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HomeMy WebLinkAbout16. 15-364 JULY 14, 2015 JULY 28, 2015 15-351 15-364 ORDINANCE FIRST READING SECOND READING (CARRIED___7-0_____LOST________LAID OVER________WITHDRAWN________) PURPOSE: AMEND CHAPTER 8 HOTEL AND MOTEL ROOM TAX ORDINANCE TO REALLOCATE ROOM TAX DISTRIBUTION, CONTINUING 2% OF THE ROOM TAX DEDICATED TO CONVENTION CENTER DEBT RETIREMENT, AND AMENDING THE TIMING OF PAYMENTS OF HOTEL AND MOTEL ROOM TAX INITIATED BY: CITY ADMINISTRATION A GENERAL ORDINANCE OF THE CITY OF OSHKOSH AMENDING SECTION 8-1.1(B) TO REALLOCATE HOTEL AND MOTEL ROOM TAX DISTRIBUTION, CONTINUING 2% OF THE ROOM TAX DEDICATED TO CONVENTION CENTER DEBT RETIREMENT, AND AMENDING SECTION 8-1.1(C) THE TIMING OF PAYMENTS OF HOTEL AND MOTEL ROOM TAX Whereas, the City of Oshkosh has entered into a new agreement with the Oshkosh Opera House Foundation (OOHF), which changes the formula used to determine funds that the city will provide to the OOHF for operation of the Grand Opera House; and Whereas, the new agreement with the OOHF requires an amendment to the room tax ordinance to reflect these changes in the agreement; and Whereas, the City and the management team for the Oshkosh Convention Center recognize that the Convention Center will continue to require improvements to stay current with ongoing needs of the convention industry, which will require continued funding for these improvements; and Whereas, the Room Tax ordinance has undergone a series of amendments over the past 25 years to reflect piecemeal changes to the distribution of room taxes, which over the years has resulted in a complex formula to distribute room tax dollars; and Whereas the City and the Oshkosh Convention and Visitors Bureau (CVB) wish to simplify the formula to distribute room taxes to allow for easier administration of the room tax ordinance. The Common Council of the City of Oshkosh does ordain as follows: SECTION 1. That Section 8-1.1(B) of the Oshkosh Municipal Code pertaining to the allocation of Hotel and Motel Room Tax is hereby repealed and recreated to read as follows JULY 14, 2015 JULY 28, 2015 15-351 15-364 ORDINANCE FIRST READING SECOND READING CONTD (B) Pursuant to Section 66.0615 of the Wisconsin Statutes, a tax is hereby imposed on the privilege and service of furnishing, at retail, rooms or lodging to transients by hotelkeepers, motel operators, and other persons furnishing accommodations that are available to the public, irrespective of whether membership is required for the use of the accommodations. Such tax shall be at the rate of ten percent (10%) of the gross receipts from such retail furnishing of rooms or lodging. Such tax shall not be subject to the selective sales tax imposed by Section 77.52(2) of the Wisconsin Statutes. The proceeds of such tax shall be remitted monthly to the City Treasurer. (1) The treasurer shall distribute the room tax receipts on a monthly basis, as follows.. a. The City shall retain the first 2% of the room tax for purposes of fulfilling the (or its) obligations towards operations and maintenance of the Oshkosh Convention Center, as well as other costs incurred by the City to support tourism in the City of Oshkosh. b. The Oshkosh Convention and Visitors Bureau, hereby designated as a tourism entity as that term is defined in section 66.0615, Wisconsin Statutes, shall receive the next 6% of room tax. c. As authorized by Wisconsin Statutes 66.0615, the remaining 2% room tax shall be used for debt obligations associated with Convention facilities within the City of Oshkosh. SECTION 2. That Ordinance 07-233, adopted on August 28, 2007 providing that upon the final repayment of the Convention Center debt, both present and that contemplated for renovations of the Center in 2008, provisions related to the additional 2% increase are repealed and the room tax is re-established at eight percent (8%), is hereby repealed. SECTION 3. That Section 8-1.1(C) of the Oshkosh Municipal Code pertaining to payment of Hotel and Motel Room Tax is hereby repealed and amended to read as follows- (C) This section shall be administered by the City Treasurer. The tax shall be payable monthly and shall be received by the City no later than the last business day of the month next succeeding the calendar month for which imposed. A return shall be filed with the City Treasurer