupancy,” Baker said.

Hotel owners in Jackson County beg to differ.

Raise the room tax, and it might drive tourists away and cost the county jobs, Amin and the other hotel owners said. Amin said she’s finding it difficult enough to earn the required $8,000 or more each month needed to pay the hotel’s bills.

Larger hotels are also feeling the dour economy’s tight squeeze.

“We hope that our county commissioners will hear our concerns and ease our fears,” said Megan Orr, director of sales for Best Western Plus River Escape Inn & Suites in Dillsboro. “Prospective customers make informed choices and will see and feel the difference of our higher taxes compared to our neighbors.”

How Jackson’s room tax stacks up

Two-thirds of the state has a higher room tax rate than Jackson County. With a tax of only 3 percent, Jackson is one of only 33 counties with a rate that low.

Jackson County leaders are debating whether to take the room tax rate to 6 percent — a rate share by roughly 30 other counties. Here’s some of the other rates in Western North Carolina:

• 3 percent: Jackson, Swain, Macon, Clay, Graham, Mitchell, Yancey

• 4 percent: Haywood, Buncombe, Transylvania, Cherokee

• 5 percent: Henderson, Madison, McDowell

• 6 percent: Town of Franklin, Watauga

It’s not too late for Jackson County leaders to go back to the drawing board on a state bill that consolidates the county’s two separate tourism agencies.

Commissioners have found themselves in the hot seat over a bill that would do away with the Cashiers Travel and Tourism Association and instead merge it with a single countywide entity. Cashiers tourism leaders have decried the plan. They argue that Cashiers needs its own tourism agency — with its own funding stream — to cater to its own unique visitor demographic apart from the county as a whole.

Those who support a merger believe it would be more effective, eliminating the duplication that currently exists and putting the money to wiser use.

The idea to merge the Cashiers tourism agency with the greater Jackson County Travel and Tourism Association was embedded in a bill to raise the room tax on overnight lodging from 3 to 6 percent. Raising the room tax was the chief objective of the bill and was supported by the majority of commissioners. But the origin of other parts of the bill is murky and has been blamed in part on a legislative mix up.

N.C. Rep. Phil Haire, D-Sylva, appeared before the Jackson County commissioners this week to let them know the bill can be changed if they don’t like it. Haire even took the prerogative to bring a new, marked-up version of the bill that would undo the changes made by the previous bill passed this summer.

That seemed to irk at least one commissioner, who asked Haire why he would bother drafting changes to the bill before commissioners officially decided whether they wanted any changes. Commissioner Doug Cody was confused how the bill had been preemptively rewritten.

“Who is the author of this?” Cody asked Haire of the new version.

Haire said he took the initiative to revise the bill based on feedback he’d gotten. Feedback from whom, Cody wondered.

“I didn’t realize we were doing an opinion survey of what changes we want to see,” Cody said.

“If you don’t like it, we will throw it in the waste paper basket,” Haire said of the new version.

It became clear that in Cody’s eye, Haire had jumped the gun with new language before the majority of commissioners reached a consensus on what to do.

“I think this needs some work,” Cody said.

County Manager Chuck Wooten portrayed it as a miscommunication. Wooten said he passed along the concerns raised at the last commissioners meeting over some aspects of the bill. Haire perhaps thought the concerns were universally shared by the commissioners when in fact the only commissioner vocalizing any concerns has been Commissioner Mark Jones, who works in the Cashiers tourism industry and sits on the Cashiers tourism board.

“I believe Mr. Jones is the only one that spoke up as having these concerns,” said Wooten.

Commissioner Charles Elders said commissioners need to decide collectively how, if at all, the bill that passed should be changed.

“We need to get our thoughts and recommendations together of what we would like to see,” Elders said.

Haire said he intended the new language to simply be a “starting point.”

While commissioners said Haire was premature in penning a new bill, Haire’s point was clear. The bill can be changed — and that lands the ball and all its political repercussions squarely back in the commissioners’ court.

