The Durham Board of County Commissioners became the second local legislative body to request authority to increase the hotel occupancy tax by 1 percent Monday night, agreeing in spirit with a proposal from the City of Durham.
The county commissioners voted 5-0 to ask the state Legislature for permission to increase the tax beginning in January to fund about half of the cost of a proposed 5,000-seat performing arts theater downtown.
"We have a stake in the future of downtown Durham," County Manager Mike Ruffin said. "This particular project, we believe, could be pivotal for the future of downtown Durham."
The commissioners agreed to divide the revenue roughly along lines proposed Monday afternoon by City Manager Marcia Conner.
Under Conner's plan, the city would use $1.4 million of the tax revenues annually for half of the estimated $2.8 million debt payments on the theater, beginning in July 2003. The remainder of the increased revenues, up to $500,000, would go to the county to pay for an existing debt on the Museum of Life and Science.
But during the first year and a half of the tax increase, $700,000 would go to the Durham Convention and Visitors Bureau to market the city.
"It's priming the pump," Shelly Green, DCVB executive vice president for marketing, told the commissioners. "It's taking that money to draw visitors to Durham who will spend money and stay in hotels."
The DCVB had long opposed the tax, favoring a prepared-food tax instead, but its board of directors agreed last month to support the occupancy tax when the food tax stalled in the Legislature.
The commissioners will meet with the Durham City Council today to try to resolve any remaining differences between the plans, such as whether any annual revenue above $1.9 million raised by the tax hike would be given to the DCVB, or split between the city and the county.
"I think that issue can in fact be worked out," Conner said. "I don't think that's something we're going to get hung up on."
Hotel managers, who would bear the brunt of the occupancy tax increase, are hesitant to support the plan. Mike Martino, general manager of the Sheraton Imperial Hotel, spoke against the tax at a joint meeting of commissioners, City Council members and state legislators Monday morning.
"It's singling out one industry--the lodging industry--to support what this tax is going to," Martino said. "We as lodging operators do not see any substantial benefit to it... in the sense of room-nights."
Ron Hunter, chair of the DCVB and general manager of the Radisson Governors Inn, reluctantly supported the tax in his role as DCVB chair. But he said he would have greatly preferred some other tax.
"It's not a good time for this tax," he said. "I don't think it's a win-win situation, and I say that with my hotelier hat on."
Hunter said he could not speak for the DCVB board as to whether it would drop its support for the tax when it next meets. He added that the DCVB supported the tax only as a stopgap measure until another tax that would fund the theater completely could be found.
"[The occupancy tax is] not the solution," Hunter said. "It doesn't have enough to do what they want to do.... It gets them to the table; it doesn't solve the situation."
Conner said it was still not clear where the city could raise the remaining $1.4 million per year to pay for the theater.
At the joint meeting Monday morning, the commissioners and City Council members made several different proposals as to how the revenues from the tax increase would be divided, causing the state legislators to hesitate to back the tax.
"If the occupancy tax does pass, then someone will have to decide where the money will go," Sen. Jeanne Lucas said.
City and county leaders spent the afternoon in a series of meetings to work out a compromise.
Sen. Wib Gulley said he would not support a plan that did not earmark significant funds for the DCVB.
"The proposals that the city and county were floating [Monday morning] all almost completely cut out the Convention and Visitors Bureau folks," he said. "The Convention and Visitors Bureau and that section of the local economy have been important players in this."
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