County Moves Forward With Occupancy Tax By Scott Nicholson The Watauga County commissioners moved forward with enacting a local occupancy tax Tuesday, holding a public hearing as the next step in adopting a formal resolution establishing the tax. Only one person spoke at the hearing. Rob Holton, chairman of the county’s economic development commission, said he supported the occupancy tax, though as owner of several rental cabins he questioned what visitors would get in exchange for paying the tax. Holton also asked, “What will it mean for the citizens of Watauga County?” Holton urged the commissioners to put occupancy tax money into outdoor recreation, and said linking local trails and greenways would enhance tourism. He said there is currently no master plan for parking to access trails, parks and rivers, and said there is no overall plan for mapping and linking local trails, including those on the Blue Ridge Parkway. Holton quoted several magazine articles that he said supported the benefits of outdoor recreation for both public health and for economic growth. He said retirees were an important part of the local economy and sought opportunities for outdoor recreation, adding that the county also offered competitive activities such as bicycle rides and races, kayaking and running. The statutory authority to establish the tax was granted in a bill adopted by the General Assembly this summer. The statute established “Watauga District U,” creating a district that includes unincorporated areas of the county. Watauga can levy a tax of up to six percent on short-term lodging of 90 days or fewer, which includes motels, hotels, bed and breakfast establishments, condominiums, rental vacation homes and cabins. The county would have to establish a Tourism Development Authority (TDA) to administer the tax. At least one-third of the members must be affiliated with businesses that collect the tax. The Boone Area Chamber of Commerce submitted a letter offering to administer tourism promotion campaigns. Chamber president Dan Meyer wrote, “Utilizing the Chamber’s services would be of great benefit to Watauga County by eliminating duplication of duties, providing staff support to the Authority, creating a better advertising program by pooling the funds of both Authorities [the county’s and the Town of Boone’s], and eliminating the need of office space, furniture and equipment.” Meyer said the Chamber’s Boone Convention and Visitors Bureau has contracted for promotion with the Boone Tourism Development Authority for the past 17 years. When established, the county TDA would have authority to distribute the funds, with the county finance officer overseeing administration. Two-thirds of the money must be spent on marketing and advertising designed to boost tourism and lodging stays, while one-third of the money can be used for capital projects that benefit tourism, such as recreational facilities or greenway trails. Meyer said under a contractual arrangement, the TDA would still be in charge of setting policy to oversee the funds. County tax administrator Kelvin Byrd made a conservative estimate that the occupancy tax would generate about $300,000 a year. Lodging establishments would receive a coupon book and pay the tax monthly. The tax is added onto the customer’s bill and paid at the time of the stay, and applies to any rental of 90 days or fewer. Byrd said there were some concerns of overlapping taxes, or competition among in-town lodging establishments because of different tax rates. “The hardest thing to determine is if it (the lodging establishment) is in the municipalities,” Byrd told the commissioners. Blowing Rock and Beech Mountain both have the maximum allowable occupancy tax rate of six percent, while Boone has a three-percent occupancy tax rate. Businesses in Boone’s extraterritorial jurisdiction would fall under the county’s taxing authority. There are an estimated 350 motels, lodges, rental condominiums, and bed and breakfast establishments in the unincorporated areas of the county. During the proposal process earlier this year, the county administration projected about $4.8 million in occupancy revenues would be generated each year. Assuming a 70 percent collection rate, the tax would generate between $200,000 and $300,000 per year. It would cost between $60,000 and $90,000 per year to administer the tax, which would require the addition of an additional staff member for the county tax office. Byrd has requested an implementation date of July 1 for the tax, which would give his office time to finish a property revaluation and prepare for collecting the new tax. Commissioner Jim Deal said the board had received some requests for lodgings in the “U” district that were near towns to be included in those towns’ TDA’s, but said he didn’t think that was legal. Deal also pointed out, though the revenues could go toward recreation enhancements, the county couldn’t spend the money inside municipalities. The money has to be spent in the unincorporated areas established by the “U” designation. Deal said the county couldn’t use the money for the Anne Marie Drive-area park the county is currently developing because it is on town property. Before the tax is enacted, the commissioners must draft and adopt a resolution. The board took no formal action after the hearing.