Until now, the county had blamed at least part of the controversy on an unintentional hiccup in the legislative process: the bill that ultimately passed in Raleigh was not what the county initially asked for.

Haire didn’t intentionally set out to introduce and get passed a different bill than what county leaders wanted. The county failed to make its request in time last spring. By the time they asked Haire for a bill to increase the room tax from 3 to 6 percent, the deadline for introducing new bills had passed. So Haire looked around for a similar bill to piggyback on. He found one from Alleghany County, which was also looking to raise its room tax, and tagged Jackson County’s name onto it as well.

But in the process, the language didn’t come out quite right, Haire said.

Commissioners had partly disowned themselves from some of the controversial parts of the bill — instead directing blame at a bureaucratic system of lawmaking.

But, Haire now says it is no problem to change it — putting commissioners on the spot to either stand behind the bill in its current form or tell Haire how they want it changed.

“I hope we can get it the way we eventually want it,” Haire told commissioners helpfully.

Haire did explain that the state’s travel and tourism branch wants to bring uniformity to the myriad of tourism bills for each county in the state, and there is pressure to use similar policies and language, he said.

Commissioners plan to take the issue up in January.

Concerns with the Jackson County room tax bill

Jackson County commissioners plan to increase the tax on overnight lodging from 3 to 6 percent. Doing so requires permission of the N.C. General Assembly. A special bill to increase the tax was passed in Raleigh earlier this year at the county’s request. The language in the bill calls for other changes to the county’s two tourism agencies as well, including:

• Create a single countywide tourism development authority. Currently, there are two — a Jackson County Travel and Tourism Association and a separate Cashiers Travel and Tourism Association. The Cashiers tourism arm currently gets 75 percent of the room tax generated in the Cashiers area to spend on its own marketing.

• Expand how the tourism tax revenue could be spent. Currently, the money generated from the room tax must go solely to tourism marketing and promotions. The new bill would allow money to be spent on “tourism-related activities,” including capital projects. Putting on festivals, building greenways or assisting the Great Smoky Mountains Railroad with the cost of an engine turntable could all be legal uses of the tourism revenue under the new bill.

Businesses skirting Haywood County’s room tax laws should pay up or they could soon find themselves slapped with a lawsuit.

The Haywood County Tourism Development Authority plans to sue six accommodation owners who have repeatedly and openly neglected to pay the county’s 4 percent tax on overnight lodging, announced Executive Director Lynn Collins at the tourism board’s meeting last week.

“That will set an example,” Collins said. “Let them know that we actually are serious about it.”

Some businesses owe more than three years worth of room taxes, Collins said, and some have openly stated their defiance of the law.

Collins added that she sees places that are not paying the lodging tax with vacancy signs welcoming people. They are clearly doing business but either haven’t been charging the tax in the first place or have been pocketing it instead of remitting it to the county.

The tax is supposed to be tacked on to a tourist’s bill when they stay in a hotel, bed and breakfast or vacation home rental. Lodging owners then remit the tax they collect to the county on a monthly basis.

The tourism agency has not yet chosen which six taxpayers, or rather non-taxpayers, it will sue. But, Collins said it will go after “the most blatantly delinquent” properties.

“(Taking legal action) is the only thing you can do now,” said Al Matthews, Canton town manager and a member of the tourism board.

However, the board will continue to look for ways, such as changing legislation that would give them the authority to impose further sanctions, to bring more people into compliance. Currently, the authority has few options for punishing delinquent lodgers beyond lawsuits and liens.

For years, the tourism authority board has struggled with ways to bring accommodation owners into compliance. Each meeting, the board is presented with an list of people who owe overdue taxes.

“Every month we look at these penalties, and it’s the same people time after time after time,” said Marion Hamel, a tourism board member from Maggie Valley.

The revenue from the room tax is used to promote tourism in Haywood County.

In September, the tourism agency collected more than $96,000 from its 4 percent occupancy taxes — about $8,000 more than its estimated revenue for that month.

