Springfield City Council sends hotel/motel tax issue to April ballot
With a ballot measure consolidating Springfield’s hotel/motel tax, the City Council hopes to “level the playing field” between hotels and Airbnb rentals while providing long-term support for the city’s tourism industry. .
Unanimously approved by city council at its first meeting of 2023, the issue will appear in the municipal ballot in April — along with at least two other measures.
The City of Springfield currently levies three layers of a license tax on hotels, motels and tourist courts. These include a 2% tax from 1979 based on gross receipts, a 2.5% tax from 1998 funding the Jordan Valley Park projects and related debt servicing, and a 0.5% tax from 2004 to fund efforts to attract sporting events and conventions and maintain a tourist information centre. In total there is a license fee of 5%.
More than half of the current tax is used for “tourism-related activities” through the Springfield Convention & Visitors Bureau, according to the city’s chief financial officer, David Holtmann. The remaining revenue is used to pay off debt related to the Jordan Valley projects included in Springfield’s previous twenty-year city plan.
If approved by voters, the proposed ballot measure would repeal all three layers of taxes and replace them with a consolidated license tax at the same rate of 5% of gross hotel revenue. This would ensure that the tax remains in effect in perpetuity – some of the existing taxes are set to expire by 2028.
“Half of the 1998 tax is due to expire upon repayment of our debt to the Jordan Valley projects. We currently estimate that will be around June 2028,” Holtmann said. “And with that, the funding for our sports commission and our arts council would be significantly reduced at this point.
According to Holtmann, consolidating the tax and making it permanent would “reaffirm our commitment to promoting recreation, education and tourism.”
While the overall tax percentage would not differ, the revised breakdown would mean a slight increase – 2.95 percentage points – in funding for the Sports Commission and the Arts Council.
The consolidated tax would also apply to short-term rentals, which currently do not pay the city hotel/motel tax. Popularized by online apps like Airbnb, short-term rentals are defined as any short-term rental entity that can accommodate fewer than nine bedrooms.
“The demand for using short term rentals has grown rapidly and they are in direct competition with our hotels who collect and pay accommodation tax. This would provide a level playing field for transitional resort tax in the future “, said Holtmann.
The Council unanimously approved the placement of the referendum on the tax consolidation of hotels and motels in the April ballot. Here’s the language voters will see when they go to the polls:
The City of Springfield, Missouri should:
- Repeal the existing five percent license tax (which includes a minimum license tax of $5.00 per monthly license) imposed on the business of renting, leasing or renting accommodation, bedrooms, rooms or part thereof, in connection with any hotel, motel or tourist court, two and one-half percent of which shall terminate upon repayment of debt issued for the Jordan Valley Park Projects;
- And replace it with a five percent license tax, effective July 1, 2023, imposed on the business of renting, leasing or renting accommodation, rooms or any part thereof, in connection with any hotel, motel, tourist court, or short-term rental, sourced from or paid for by visiting guests for sleeping accommodations, and to be distributed as follows for the benefit of the local economy:
- Forty-seven percent of tax revenue used to promote travel and tourism, Four and a half percent of tax revenue used to attract and host sporting events, Four and a half percent of tax revenue used to support arts and cultural tourism, and The balance of tax proceeds used to pay debt service on bonds issued under the prior license tax and to fund capital improvements, including issuing and paying debt service obligations, to attract travel and tourism?
Tax for sports tourism?
Explaining his support for the consolidated tax, Mayor Ken McClure said “the whole point of this is to increase tourism”.
“It’s ‘head in bed’ as the industry calls it – bringing people to Springfield and allowing them to take advantage of the amenities we have and hopefully spend some money while they are here,” he said.
Councilman Matt Simpson somewhat cheekily called the proposal a “slam dunk.”
“Here we have taxes paid by people from out of town who come to visit us and then put back into our community in facilities, services and programs that make Springfield a better place to visit but a better place to live,” Simpson said. .
A resident spoke out against placing the proposed ballot measure for a public vote. Not because of the council’s desire to consolidate the tax but because of their priority of promoting tourism.
“I have concerns about how the funds will be allocated and whether they will really benefit the community. It is currently proposed that the revenue you generate through this bill will be used to support tourism efforts. However , I strongly recommend that the council reconsider this allocation and instead use the funds to address the pressing issue of affordable housing,” said Jackson Zwikelmaier, a Springfield resident, who said he owns rental properties.
By expanding housing assistance programs with income, Zwikelmaier said the city could “address a pressing need and create a lasting positive impact for the community.”
“The high cost of housing contributes to homelessness. Individuals and families are unable to pay their rent or mortgage payments. By providing down payment assistance on a home, we can help reduce homelessness and the associated costs to the city. “
Councilwoman Monica Horton agreed the city should have more “skin in the game” when it comes to affordable housing and not be so reliant on federal dollars. However, she said the hotel/motel tax was not the best place to look for funding, as the city’s tourism industry already relies on revenue generated from the tax.
Councilman Abe McGull said he thinks the increase in youth sports in Springfield could impact many other issues facing the city.
“The best way to reduce crime and prevent crime is to involve young adults or young students in sport. And we have made a deliberate effort with our money offer to increase the number of football pitches and provide the appropriate artificial turf for these pitches. …” he said. “We want to show surrounding communities that Springfield is the place to be for youth football and sports, and this is a great way to do that.”
Crackdown on short-term rentals without permits
The vote discussion led to a broader discussion about the appropriate role for short-term rentals in Springfield.
Councilman Andy Lear agreed the consolidated tax was needed to “level the playing field” between traditional hotels and short-term rentals that have only become hugely popular in the last decade and a half.
“Short-term rental is a viable business that enhances our community, but at the same time it competes with existing businesses whose customers pay this tax,” he said. “This is a necessary step to add these entities to make them a level playing field.
Speaking on behalf of the Convention & Visitor’s Bureau, recently retired Tracy Kimberlin said the CVB hasn’t promoted short-term rentals because they don’t participate in the tax.
“If it gets through to voters, we’ll favor short-term rentals. It’s a legitimate and necessary form of accommodation today and they’re not going away, and we believe they have a place,” he said. he said on Monday. Council meeting.
According to Kimberlin, there are about 400 short-term rentals in the Springfield area, representing at least a thousand hotel rooms. Including unlicensed short-term rentals, Kimberlin estimated the city was losing half a million dollars in revenue annually due to the exclusion of short-term rentals from the hotel/motel tax. .
Holtmann promised that “we can and will” find unlicensed short-term rentals and make sure they comply with city code.
“We are currently working with the state and county on monitoring license agreements for short-term rentals. We are getting better cooperation in the future. There are also tools we can review to expand compliance to those who register for the license tax on short-term rentals,” he said.
Councilman Craig Hosmer noted that many Airbnbs and similar short-term rentals are still unregistered and lamented the city’s mechanisms for enforcing their ordinances.
“One of the problems I have with what sometimes our law enforcement system is, if a citizen doesn’t complain, we don’t do anything, whether it’s barriers, landscape things, driving without license plates. We’re not doing anything. We’re not enforcing our laws very well,” he said.
Hosmer added that he’s concerned the city only enforces the laws when tax revenue is at stake.
“We have all kinds of problems in the city. We don’t enforce because we’re a complaint-driven city and we’ve been talking about enforcement for a long time. It just seems like we never move until we have to. earn income.”
City Manager Jason Gage strongly pushed back on that point.
“I don’t think that’s the motivation. Talking to the staff over the years, it’s really a question of how many staff you have for the activities that are there,” Gage said.
Council members agreed to address enforcement at a future meeting.