SAN JUAN COUNTY HOTEL/MOTEL TAX

Work progressing on county hotel/motel tax increase

posted 04/13/02
The Lodging Tax Advisory Committee has met twice to discuss plans for the use of the estimated $325,000 that will be raised by increasing the hotel/motel tax. Minutes of the first meeting are posted on the county's Web site. The committee will meet next on Lopez Island April 22 and on San Juan Island on April 30, 2002.

Hotel/motel tax proposal handed to committee

posted 03/27/02
The county's nineteen member Lodging Tax Advisory Committee has 45 days to review a proposal presented March 26, 2002 by the Board of County Commissioners. The proposal would double the current hotel/motel tax and use the proceeds solely for tourism promotion and the county's Visitor Information Service. The portion of the current tax used for the VIS would be used for the county's parks.

Commissioners Darcie Nielsen and John Evans supported the proposal and voted to send it the committee. Commissioner Rhea Miller objects to the idea of spending the estimated $325,000 raised on tourism promotion. She noted a survey conducted in 1992 showed county residents were not in favor of advertising and promotion of the San Juans. She said, "This is a radical change from how we approached it before." She doesn't oppose funding parks with hotel/motel money.

Evans said the added funds for parks will be a huge benefit to the public. He noted the tax is only paid by customers of lodging facilities. "The strength of our local economy is dependant on the health of the tourism industry," he said. The tourism business operators are interested in shoulder season promotion and sustainable eco-tourism he said.

Nielsen said tourism has been part of island life for more than 100 years. "We can either manage tourism or have it manage us," she said.

Miller asked what problem the hotel/motel tax revenue would solve. She said hotel/motel tax revenues had not decreased and that she's heard bookings for the upcoming season are strong. "You have yet to convince me there is a problem here," she said. "There are more people who want to do tourism activities with the same amount of tourists."

County Auditor Si Stephens heads the LTAC and has said there will be public meetings on the three largest islands during the 45 day review process. The text of the proposal given to the committee appears below.

BOCC proposal for LTAC consideration and recommendation

BACKGROUND

The county has imposed the "basic" 2% Hotel/Motel tax under RCW 67.28.180(1) on the furnishing of lodging for over 10 years. This basic tax is taken as a credit against the state sales tax rate, so that the total tax that a lodging patron pays in retail sales tax and the lodging tax combined is equal to the retail sales tax for the county (7.7%). In 1992 the county established an allocation formula (which was further amended in 1999) for the basic tax as follows:

Counties may also levy an additional 2% lodging tax under RCW 67.28.181(1). This "special" tax is not credited against the state sales tax; instead it is added to the sales tax rate, therefore, the total tax on lodging would increase by 2% from 7.7% to 9.7%.

The revenues from both the basic and special lodging taxes may only be used for the costs of tourism promotion or for acquisition and/or operation of tourism related facilities. The basic tax has always been used for the latter in the county. No lodging tax funds have been used for tourism promotion.

PROPOSAL TO ADJUST EXISTING "BASIC" 2% LODGING TAX FORMULA

The Board of County Commissioners (BOCC) propose that a portion of the basic 2% lodging tax fund be allocated to San Juan County Parks to operate park facilities that enhance and support tourism, specifically public restrooms. Our parks are "tourism-related facilities" providing public access to shorelines, open space, and scenic vistas. Well-maintained park support facilities are essential for the visitor experience and are appropriately partially funded by the lodging tax. The 30% portion of the basic tax currently allocated to the Visitor Information Service (VIS), special projects, and reserve fund should be allocated instead to the County Parks capital facilities fund beginning in 2003.

PROPOSAL FOR A NEW "SPECIAL" 2% LODGING TAX

In addition to the existing basic tax, the BOCC proposes to impose the "special" 2% lodging tax as authorized by law and dedicate the entire revenue to tourism promotion and visitor information services. This proposal recognizes that more than 150 existing county accommodation enterprises, most of which are owner operated, will directly benefit from an adequately funded, professional, strategic promotional and information effort. These additional accommodation revenues will also have significant multiplier effects throughout the local economy. The community as a whole will benefit with a public process that will guide the countywide tourism promotion and visitor information effort.

A countywide tourism campaign should be targeted to attract visitors who can most appreciate our sensitive natural environment and have the least impact on it. A well-managed, sustainable, eco-tourism based campaign is consistent with the County's Vision Statement which seeks "…to support and encourage traditional industries including forestry, farming, aquaculture, construction, fishing, and tourism without jeopardizing the resources on which they depend."