The increase is a vast improvement compared to August, when the actual amount of taxes collected came in 20 percent under the TDA’s year-to-date projections. The agency estimates it will bring in a little more than $863,000 this fiscal year.

The Haywood County Tourism Development Authority board backed down from plans to cut grant funding for long-celebrated events such as Folkmoot USA, Downtown Waynesville street dances and Canton’s Labor Day Festival.

The tourism board had been contemplating new grant guidelines for events — cutting off grant funding after four years and capping one-day events to a maximum grant of $1,500. But they reversed course following backlash from event organizers over the proposed changes.

Not all tourism board members wanted the changes in the first place. Mark Clasby, executive director of the county’s Economic Development Commission and a board member, was among those on the tourism board who raised concerns about the repercussions of cutting funding for existing festivals.

The intent was to free up grant money to boost new, up-and-coming festivals. The watered-down guidelines encourage rather than mandate that “new, qualified events” are given priority status.

Established festivals already have strong sponsorships and attendance, and after receiving TDA money for four years, new events should be better able to support themselves, said Marion Hamel, a member of the board from Maggie Valley.

“We didn’t feel like it would be that big of a hardship,” said Hamel, who helped draft the proposed guidelines.

Hamel said four years of grant funding should be adequate.

“It is going to take three years for any new event to get off the ground,” Hamel said.

But, just because an event is longstanding does not mean it’s profitable or no longer needs grant support. The town of Canton doles out $20,000 for music, portable toilets, stages, tents, clean-up crews and law enforcement at its annual Labor Day Festival.

“Ours is a little over a 100 years now. We are going to get it right,” joked Al Matthews, Canton town manager and a board member.

Many of these events depend on TDA funding to help broaden their promotional efforts beyond Western North Carolina. Organizers said they would not be able to continue attracting larger crowds to the popular annual events without the funding, and the loss could force some perennial favorites to shut down.

“You don’t want to penalize somebody who is successful,” said Kay Miller, executive director of the Haywood County Arts Council, who attended the meeting. Miller said International Festival Day would never be able to advertise in publications, such as Southern Living, if it did not receive TDA money.

Most events are run by nonprofits, which are only allowed to keep a certain amount of money in the bank. Any monies left over go back into the nonprofit or are used to promote the event the following year.

“This would be very devastating to some of us,” said Deborah Reed, a member of the tourism board. Reed is also leader within the Canton merchant’s association FOCUS, a nonprofit that puts on the annual Mater Fest.

Board members agreed that new events should be given a chance but disagreed over whether older events should be excluded from the TDA’s funding pool.

“You don’t want to create funding dependent organizations,” agreed Matthews, who also suggested cutting out the proposed guidelines how much money older events can receive.

About $215,000 of the tourism agency’s funds — a quarter of what is collected from the county’s 4 percent tax on overnight lodging — are earmarked this year for special tourism initiatives. The TDA collects more than $850,000 in revenue each year from the county’s 4-percent lodging tax.

Maggie Valley, Canton, Waynesville, Lake Junaluska and Clyde each keep a portion of the tax revenue they generate. The five areas also have their own committee, which divvies up their share of the tourism agency’s funds.

Ken Stahl, the tourism board’s finance chair, said the committees need to try to achieve a balance between giving new events an opportunity to flourish and supporting the events the county is already known for.

“Our prime directive is to get an increase in tourism,” Stahl said.

Each year, the committees sift through applications and make recommendations to the tourism authority, which has final approval in all funding decisions.

The committees have “a very difficult time sometimes,” Hamel said.

“The best things to do would be to clarify (the guidelines),” Hamel said. “This is what we are suggesting.”

Some board members and event coordinators did not know about the proposed changes until they received a call for comment from The Smoky Mountain News for an article prior to the tourism meeting last week.

“It caught me a little off guard,” said Matthews, who noted that he had not seen the changes to the guidelines until he received the board’s meeting agenda.

