PATT/PRLA Room Tax Task Force

1. PATT/PRLA Room Tax Task Force

2. 2011- 2012 Legislative Session – Legislation Passed • Adams County 3% to 5% • Erie County 5% to 7% • Lackawanna County 4% to 7% 2013-2014 Legislative Session • York County Legislation: Increases the maximum county hotel room tax for nine specific counties from 3 percent to 5 percent.The bill amends Section 1770.2 of the County Code, which applies to the following counties:  Blair, Cambria, Centre, Chester, Indiana, Lancaster, Lycoming, Mercer and York.  The local hotel tax is optional and is enacted, increased or decreased by a vote of the county commissioners.  If counties choose to enact the higher tax, the revenue will be collected and distributed as currently provided in the law. Current Climate

3. 2013-2014 Legislative Session • Franklin County: Plans to introduce legislation which will amend the County Code to provide counties of the fourth class (populations 145,000 – 209,999) the option to raise the ceiling on hotel room tax from 3% to 5% in order to generate more revenue for tourism promotion.75% of all revenue collected for the hotel room tax will be used by the county’s Tourism Promotion Agency (TPA) for the promotion, advertising, and marketing of tourism and special events and for administrative costs. • 25% of all revenues received shall be distributed as follows: • 50% shall be used by the county commissioners for the purpose of economic development and historic preservation, and the arts. • 50% shall be used by the county commissioners for grants to municipalities that have a municipal police department employing at least two full-time police officers assigned to law enforcement duties and who work a minimum of two hundred days per year or are a member of a regional police department that provides full-time police services to the municipality pursuant to an agreement or contract. Current Climate

4. House Tourism Committee (Senate): They want a strategy for Hotel Tax issues moving forward before moving any other pieces of hotel tax legislation. They are very concerned with the piece meal approach that exists. • Interest from many Counties to consider hotel tax increase – particularly out of those 47 Counties in the 2000 legislation (3% counties.) TimeLine: • Strategy meeting with Chairman Stern/Al Taylor by end of May. • PATT/PRLA policy/recommendations back to DMO Council/PATT Board by end of June – via PATT/PRLA taskforce (see Texas example). • Fall Session begin to implement recommendations – potential movement on current bills and or other solutions. Current Climate

5. Define the original intent of the Legislation that establishes a sound perspective beyond a TPA or County Commissioner’s interpretation. • Engage those who originally proposed and developed the legislation for their insight and feedback and ask for them to issue a statement. • Update and reissue the letter from the House Tourism Committee in 2001 that was sent to all County Commissioners clarifying how the tax was to be used, citing specific County Commissioner-driven projects that should not rely on the room tax for funding. • Maybe it is time to update and re-issue that letter and the join memo [at the time from PACVB, PTLA and the PCCA] that announced how the tax should be used – which, surprisingly, seemed to be agreed upon by all organizations! Potential - Statewide Policy Recommendations

6. Special attention needs to be made to defining “tourism development” as used in the legislation. • Original intent of using such broad words were to allow TPAs and Counties the ability to define it themselves. • Unfortunately, those two words seem to have allowed a lot of misinterpretation, specifically by those outside TPAs who want to use the money for a variety of things, thinking they have the right to access the room tax simply by adding the word “tourism” to their project. • Perhaps the definition of “Tourism Development” could include: • “Tourism Development is defined as projects that enhance the tourism based amenities within the County that are managed by the TPA that represents and promotes said County. Such projects are to be included in the TPA marketing plan and budget. Tourism Development projects not included in the marketing plan or budget must be approved by the TPA Board”. Potential - Statewide Policy Recommendations

7. TPA Certification/Designation: Change the law to take away the ability of the County Commissioners to designate or un-designate TPA’s. Maybe move towards having state recognized/designated TPA’s rather then County designated? • Ideally partner with DCED/Office of Tourism to assist us in this goal. • Let this history of funding and documentation become the foundation for State Designation of a TPA. • Standards would need to be determined to address a newly-formed TPA [or mimic DCED past criteria] • Most TPAs would be grandfathered by the above criteria. • Criteria would require TPAs to annually submit forms to DCED acknowledging that they continue to adhere to the requirements in order to maintain their State Designation status. Potential - Statewide Policy Recommendations

8. TPA Certification/Designation continued: • Designation mandates that TPAs set aside a certain amount of room tax every 2-3 years to conduct Marketing and ROI Surveys and Research. Copies of the findings would be forwarded to the State? • Rational by DCED for TPAs to be State Designated and receive the legislated Room Tax [which would be further supported by mandated 2-3 yr Market & ROI research: • TPAS have the skills, access, vision, talent, staff and market research to best utilize their brand to attract visitor spending. • More room tax dollars the TPA has to spend, the more marketing it can to do attract tourists and visitors to come and stay over night. This visitor spending money will help support a wide variety of area businesses and business owners – COUNTY COMMISIONER CONSTITUENTS. • TPAs work consistently and directly with the marketing efforts of the State Tourism Office – and the new private/public partnership. Potential - Statewide Policy Recommendations

9. TPA Certification/Designation continued: • Commissioners will probably be VERY hesitant to give up this “power” of designation… or un/de-designation. • County tax so difficult to not have County have control and or responsibility – could lead to the idea of having hotel tax collected by the state? • However, the “in” may be to define how a TPA would lose its State Designation to promote said County. This would include: • Lack of certain credentials 501c status, bylaws, board of directors criteria, etc., • Incomplete or bad audits. • Flagrant misuse of room tax funding [by the TPA Staff or Board]. • In addition to stating the “hows and whys” a TPA could lose its State Designation, it could be mandated that TPAs provide their County Commissioners with a copy of their annual audit to show financial responsibility. Potential - Statewide Policy Recommendations

