Asheville Daily Planet
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Tourism occupancy tax plan unveiled, questioned
Wednesday, 01 April 2020 12:00
By JOHN NORTH
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Changes proposed to the Asheville-Buncombe County tourism tax and its structure were unveiled to the Council of Independent Business Owners during a March 6 breakfast meeting at UNC Asheville’s Sherrill Center.

Presenting a Tourism Development Authority occupancy tax report were Brownie Newman, chairman of the Buncombe County Board of Commissioners; Esther Manheimer, Asheville’s mayor; and John Winkenwerder, representing the Asheville Buncombe Hotel Association.

CIBO noted in pre-meeting event promotion that they would be addressing: “Are changes to the tourism occupancy tax and its structure coming? What changes do the local governments want (city and county)? What do the hotel/motel folks think? Lots to talk about – don’t miss this lively discussion!”

On a second matter, the CIBO received an update from the City of Asheville Development Services, including changes to the permitting process.

Opening the meeting was John Carroll, CIBO’s vice president, who once again was serving as moderator in the absence of CIBO President Buzzy Cannady.

Regarding the TDA occupancy tax report, Newman, chair of the county commissiones, opened the presentation by noting that (in North Carolina) “every city and county has authority to set hotel occupancy policy.

“The last time, hotel occupancy policy was changed was four or five years ago. It was set at 4 percent  There was a very robust public debate at that time. The hotel industry thought that was a good decision to make at that time.

“Lots of new hotels were coming to the region at that time... The main point of discussion was what’s the appropriate mix? Some (was) for advertising as well as investment in community infrastructure. That was the debate. In the hotel industry, they wanted to use 100 percent for advertising. Elected officials felt a 50-50 split would be a better formula. 

“Ultimately, the legislators decided on 75 (percent) for advertising and 25 percent on infrastructure. We had a very vigorous debate at the (county) commissioners. It was passed on a 4-3 vote. It wasn’t just a partisan thing.

“I really believe if we had not improved it at the time. Since then, the tourism industry has grown by an unprecedented.”

Newman added that “$25 million per year in tax is being generated. About $17 million is being spent per year on advertising.

“The good news is there’s more common ground with the hotel industry to allow more on infrastructure and less on advertising, percentage-wise…. The main point is we’re still not exactly on the same page on. So I think a lot of elected officials feel those are issues that are best spent on the community level.”

Next, Manheimer, Asheville’s mayor, said, “We’d like to be able to reach an agreement across the leadership so that we could go to the legislature with a unified voice.

“When I decided I wanted to first run for City Council, it was 2008. All of a sudden there was a vacancy on City Council. I had served on the Board of Adjustments, so I was pretty sure I was qualified to serve on City Council. That’s a joke.” (After her explanation, several CIBO meeting attendees laughed.)

Continuing, Manheimer said, she was seeking “to replace Holly Jones. She lost to Kelly Miller, the director of the TDA, by a vote of City Council.

“Now, in Asheville, we’re experiencing more than 11 million visitors per year. Not all of these are tourists, many are coming to shop, visit a doctor” or other activities. “But we have all these....

“Our room taxes have grown to $25 million. It was only $6 million a few years ago. We really need a better way to harness available revenue... Every time we have to replace the sod in Pack Square Park, which is once a year, it comes from the taxpayers...There needs to be a little more flexibility in the spending of the TDA funds. I think we’re heading in that direction.”

Further, Manheimer asserted, “Some say it needs to flip — it needs to be 75 percent for infrastructure andf 25 percent for marketing.

“Some hoteliers are saying: ‘How can we fill heads and beds without all the marketing?’ I think we’re coming to a better compromise.

“The hoteliers recommend a 66-33 move. I think this is a realistic split and I think it’s better now than doing nothing because doing nothing is not sustainable.”

Newman then stood up from his seat and interjected, “Everyone understands that any changes in legislation would require the money would get administered by TDA and not by local governments.”

At that point, Winkenwerter, representing the Asheville Buncombe Hotel Association’s position, said, “We lost quite a bit of our job base. If not for the growth of tourism, we wouldn’t have a fraction of the air service that we have today. If we hadn’t done that in that day, we wouldn’t be where we are…. We still have industry. But the tourist industry helps make all that happen, including air service.

“I was not involved in the roundtable working on this change, but I think the extreme mass majority supports” the proposal.

Winkenwerter then introduced two members of the TDA, including Ron Stordo, past TDA chair; and Patik Bataka, whose family has been in the hotel business for about 40 years. “They’re here in case we get questions that I can’t answer... We’re all extremely busy business people who are busy every day....”

He then said, “You know, I think we’ll get to a resolution. We need to” because it has a “$3.1 billion impact of tourism on Buncombe County. That didn’t happen by accident. We (downtown) were ‘boarded up’ in the 1980s.”

Further, Winkenwerter said, “We think we could make this move — to go from three-quarters marketing (and it’s not just advertising), to 66 percent — with a third for the “product development.

“So, we’ve got to work to make this work. But the split seems appropriate to us. We’re going to make that work.

“So we’re going to make this bill available for operational issues, like the flooded soccer fields, the Pack Square issues. We want to help, we want to be involved.

“So we’re in discussion what happens locally with the TDA. So we’ve got to have policy within the TDA and we need to also have good legislation.

“And I do want to thank Esther and Brownie and Joe Belcher and Julie Mayfield, who worked along with the TDA on this,” Winkenwerter said. “This is a strong step forward on our part to broaden our part.”

As for the extensive renovation needed at the Thomas Wolfe Auditorium, he said, “Would the TDA ever have enough to pay for that? Certainly not. But we could help...  We’ve got to be really careful how we manage that. Because once you do that, it’s done.”

He ended his portion of the presentation by noting, “The caronavirus. could affect things in a major way, too.”

During a question-and-answer session that followed, CIBO member Mac Swicegood asked, “Define what you’re talking about in terms of ‘infrastructure?’”

“We’re not talking about chipping in money for water lines or repaving highway,” Winkenwerter replied. “It’s (for) infrastructure that affects the tourism industry... It’s best spent where it’s spent with other public and private funds. We did that once with the civic center arena.”

An unidentified man asked, “How can you be assured this money doesn’t go down a dark hole? Any time you turn money over to government it can go anywhere....”

“I agree with you,” Winkenwerter said. “The TDA has no intention” to let the money be misspent. “I think our community gets better every day. It never will be where the TDA just writes a (blank) check and just gives it to the city and county… It is not grant-making.”

At that point, Manheimer interjected, “I would add, John, that we already are operating that way. We don’t just get a blank check. The city has received about $22 million earmarked specifically for projects. So there’s a high level of accountability. 

“We’re not proposing that the system be changed. What we’re proposing that there be increased flexibilty. Right now it says there can only be more … Right now, the city is rebuilding Haywood Street. No TDA money can be used for that because it’s considered ‘maintenance,’ even though tourists would use that. Under this, there’d be more flexibility.”

“Well said!” Winkenwerter added, nodding. “The TDA would have the flexibility to do such projects” as it deems worthwhile.

Another unidentifid man asked, “Is the change proposed …. strictly with the bonding? Or are there other changes?

“It’s going to be more flexible,” Winkenwerter said. “Probably nothing would be bonded, unless it was something that was very clear. Both the city and county would be involved... For example, something like Thomas Wolfe (Auditorium renovation) is great for the community — and it’s great for visitors to come to.”

 



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