Supporting changes to occupancy tax

March 4, 2020

For over 120 years, the Asheville Area Chamber of Commerce has been a catalyst for economic vitality in our community. We champion a balanced, thriving economy. Representing 15 percent of Buncombe County’s employment, or about 18,000 jobs at 1,300 businesses, the tourism industry plays an essential role.

But tourism and its impacts on our community have become controversial topics, with a conversation about how we use our occupancy tax dollars appearing at the forefront of traditional and social media. Because of the importance of the ongoing discussions to the fiscal health of our community, we want to encourage pragmatism and compromise.

We have been encouraged by the broad engagement of the tourism industry, local elected officials and community members in the comprehensive Tourism Management & Investment Plan (TMIP) process led by the Buncombe County Tourism Development Authority. And, we are heartened that the Asheville Buncombe Hotel Association (ABHA) has responded to that feedback and the larger needs of the community with proposed changes to the occupancy tax legislation that offer the compromise Buncombe County needs.

The ABHA changes call for:

  1. Greater investment in the community – Since the fund began, $44 million in occupancy tax revenues has been spent on projects that support everything from kids’ recreation, to the arts, to local entertainment and cultural diversity. Those are dollars paid by visitors and that don’t have to come from citizens’ pockets.

    Residents have made themselves clear: We’re spending enough on marketing Asheville. The Chamber appreciates the tourism-built Asheville brand. This brand has helped grow other parts of the economy – non-tourism related jobs. We also recognize the need to spend more money on things that directly benefit residents. The occupancy tax change proposed by ABHA increases the percentage of funding for community projects from 25% to 33%.  That’s a total of $8.3 million per year that will go toward projects that benefit residents, but can also benefit visitors.

    We support the 66 percent / 33 percent split. The split is consistent with statewide guidelines and has support from local elected officials as well.

  1. Flexibility in use of community funds – Throughout the TMIP process residents have called for flexibility in the “heads in beds” requirement for a project to qualify for a grant from the Tourism Product Development Fund (TPDF). The ABHA suggests adding flexibility by:
    a. Removing the limitation to “bricks and mortar” capital projects to include non-capital projects, like urgently needed transportation funding.
    b. Maximizing the impact of these investments by using bonds to address larger community needs.
    c. Responding to concerns about capital projects that need additional maintenance by incorporating maintenance, administration and design as fundable.
    d. Formal recognition of local arts projects as viable candidates for funding which is fitting for a community that is so integrally linked to the arts.
    The proposal goes on to recommend dedicating 2 cents for community needs (of the total 6 cents of every dollar collected) and further expanding the Tourism Product Development Fund:a. Earmarking half-cent for projects that don’t have to be capital related (like transportation, events or beautification), and
    b. With the remaining 1.5 cents for capital and related expenses (like improvements to parks, sport complexes, soccer fields and bonding for things like Thomas Wolfe Auditorium renovations or downtown infrastructure improvements).

    The new language as proposed by the ABHA would establish unambiguous working guidelines that will avoid future uncertainty or contradictory interpretations of the existing statute. These fiscal guideposts will furthermore provide clear and explicit direction for future community benefit to the next generation of both local elected and tourism leadership.

  1. More community voices in decision-making – Currently, volunteers who serve on the Tourism Development Authority are appointed by City Council (4), County Commission (4), the Chamber (1) and 1 ex officio member from both the City Council and the County Commission for a total of 11. Six members must be owners or operators of hotels, motels, bed and breakfasts or vacation rental management companies.
    The ABHA proposal supports expanding the TDA board by four more seats to respond to both community request and the changing nature of the city. These seats could add representation from a broader range of businesses including ticketed attractions, arts organizations, restaurants and short-term rental owners.  We think that expansion makes sense as a reflection of our changing times and economy.

The proposed changes of the ABHA provide a productive outcome and pragmatic compromise to what has been a contentious and often divisive local policy discussion.  We believe when it comes to our economy, we need to focus on balance, not blame. While tourism is only 15 percent of employment in Buncombe County, the
$2 billion it generates from visitors each year flows through all kinds of businesses, including the many small businesses that help Asheville flourish and ultimately provide for tens of thousands of families in Buncombe County.

While no solution is perfect, supporting these changes to the occupancy tax can create the progress our community needs.  Let’s not sacrifice progress in the pursuit of perfection.  We urge our NCGA representatives to support AHBA’s proposed changes to the occupancy tax.