Although a tamer version of the proposed guidelines was passed, the board could decide to pass stricter standards in the future.

“This subject comes up every two or three years for discussion,” said Lynn Collins, executive director of the Tourism Development Authority.

Jackson County is nowhere close to cementing a deal with the Great Smoky Mountains Railroad — one that would offer financial incentives in exchange for basing a steam engine tourist train in Dillsboro.

“It is far from a done deal,” said County Manager Chuck Wooten.

The county and the train have yet to agree on key factors.

The heart of the matter is a restored 1913 steam engine and passenger cars the railroad would like to put in service. But there’s a problem. The train is in Maine, and moving it here would cost $430,000, the railroad’s owner Al Harper estimates.

Harper wants the county to chip in half the cost of moving the train, as well as help secure an outside grant to build a turntable and a standing commitment to help with advertising costs.

Discussions have been informal and intermittent since last winter. The deal is primarily being brokered by a Dillsboro business owner and town board member, David Gates, who is acting as a de facto intermediary between Harper and county officials.

Gates recently drew up a draft contract and passed it around to the various parties. Harper lives out of state, but came to town for the train festival in Bryson City in late September. Gates took him a copy — and Harper promptly signed it.

The draft is not a version the county would endorse right now, however, and Wooten was flummoxed as to why Harper would have signed it prematurely.

There’s a key component missing, from the county’s perspective. Jackson County wants a written guarantee the steam engine would be based in Dillsboro for at least five years — not Bryson City, where the rest of its trains depart from.

“We want it to originate in Dillsboro, turn around in Bryson City and run back to Dillsboro,” Wooten said.

Shops would benefit more if people boarded and disembarked in Dillsboro, rather than merely rolling into town for a 90-minute layover before loading back up and heading out.

The trip from Bryson City to Dillsboro and back lasts four hours total, including the layover. Tickets start at $49 for adults and $29 for children age 2 to 12.

Dillsboro was once the main depot for the train, but the headquarters were moved to Bryson City in 2005. Then in 2008, the train yanked service to Dillsboro completely before partially restoring it the following year.

“When the train left, they lost a lot of traffic,” Wooten said of Dillsboro merchants.

County leaders are skittish that could happen again and want an assurance built into the contract. To pass muster with the county, the contract would have to require the train to keep the steam engine based in Dillsboro for five years. If it is moved elsewhere, the railroad would have to pay back a portion of the county’s grant, Wooten said.

Ideally, the train would promise to run a certain number of trips — such as two a day during summer and fall, and once a day during winter. But the county can’t expect the railroad to make such a commitment not knowing what the demand will be.

The draft contract circulated by Dillsboro stipulated that operations of the steam engine would be based in Dillsboro. But it also stated that “only the Great Smoky Mountains Railroad will have complete authority as it relates to all scheduling and operations of the train set originating out of Dillsboro.”

Such a disclaimer could make enforcement difficult if the railroad ever broke the promise.

Wooten also said if a deal was ever agreed on, the county would shy away from writing a check directly to the railroad. Instead, the county would want an invoice from the company involved in moving the steam engine and would pay it directly.

Turntable

A must-have for the train to bring a steam engine to Dillsboro is a turntable, a piece of track that can be spun around to get the engine pointed back the right way when it reaches the end of the line.

The train apparently can’t afford the $200,000 to build one. The tiny town of Dillsboro can’t either. But the town will apply for a grant to cover the cost. A lot is riding on the outcome of that grant.

“No turntable, no steam engine,” Wooten said. “That would be a deal killer.”

The train currently runs on diesel engines. When the engine reaches the end of the line on excursions, it goes in reverse until it gets back to the depot in Bryson City.

Steam engines can’t go in reverse for long distances, however, making the turntable critical. The steam engine would run from Dillsboro to Bryson City, so another turntable would have to be installed there.

