[Memo]
[Draft Resolution - (City Attorney)]  [Draft Resolution - (Hartzell & Laws)]

MEMO

To City Councilors
From Don Laws & Cate Hartzell
March 13, 2003

Background

Resolution No. 2000-25 governs the Transient Occupancy Tax in Ashland. It regulates the expenditure of 33.3% of anticipated Hotel/Motel tax monies for Economic and Cultural Development. Of that 33.3%:

• 60% of these funds are allocated to Chamber of Commerce;
• 28% are allocated to the Oregon Shakespeare Festival;
• 12% are allocated to other local organizations

The modification of the Resolution in 2000 also revised the goals for the use of money allocated by the Committee and required that the Chamber and OSF make annual reports specifying how they are meeting these goals. One of those goals is the promotion of tourism.

Current Status

Since FY 1997-1998 alone, transient occupancy taxes have provided $ 1,135,340 to the Chamber of Commerce and $536,475 to OSF for marketing. We understand that marketing is an on-going expense for tourist-dependent businesses, and that it is challenging to define when one has achieved the goal. Tourism is obviously one of the large generators of wealth in this community, along with the University and pensions.

We believe that the commitment of a portion of transient tax money over the years has established a foundation and capacity for OSF and the Chamber of Commerce to market to its returning patron base and to attract the 25% who come for only one visit. It is difficult to know how much a dollar's worth of advertising accomplishes, compared, say, to word-of-mouth and articles by reviewers. OSF appears to have sufficient resources for a marketing budget typical of tourist businesses.

Promoting Ashland as a tourist destination increases the national exposure that Ashland receives, and fuels the influx of new, permanent residents. Additionally, tourism creates impacts on existing residents that we believe has reached an important threshold. We are questioning the current levels of city funding that speed up this growth and impact.

Tourism-based business generates needs beyond just advertising. We propose expanding the use of the transient occupancy tax dollars to include one of those needs by reallocating a portion into enhanced public transportation. There are many reasons why an investment in providing and marketing public transportation to visitors and residents supports economic development, from air quality, safety, convenience, and health, to reduced automobile congestion. We believe that enhanced bus service is critical not only for visitor, student, and resident use, but for the service workers who support the tourism industry. Public transportation services the business corridors of town.

During last year's budget cycle, the City Council allocated General Fund money to support a free-ride RVTD bus program; we reinforced that as a priority during our 2003 Goal-Setting Session. In FY 2002-2003, those funds were drawn from Working Capital Carryover. In the current budgeting process, staff is considering spending $40,000 from the General Fund towards this goal. We believe that our proposed change establishes a logical funding relationship between the cost of public transportation and many of the beneficiaries.

We recommend the attached revision of Resolution 2000-25 for your consideration.

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RESOLUTION NO. 2003-___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASHLAND REITERATING ITS POLICY OF RELATING THE EXPENDITURE OF MONIES FOR ECONOMIC AND CULTURAL DEVELOPMENT TO THE HOTEL/MOTEL (Transient Occupancy) TAX AND REPEALING RESOLUTION 2000-25.

Annotated to show deletions and additions to the draft resolution submitted by Councilors Hartzell and Laws on Friday, March 14, 2003. Deletions are lined through and additions are underlined.

THE CITY OF ASHLAND RESOLVES AS FOLLOWS:

SECTION 1. The City Council recognizes that the source of monies for the Economic and Cultural Development Grant program is the Hotel/Motel Tax.

SECTION 2. Beginning in Fiscal Year 2003/2004, the City Council will appropriate thirty three and one-third percent (33.3%) of the anticipated Hotel/Motel tax monies:

A. 33.3% for Economic and Cultural Development;

B. 55% of these funds will be allocated to for the Ashland Chamber of Commerce;

C. 23% will be allocated to for the Oregon Shakespeare Festival; and

E.12% will be granted to for local organizations which that promote Economic and Cultural Development; and

F. 10% will be allocated to increase the capacity of public transportation to support economic development throughout Ashland.

The anticipated budget for subsequent fiscal years shall be based on the previous year's actual receipts. Actual receipts that exceed the anticipated amounts will remain in the General Fund. By January 31 of each year the Chamber of Commerce and the Shakespeare Festival shall make a report to the City Council regarding meeting the goals in Section 3.

SECTION 3. The following are the goals that the Economic and Cultural Development Committee is attempting to meet by granting money to applicants.

A. To respond to general inquiries about business in the City.

B. To promote tourism.

C. To provide assistance to existing small businesses.

D. To provide technical and financial assistance for the expansion of existing businesses.

E. To provide technical and financial assistance for the development of new businesses.

F. To provide information and financial assistance to small cultural organizations to:

i. Attract tourists with emphasis on the off-season;

ii. Create a greater diversity of cultural opportunities for our citizens.

SECTION 4. The following guidelines and criteria are established for the Economic and Cultural Development Grants

A. Grantee shall be a 501(c) non-profit agency.

B. Grantee shall be a non-governmental agency.

C. Grantee shall promote livability for the citizens of Ashland.

D. The minimum grant proposal will be $1,000.

E. The grant will benefit Ashland in regards to enrichment and activities of an economic nature.

F. Grantee shall serve the population in Ashland but may encompass other venues in the Rogue Valley.

SECTION 5. Resolution 98-23 2000-25 is repealed upon passage of this resolution.

SECTION 6. This resolution takes effect upon signing by the Mayor.

This resolution was read by title only in accordance with Ashland Municipal Code §2.04.090 duly PASSED and ADOPTED this _____ day of ________________, 2003.
Barbara Christensen, City Recorder

SIGNED and APPROVED this day of , 2003.
Alan W. DeBoer, Mayor

Reviewed as to form:
Paul Nolte, City Attorney

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The Draft Resolution modified by Hartzell/Laws is available in PDf format.  To view this document, please click on the link below:

HotelTax_HartzellLaws_reso_dft.pdf (51KB)

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