MISSION AND GOALS FOR A SAN JUAN COUNTY TOURISM PROMOTION PROGRAM

Utilizing the County Comprehensive Plan Vision Statement as a guide the Lodging Tax Advisory Committee (LTAC) should develop a draft mission statement and goals for the San Juan County Tourism Promotion Program. The goals should address:

1. A comprehensive framework for how an effective program of tourism promotion is best implemented in San Juan County.
   
   
2. A business plan consistent with the mission for marketing and promotion;
   
   
3. An annual budget with an outline of estimated funding, cash flow, and spending plans for the promotion program.
   
   
4. An operational plan including a vision for management organization and functional structure; recommended priorities for setting up and running tourism promotion programs; policies for the use of contractual arrangements for the procurement of professional marketing and promotion resources, resources needed to fit the plan including estimated staffing and utilization of already available resources such as functions performed by the Visitor Information Service and volunteers.
   
   
5. Management strategies to leverage and maximize other funding sources to pursue marketing plan goals.
   
   
6. A network and coordination strategy to develop partnerships with other tourism-supporting organizations.
   
   
7. Maintaining and distributing visitor information about the San Juan Islands.
   
   
8. A public relations strategy to educate stakeholders on tourism-related matters.
   
   
9. A strategy for providing leadership in the tourism industry by unifying promotional activities throughout the Islands' community.
   
   
10. A framework for measuring the effectiveness of the tourism promotion plan and contractor performance benchmarks.
    
    
11. How the program will leverage multiplier effects that support economic diversity.

ADMINISTRATION OF THE PROGRAM

The LTAC would function both in an advisory capacity to the county commissioners and provide oversight for the tourism promotion and information program. The LTAC should meet at least on a quarterly basis to monitor the program and would prepare an annual activities report and budget for BOCC approval. The County will not be involved in direct program management or promotional activities. Contractors will carry out actual promotion and information activities. The County Auditors office shall manage the lodging tax funds, and the BOCC, upon recommendation from the LTAC, will sign all contracts for promotion activities. Other than the County Auditor's and BOCC state mandated fund management duties, no general fund county tax dollars will be used to support the promotion program.

Committee expands to 19 members

posted 03/16/02
San Juan County commissioners by a 2-1 margin voted to expand the county's lodging tax advisory committee to 19 members. The committee will review a proposal for the use of an estimated $325,000 which will be raised by doubling the current 2 percent hotel/motel tax.

As required by state law the committee includes an elected official. Committee positions are divided equally between people who collect the tax and those who receive proceeds from the tax. The BOCC voted to include two non-voting members - one to represent the town and one to represent the Economic Development Council.

Presentation of a plan by the BOCC to the committee is the next step in the process. County Commissioner Darcie Nielsen has written a proposal. At least one other proposal has been submitted by lodging operators. Nielsen offered to meld the proposals into one document.

Once the proposal is presented to the committee, they have 45 days to review it. Stephens has said public meetings will likely be held on Lopez, Orcas and San Juan Islands during that period. The committee will then present its recommendation to the BOCC.

County seeking lodging tax advisory committee members

posted 02/18/02
Finding volunteers to serve on a 13-member advisory committee is the first step in increasing the county's hotel/motel tax. The BOCC is considering a proposal to double the tax and use the $325,000 raised for tourism promotion.

According to state law, the committee must include an equal number of people who receive the funds and people who collect the funds. An elected official must also be a committee member.

The committee positions are:

1. Elected Official (county Auditor Si Stephens).
2. Lodging Rep from a large (more than 20 beds) establishment.
3. Lodging Rep - medium (10-20 beds).
4. Lodging Rep - small (5-10 beds).
5. Lodging Rep (B and B).
6. Lodging Rep at-large.
7. County Visitor Information Services.
8. County Park Board.
9. Theater/Museum Rep.
10. Business Association of San Juan County.
11. Business Rep at-large.
12. Friday Harbor Town Council (non-voting member).
13. Economic Development Council (non-voting member)

Once the committee is established, the BOCC will present it with one or more recommendations for a plan. The committee than has up to 45 days to hold hearings and consider the plan. They report back to the BOCC, which then has final say on if and how much the tax will be increased. The state Department of Revenue will than notify the businesses and after a waiting period the tax begins to be collected at the beginning of a quarter.

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