A turntable in Bryson City has been discussed for years. In 2005, the train got a $7.5 million low-interest loan from the Federal Railroad Administration, in part to construct turntables in Bryson City and Dillsboro. “How many years ago was that and where is the turntable?” asked Hanneke Ware, an inn owner in Jackson County who doesn’t think the county should give the railroad a grant. Wooten said the train apparently purchased the turntables but never installed them.

A portion of that loan was also for repairs to the track. But the majority was used to restructure existing debt that had a higher interest rate.

That existing debt and federal loan is one reason the railroad wants grants — not more loans — to move the steam engine and for the turntable. Wooten was told by the railroad that it lacked the collateral to take on additional debt right now.

The train has also asked for money for advertising from the Jackson County Travel and Tourism Authority — tapping into the  pot of money raised from a tax on overnight lodging in the county. The train initially asked for $150,000 a year, but has since revised the request to an unspecified amount of advertising on the train’s behalf, specifically for marketing the steam engine service from Dillsboro.

Opponents to a proposed room tax increase in Jackson County are accusing county leaders of secretly earmarking the money for a grant to the Great Smoky Mountains Railroad.

“If this is about raising funds to get the railroad to move back to Dillsboro, then we are against it,” said Hanneke Ware, owner of the Chalet Inn, at a public hearing on the room tax increase this week. “It is not right to increase the accommodation taxes in a county as widespread as Jackson to provide marketing money to a private business.”

The scenic tourist railroad has asked the county for as much as half a million dollars in exchange for offering steam engine train service to the tourist village of Dillsboro.

The train, once headquartered in Dillsboro, cited the flagging economy when it pulled out in 2008. Dillsboro’s galleries, gift shops and restaurants were thrust into a tailspin over the sudden loss of 60,000 tourists annually.

While the train has since brought limited passenger train service back to Dillsboro, business owners worry the train won’t stick around and still pine for the same level of foot traffic they once enjoyed.

County Commissioner Mark Jones, who spoke to commissioners during the public hearing in his capacity as head of the Cashiers Area Travel and Tourism Authority, said if a tax increase is needed to help the train, perhaps Dillsboro should levy it. In Macon County, Jones pointed out, the county levies a 3 percent tax and the town of Franklin levies an additional 3 percent tax there.

County leaders say there is no connection between the proposed room tax increase and the financial assistance being sought by the railroad.

“We don’t have a motive,” said Commission Chairman Jack Debnam.

Anyone who thinks the room tax increase is aimed at raising money to give the railroad is misinformed, Debnam said. The county has bandied the idea around but is not close to a deal, Debnam said. (see related article)

Several speakers opposing the room tax hike believe there is a connection, however.

“Why are they asking the county for money?” Ware asked.

She said the railroad should do what other businesses do when expanding: namely, get a bank loan.

“Is it because they don’t have collateral?” Ware asked. “If they can’t get a loan, why would the county want to put money into a business whose financial plans are tenuous?”

Henry Hoche likewise questioned why the tourist railroad needs money from the county.

“To me it makes no sense why the railroad isn’t paying for it itself,” said Hoche, owner of Innisfree Inn By-the-Lake in Glenville.

Giving tax money to private business in exchange for creating jobs isn’t exactly a new concept. Incentives to land new industry are common at the state level, and counties often get in the game by offering tax credits to lure new companies offering jobs.

Jackson County has a revolving loan fund designed to help businesses moving to or expanding in Jackson County. Al Harper, the owner of the railroad, previously estimated 15 to 20 news jobs would be created under his plan to base a steam engine train in Dillsboro — a plan predicated on financial help, however.

County Manager Chuck Wooten said the Great Smoky Mountains Railroad steam engine project would not create enough jobs to qualify for the size of the revolving loan request, however.

It wouldn’t matter anyway, Wooten said, because the railroad has since told him it can’t take on any more debt.

Spin-off jobs created by other businesses, such as the tourist-oriented shops in Dillsboro, wouldn’t count toward the job creation quota the railroad must meet, Wooten said.