by those furnishing at retail such rooms and lodging on or before the same date on which such tax is due and payable. Such return shall show the gross room receipts of the preceding calendar month from such retail furnishing of rooms or lodging, the amount of taxes imposed for such period, and such other information as the City Treasurer deems necessary. Every person JULY 14, 2015 JULY 28, 2015 15-351 15-364 ORDINANCE FIRST READING SECOND READING CONTD required to file such monthly return shall, with his first return, elect to file an annual calendar year or fiscal year return. Such annual return shall be filed within 90 days of the close of each such calendar or fiscal year. The annual return shall summarize the monthly returns, reconcile and adjust for errors in the monthly returns, and shall contain certain such additional information, as the City Treasurer requires. Such annual returns shall be signed by the person required to file a return or his duly authorized agent, but need not be verified by oath. The City Treasurer may, for good cause, extend the time of filing any return, but in no event longer than one month from the filing date. SECTION 4. This ordinance shall be in full force and effect from and after its passage and publication. SECTION 5. Publication Notice. Please take notice that the City of Oshkosh enacted ordinance#15-364 AMEND HOTEL AND MOTEL ROOM TAX ORDINANCE TO REALLOCATE ROOM TAX DISTRIBUTION, CONTINUING 2% OF THE ROOM TAX DEDICATED TO CONVENTION CENTER DEBT RETIREMENT, AND AMENDING THE TIMING OF PAYMENTS OF HOTEL AND MOTEL ROOM TAX, on July 28, 2015. The ordinance amends the Hotel and Motel Room Tax Ordinance to reallocate the distribution of the room tax; repeals ordinance 07-233 adopted on August 28, 2007 which sunsetted the additional 2% room tax upon repayment of the debt pertaining to the 2008 renovation of the Oshkosh Convention Center; and clarifies that hotel and motel tax payments to the City must be actually received by the City no later than the last business day of the month succeeding the calendar month for which the tax is imposed. The full text of the ordinance may be obtained at the Office of the City Clerk, 215 Church Avenue and through the City's website at www.ci.oshkosh.wi.us. Clerk's phone- 920/236-5011. CIT' HALL 215 Church Avenue P.O. eox 1130 Oshkosh, Wisconsin sa9oa-iiao City of Oshkosh � �_ HK IH ,;,� �. TO: Honorable Mayor and Members of the Common Council FROM: Mark Rohloff, City Manager DATE: July 10, 2015 RE: Amend Chapter 8 Hotel and Motel Room Tax Ordinance to reallocate Room Tax distribution, continuing 2% of the Room Tax dedicated to Convention Center debt retirement, and amending the timing of payments of Hotel and Motel Room Tax. BACKGROUND Wisconsin State Statutes allow cities to impose a Room Tax on Hotels and Motels operating within the city. The City of Oshkosh first adopted a Room Tax in 1976. Initially, the city created a Tourism Bureau which operated within the city government structure with oversight by a Convention and Tourism Committee. In 1995, an ad hoc committee was formed to study the operation of the Convention and Visitors Bureau. Because of that study, in 1995 the Common Council approved privatizing the Convention and Visitors Bureau and began the transition to the current independent Oshkosh Convention and Visitors Bureau (OCVB). In 1976 the Hotel and Motel Room Tax was established at 4%. This amount increased to 5% in 1984, 7% in 1998, and 8% in 2002. A resolution in 1985 designated specific percentages of the Room Tax to the Convention Center and Grand Opera House; this was amended in 2003 to include the Convention Center, Grand Opera House, and OCVB. in 2007, in anticipation of the renovation of the Convention Center, the City raised the Room Tax to 10% and amended the allocation of the Room Tax incorporating it into the ordinance. The 2007 amendment set up a formula for distribution under which the City retained the first 2% of the 10% Room Tax and the fuli amount of the Room Tax attributable to the hotel located at 1 N. Main Street adjacent to the Convention Center. The next 1% of the 10% Room Tax is allocated to the OCVB, which is designated as the City's tourism entity under the statutes. The remaining 7% (exclusive of those receipts attributabie to 1 N. Main Street) are divided with 19% going to the Grand