Lowell Council to review tax proposal

The Lowell City Council will review a proposal to create a 2 percent tax on stays at hotels and other similar accommodations during its regular meeting today.

Funds from the tax would be used on advertising and promotion, if approved, said Mayor Eldon Long. An Advertising and Promotion Commission would be developed to manage the funds, he said.

A ballot initiative would not be needed to implement the tax, Long said. It only needs City Council approval.

The tax would be on gross receipts and proceeds from renting or leasing a hotel, motel, cabin, bed and breakfast, campground, condominium or other similar rental accommodations for sleeping, meeting or party rooms, the ordinance states. It excludes rentals for periods longer than 30 days.

The Super 8 on Hospitality Avenue is the only large hotel in the city, Long said. It is possible there are smaller businesses he is unaware of, he said.

Ed Putnam, manager of the hotel, said Monday he didn't know about the proposal.

"I pay more and more every year," Putnam said. "Every year someone else comes up with something else. What am I going to do? They charge a tax, I am going to have to pay it."

Long said an Advertising and Promotion Commission would likely receive a minimal amount of money considering it's possible there is only one business the tax affects.

Jerry Hudlow, the city's financial director, said it is impossible to know how much revenue the tax will generate. Cities are not allowed access to financial records kept by businesses, he said.

It's expected that more hotels will locate to the city once a 220,000-square-foot recreational facility opens in the city, Long said. Life Wellness USA has announced plans to open the facility that will include competition basketball and volleyball courts along with soccer fields and a pool. A ground-breaking for the facility is planned in June.

Dean Bitner, Lowell City Council member, has spearheaded the campaign for the tax and Advertising and Promotion Commission. More hotels and motels will be locating in Lowell in the future, he said, so it is important to have the tax in place.

Advertising and promotion taxes are common for cities in the region, Long said. On average, the tax is about 2 percent, he said.

Cities are not allowed to use general revenue to promote and advertise, Long said. The only way to do this is through advertising and promotion taxes, he said.

"The city is like a business," Long said. "If you spend some money on marketing, you have more businesses wanting to come and establish in your city."

Funds from the tax can be used to promote the city or to construct a convention center or tourist promotion facility within the city, according to the ordinance.

Bitner said funds can also be used to support events that draw people to the region.

The Advertising and Promotion Commission would have seven members, the ordinance states. Four of those members would be owners or managers of businesses in the tourism industry. At least three of the four business owners should be owners or managers of hotels, motels or restaurants.

Two of the members should be from the City Council and one should be an at-large position. Commission members would be appointed by either the City Council or commission, the ordinance states.

NW News on 03/17/2015

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