The scenic railroad wants to base trips on a restored 1913 steam engine and rail cars in Dillsboro, but there’s a hitch. The train is in Maine, and it would cost more than $400,000 to move it down to Dillsboro, the railroad estimates. It wants the county to split the cost, plus pony up money to help advertise the new steam engine service.

Currently, tourism tax dollars can only go to marketing and advertising, not to hard costs like steam trains. The narrow criteria were imposed by the state in the 1980s when counties first began charging lodging taxes.

A few years ago, the law changed. Room tax can now fund “tourism-related expenditures,” which can include walking trails, festival bleachers, boat docks, or perhaps a stream train — anything that would presumably lure tourists. The state allows up to one-third of a county’s room tax dollars to go toward such “tourism-related expenditures.”

If Jackson County wants this flexibility, however, it has to adopt new language at the local level reflecting that. It has become part of the discussion over whether to increase the room tax, along with revamping the tourism oversight agency that controls the money.

Clifford Meads, general manager of High Hampton Inn in Cashiers, doesn’t like the idea of tourism tax money going to projects instead of strictly promotions.

“There will be people dreaming up projects so they can spend the money,” Meads said.

Meads said shipping money from other parts of the county to help Dillsboro is “going to be divisive.”

Cashiers business owners led the charge against a proposed tax increase on overnight lodging in Jackson County during a public hearing this week.

Several lodging owners complained that tourism is already down because of the economy. Asking tourists to pay a higher tax when they are reluctant to travel in the first place is adding insult to injury, they argued.

“This is our bread and butter,” said Richard Hattler of Mountain Lake Rentals in Cashiers, adding that a tax increase in these times of economic hardships is “insane.”

SEE ALSO: Is room tax hike aimed at helping scenic railroad? 

George Ware of Chalet Inn said tax increase would represent an “ill-advised action at the worst-possible time.”

About 40 people packed the hearing before county commissioners, with a dozen speaking out against the tax increase.

“You are going to negate the efforts of the tax itself,” said Judy Brown, president of the Greater Cashiers Area Merchants’ Association. “I think this is going to end up blowing up in our faces.”

Jackson leaders have proposed doubling the room tax from 3 to 6 percent. The room tax raised $440,000 last year, which is pumped back into tourism promotions.

The extra revenue from the proposed tax increase should mean more money to market Jackson County as a destination, which in turn should increase tourism. That’s something supporters say Jackson County sorely needs.

Overnight stays have declined by 12 percent in Jackson since 2006. Jackson has fared worse on the tourism front than other counties and has failed to rebound as well as its neighbors.

But a room tax increase is the wrong approach, opponents argued. It would put Jackson’s room tax higher than surrounding counties: Haywood and Transylvania are at 4 percent, while Macon and Swain are at 3 percent.

Tourists are already penny pinching as it is. Industry-wide, lodging owners note a major trend in how visitors book their trips these days.

“It is a last minute reservation, they want only one night, they want a discount, and they want the bottom line of how much it is going to cost,” said Michelle McMahon, owner of Mountain Brook Cottages for more than 30 years.

McMahon claims tourists are savvy enough these days to ask about extra taxes and fees, factoring the total cost — not just the advertised nightly rate — into their decision about where to stay.

“They compare, compare, compare,” McMahon said. “Nobody truthfully cares this is Jackson County. They just want to come to the mountains.”

Mary Korotwa, owner of Cashiers Resort Rentals, said the county is barking up the wrong tree in its quest for more tourism tax money. Instead, the county should be tracking down people who rent out their mountain homes and cabins to vacationers under the radar without levying the tax and remitting it to the county.

“You are leaving money on the table,” Korotwa said. “There are legions of homeowners in the county renting their own properties who are not paying the tax.”

Opponents overwhelmingly hailed from the Cashiers area. None of the county’s large chain hotels showed up.

That led County Commission Chairman Jack Debnam to wonder whether opposition to the rate hike is shared by the majority in the tourism industry. Debnam said the goal is to help tourism, not hurt it.