10. TPA Certification/Designation –Steps/Partners & Questions: • Conversation and agreement with DCED to establish and adopt the criteria for TPA State Certification/Designation. • Letter from DCED to the Commissioners who would then need to amend any County Ordinance relative to the County TPA, removing any verbiage using “county designated”, and simply replacing it with the name of the TPA? • Side note: as it involves taxes do we need to get the State Treasurer/Comptroller/Tax Collection Agency/Auditor to also endorse State-designation of TPAs – would this give us more credibility in a joint message to the Commissioners.? • Thought: If the TPAs are required to submit an audit and a 2-3yr Market & ROI Research Study and Report [which I highly recommend], shouldn’t it be required that any entity [including County Commissioners] that have access to the room tax be required to do the same? Potential - Statewide Policy Recommendations

11. Room Tax Collection & Enforcement: • Criteria for TPA State Designation – maybe in the section detailing consequences to bad audits or misuse of room tax funds – there is an outline of enforcement protocol and procedures for room tax collection? • This would establish a partnership between the TPA and the Commissioners: • The TPA would help identify collection problems and new properties eligible to implement and collect the tax to the County Treasurer. • At the beginning of each year, the TPA is required to submit a formal letter to the County Treasurer listing all properties within the County that should be collecting room tax and a list of future properties of which to be aware in the upcoming fiscal year. • Subsequently, tax collection problems would be handled by the County Treasurer through an official notification process: • Notices sent by certified mail from the County Tax Collector to the property. Failure to comply results in a letter from the Attorney General’s office detailing deadlines for compliance, consequences and fines. Potential - Statewide Policy Recommendations

12. Raising the Local Room Tax: • Is it necessary to open the legislation – is it worth the risk? Would it create “free for all” for money-hungry entities who want access to room tax? • If we are emphatically convey the original intent of the legislation – with the backing of other partners, including DCED and legislatures – do we need to open it up as opposed to just finally enforcing it? • ANY increase in room tax – if allowable – should follow an outlined procedure that involves the hotels, TPA and TPA members [who will be hurt most from lack of room tax to market them], that is determined by majority vote by the both TPA Board and TPA members to increase the room tax % - BUT ONLY with the TPA continuing to get the 98% per the original legislation (some exceptions with other pieces of legislation – but moving forward TPA should 100% of the hotel tax dollars). • Room tax increase must not fund police forces, fire departments or any county expense line item that they could not afford – once again – going back to the original intent of the legislation. Potential - Statewide Policy Recommendations

13. Raising the Local Room Tax Continued: • Should any new entity – other than the TPA – get room tax as a result of an increase, they will be held to the same rules that apply to the TPAs: • Submit an annual audit to the County Commissioners, the TPA and DCED/Private- Public Partnership. • Conduct every 2-3 years, a Marketing and ROI Research and report with the findings distributed to the County Commissioners, the TPA and DCED/Private- Public Partnership. • Flagrant abuse or misuse of Room Tax [outside of the intent of the legislation] makes them ineligible to received further room tax. • Do we need a position on efforts by individual counties who are seeking to make changes and or enact legislation that sets a bad precedence for other counties: i.e. separate pieces of legislation, or bad memorandums of understanding with their County Commissioners that will open Pandora's box for other Counties? Potential - Statewide Policy Recommendations

14. Better Relationships with Commissioners/Stakeholders/Legislators: • TPAs would be encouraged to providing ongoing education and partnerships with the County Commissioners/Stakeholders and Legislators that could include: • Copy of the Annual Audit • Copy of the 2-3yr. mandated Marketing & ROI Research Surveys and Reports • Host annual events that provide annual updates to the TPA goals, missions, successes and strategic plan. • Host an annual fam trip for County Commissioners/Stakeholders and Legislators to see the destination from a tourist’s perspective. • Let the County Commissioners/Stakeholders and Legislators know that they are welcome to present ideas for Room Tax usage but… all ideas must follow the original intent of legislation and must be TPA managed and TPA Board approved. Potential - Statewide Policy Recommendations

15. Questions to be Answered: • Do County Commissioners have the legal right to say how the Hotel Tax money is to be used? • What are the gray areas of the legislation? • Loopholes? • Can County Commissioners use the legislation to work in their favor? • What trumps what – County Ordinance or State Legislation? Potential - Statewide Policy Recommendations

16. Questions to be Answered: • If County Commissioners want more access to the Hotel Room Tax money or seek to dictate how the Hotel Tax dollars can be spent – what would be the best legal response? • Can a TPA be audited to confirm that its use of Hotel Room Tax dollars was spent in accordance with the Enabling Statute/Ordinance requirements? • Who ultimately is responsible for making sure that the hotel tax money is spent per legislation? • Who runs the risk if it is not? • Taxation of time-share properties and second home rental properties? Potential - Statewide Policy Recommendations

17. Other Issues related to Hotel Tax: 30 Day Rule: • The 30 Day Rule needs to be addressed and a position formed. This will be an issue that is raised again in this legislation session and the County Commissioners would like to see the 30 Day cap lifted. • 30 Day rule needs to be specific to individuals and not corporations. • What other changes could we agree to related to the 30 Day Rule? Colleges and Universities • Colleges and Universities having to pay sales tax when renting their facilitates for use by outside groups. • Competitive Issue Bond Debt • What happens to the hotel tax when the bond debt is paid off? Other Issues

18. Education: • PATT/PTLA will develop an educational kit about the Hotel Room Tax to distributed to County Commissioners - Legislators and Stakeholders – particularly those that are newly elected. • Educational Kit to include: • PowerPoint giving history and specifics on hotel tax and the intent for usage. • Document outlining the 14 Hotel Tax Laws and in particular information on the specific County(s) in question.. Potential - Statewide Policy Recommendations