Opera House Foundation, 80% to the OCVB and the remaining 1% to the City of Oshkosh for Convention Center operations. Included with the increase in 2007 Council incorporated a sunset clause automatically repealing the additional 2% Room Tax upon repayment of the Convention Center debt. Later that same year this sunset provision was amended so the automatic provision would apply upon final payment of the Convention Center debt and the 2008 anticipated renovations. Section 6&.0615 of the Wisconsin Statutes generally limits the amount that a municipality may impose by Room Tax to 8% unless the municipality meets one of several very specific criteria. One of the exceptions to the Room Tax cap is if the municipality has any long-term debt outstanding with which it financed any part of the construction or renovation of a Convention Center. This is the provision that the Council relied upon in 2007 to increase the tax. By imposition of the sunset clause, the additional 2% debt would be automatically repealed upon the payment of the debt associated with the renovations without the need of further council action. The language as originally drafted appears to have limited the debt to that existing at the time the ordinance was passed. The later amendment extends this to "debt both present and that contemplated for the renovations to the center in 2008". As adopted, this ordinance did not consider the $1 million loan made to the City by the Oshkosh Area Community Foundation, and costs to pay back this debt, nor did it include other capital costs incurred by the City since 2008 that were not contemplated at that time. In April 2015, the City entered into a new agreement with the Grand Opera House Foundation. The new agreement uncouples the support for the Grand Opera House from a portion of the city's Room Tax receipts. It is therefore necessary to amend the ordinance to reflect this change. ANALYSIS In anticipation of preparing this ordinance, staff met with representatives of the OCVB to explain the changes to the Grand lease and how the ordinance needed to be changed to reflect the new arrangement, which uncouples the Room Tax from the Grand's payment. While the payment has been uncoupled, it is still appropriate to fund the Grand's payment with Room Tax doilars, as that was one of the original intents of increasing the Room Tax back in the 1980s. During our discussions with OCVB representatives about restrictions on Room Tax doliars, and the commitments that we have for our Room Tax doliars, we also addressed the OCVB's concerns about the complexity of the Room Tax formula and the ability of the OCVB to reliably estimate revenues. After a good deal of discussion about how the actual Room Tax dollars have been distributed, we came up with a solution that will dedicate 60% of current Room Tax revenues to the OCVB, 20% to Convention Center debt, and 20% to the city for our share of tourism related expenses such as Convention Center operations, and the Grand Opera House. I believe we will be able to use the remainder of our share towards the funding of a Special Event Coordinator that has been discussed previously but could not be funded. FISCAL IMPACT The adoption of this ordinance will commit the City of Oshkosh to provide a full 6% of the 10% Room Tax to the OCVB; 2% to Convention Center-related debt; and the remaining 2% to fund the city's costs associated with Convention Center expenses, our revised payment to the Grand Opera House, as weli as other related tourism costs, including special events coordination. This year, Room Taxes are projected to reach approximately $1.5 million, allocating $900,000 to the OCVB, and $300,000 to Convention Center debt and City tourism related costs, respectively. The amount dedicated to Convention Center debt will remain in place as long as the city holds debt obligations associated to the Convention Center, which will extend the additional 2°/o rate beyond 2020, enabiing the city to satisfy its debt obligations to the Community Foundation and other future capitai costs. This revised formula will eliminate the cbmpiicated Room Tax formula developed over the past 30-40 years and will make it easier to administer in the future. RECOMMENDATION Staff recommends adoption of the revised ordinance. RespectFully Submitted, /`�F^- /� f�✓�---- � Mark A. Rohloff City Manager