“We are trying to figure out how to promote Jackson County,” Debnam said. “We’ve got to be able to do a better job than we’ve been doing.”

Finding the best way

Controversy over the room tax increase has opened other wounds in the county. One is whether tourism tax revenue should continue to be divvied up between two tourism entities — the Jackson County Travel and Tourism Authority and a separate Cashiers Travel and Tourism Authority.

Both of those contract with either the Jackson County Chamber of Commerce and Cashiers Chamber of Commerce to carry out on-the-ground tourism marketing. Manning a visitor center, answering phones, mailing out brochures, placing ads in magazines or on billboards, managing a travel web site — all these functions are carried out by the respective chambers of commerce rather than an explicit county travel and tourism staff.

The county has floated the idea of merging the separate Jackson and Cashiers tourism agencies into a single countywide tourism authority. The chambers of commerce fear they could lose their starring role — and their cut of the room tax revenue — under a new structure.

Robert Jumper, chairman of the Jackson Travel and Tourism Authority, spoke up for the vital role played by the Jackson chamber when it comes to tourism.

The Jackson County Chamber of Commerce has the skills, knowledge and expertise to orchestrate tourism promotions on behalf of the county, Jumper said.

“We want our voice to be heard,” Jumper said, adding that any new countywide entity should honor the existing arrangement with the chamber

SEE ALSO: Railroad wants money, county wants assurances 

Debnam said not to worry. He said the two chambers of commerce would, in all likelihood, remain the go-to entities for carrying out the scope of tourism work.

“I think there is a big misconception about what is going to happen,” Debnam said.

Commissioners didn’t offer any comments of their own following the hearing. They will hold a work session to talk about what to do at 1 p.m. Monday, Nov. 14, in the county administration building. The earliest they would vote is at their next formal meeting on Nov. 21.

The commissioners previously voted 4 to 1 on their intent to increase the room tax, but that was prior to such backlash from Cashiers lodging owners. One commissioner is rumored to have changed his mind.

Meanwhile, lodging owners fighting the tax continue to rally their forces. They are forming a Jackson County Accommodations Association “to strengthen our voice,” said Henry Hoche, owner of Innisfree Inn By-the-Lake in Glenville.

As for a compromise, such as increasing the tax to only 4 percent as neighboring Haywood and Transylvania have done, Hoche wasn’t interested. A more modest increase from 3 to 4 percent would bring in another $115,000 a year to bolster tourism efforts. But it simply isn’t needed, Hoche said.

The Haywood County Tourism Board was hoping for a 15 percent increase in occupancy tax collection this August, but what it saw was a 20 percent decline.

“The August numbers aren’t good,” said Lynn Collins, director of the tourism agency.

It brought in $93,646 from its 4 percent tax on overnight lodging this August. However, it had projected that it would raise at least $114,442 — a 20 percent different.

“A lot of it has to do with the increase I projected for August,” Collins said. “If you look at it in comparison to last year, it doesn’t look as bad as it does compared to budget.”

When compared to last year, the decrease is only 7 percent, or almost $5,000.

Collins said she predicted an increase because of the number of area sporting events, including the Blue Ridge Breakaway and the Maggie Valley Moonlight Run. High gas prices and the economy continue to negatively affect the tourism board’s occupancy tax numbers, she said.

Despite the decline, Collins said she remains optimistic that things will improve.

“I feel good about it,” Collins said.

The tourism agency will not adjust its projections or make any cuts until January, she said.

At its quarterly meeting earlier this month, the tourism board began discussing ways to find vacation home renters who are evading the county’s lodging tax.

Collins is currently looking into software from the Virginia-based company VRCompliance, which searches the Internet for property listings and identifies rentals that are not paying the room tax.

The agency is also looking for more effective ways to censure businesses or renters who know about the tax but do not pay it. The tax doesn’t come out the lodgers’ revenue but is supposed to be added to the bill of those renting a room or house.

Jackson County commissioners likely erred two weeks ago when they voted to double the county’s tax on overnight lodging: they failed to hold a public hearing first.

Commissioners were forced to rescind their vote, and will now hold a public hearing Nov. 7.

Commissioners had voted 4-1 to bump the room tax up from 3 to 6 percent, making it one of the highest in the region. The tax on overnight stays brought in $446,000 last year, which is pumped back in to tourism promotion through the Jackson County Travel and Tourism Authority.

County Attorney Jay Coward had failed to tell commissioners a public hearing was necessary.

Coward, who gets paid $150 an hour for his legal work by the county, explained that he thought Jackson County was exempt under a certain state general statute from the requirement for a hearing.

“Since then, I’ve decided that we probably ought to have that public hearing in case that was a defect in my reasoning,” Coward said.

The hearing is most likely an exercise in formality rather than a genuine intent to hearing public opinion, as a do-over of the vote is planned for the same night.

“After the public hearing we’ll take it up again,” said Commissioner Charles Elders.

Commissioners may get an earful, however.

Henry Hoche of Innisfree Inn By-The-Lake spoke against the doubling of Jackson County’s room tax at the county meeting this week. Taxing visitors might seem more attractive than upping property taxes, Hoche said, “but it is not advantageous” to owners of inns and motels. “It is difficult enough for us in the lodging business today.”

Hoche said a higher room tax would mean visitors stay in the area for shorter amounts of time.

Bob Dews of Laurelwood Mountain Inn in Cashiers also spoke against an increase, saying the economy has knocked down guest numbers, and inn and motel owners don’t need help from the county in knocking rates down even further.

Dews said people would choose to stay elsewhere if the room tax is higher in Jackson than neighboring areas.

The Haywood County Tourism Development Authority may outsource its search for vacation home renters who are evading the county’s 4 percent tax on overnight lodging.

Lynn Collins, director of the tourism agency, plans to meet with Virginia-based software company VRCompliance over the next month. The company scours the Internet for property listings and helps identify renters in the county who are not collecting room tax.

The company would get a finder’s fee for each offender it tracks down that is brought into compliance, Collins said, but didn’t know exactly what that fee is yet.

Ferreting out people who rent their vacation homes under the radar is such a universal problem, VRCompliance, which stands for Vacation Rental Compliance, saw it as a business opportunity. It created software to search the web for vacation listings, and is now marketing that service to tourism agencies across the country trying to enforce the room tax.

Part of the problem is simply ignorance that vacation home rentals are subject to the overnight tax. Last month, the Haywood tourism agency announced a campaign to inform vacation homeowners that they are required to levy a 4 percent tax if they rent their property.

“That’s where the big money is,” said Ken Stahl, the board’s finance chair.

Stahl said he looked into cross-referencing local cabin addresses with the North Carolina Department of Revenue’s income tax records, but the department has not been willing to cooperate in the past.

And, even if the agency identifies properties skirting the tax law, the consequences — a fine or legal action — are still not enough to convince some to pay. While some are unaware of the law, other lodge owners are knowingly ignoring it, apparently collecting the tax from patrons but not passing it along to the county.

“Many of the hotels and motels feel that nothing is going to happen … because nothing has happened in the past,” said Marion Hamel of the Haywood County TDA.

During its meeting last Wednesday, the tourism board discussed other ways to enforce the tax law.

“We just got to have teeth,” said County Commissioner Michael Sorrells.

Among the options discussed were printing repeat offenders’ names in the newspaper and pulling their information from the board’s website and publication.

The county has previously used liens to bring people into compliance and mailed letters threatening legal action. Those who owe taxes also receive monthly bills.

“They know they’re not paying,” said Julie Davis, the finance officer for Haywood County.

The tax on overnight lodging is used for tourism promotions for the county. Haywood County collected about $135,198 in occupancy taxes this July — almost $10,800 less than the same period last year.

Stahl said the economy and a decline in tourism are responsible for the decrease.

“People say it’s not a double dip recession, but it sure feels like it,” he said.