Business district controversy heats up
Both sides of a controversial Business Improvement District proposed to fund marketing of South Lake Tahoe are stepping up efforts to get their messages out.
The business community, composed of the South Lake Tahoe Chamber of Commerce and Lodging Association, will put on an educational forum Dec. 21 at Inn By the Lake designed to inform residents of the BID’s intent – to re-establish tourism dollars taken away during massive city budget cuts.
BID opponents are circulating a formal notice of protest with signatures against the proposed district – which they say is unfair and unclear.
At this point, proposed BID funds are earmarked for the Lake Tahoe Visitors Authority and Chamber of Commerce, 85 and 15 percent, respectively. Collectively, the two tourism organizations lost about $500,000 in marketing subsidies over an 18-month period.
“We’d be able to pick up where we left off,” LTVA Executive Director Patrick Kaler said of efforts to continue funding the Blue World campaign. The image campaign, a melding of LTVA and Tahoe Douglas Visitors Authority efforts set into motion over a year ago, has only seen air time during the American Century (Golf) Championship.
Kaler empathized with those who are apprehensive about the district, which would tax businesses according to category or type and gross revenue.
“We understand people want to see instant results. It’s good we have the community raising questions,” he said.
And they’re raising more than that.
John Cefalu, who served on the City Council when 2 percent of the transient occupancy tax was designated for marketing, said the city should have never taken away the subsidies.
The longtime resident is circulating a petition for a number of reasons – including the voting formula based on gross revenues and a disagreement with the hiring of a consultant, which cost the city and business community at least $10,000.
And he said the timing of the process was poor.
“It raises some real credibility issues,” he said.
Sticking points to the proposal span the map, with a main one being an exemption for lodging properties including vacation rentals to pay the additional assessed fee that ranges from $30 to $3,000 on the 4,200 businesses with licenses in the city.
“If this is going to have any chance, it will need to be more inclusive – not exclusive,” he said.
Supporters say almost three-quarters of the businesses are predicted to pay the low end of the scale, placing an estimated $322,000 into BID tourism marketing coffers.
The controversial exception was based on the willingness of lodging properties to endure years of taxation to further city causes, those in favor insist.
Most recently, Measure Z – which was passed by the voters in November 2002 – placed an additional $1.50 surcharge on the 10- and 12 percent standard and redevelopment hotels charge their guests and collect for the city. The tax, which was intended to make up for a city budget shortfall, expires Oct. 31, 2006.
Under a verbal BID agreement with the city, Councilman John Upton suggested to the Lodging Association a third of the $1.50 surcharge lodging properties charge on rooms for the city would be earmarked for the BID. But that idea would require a vote of the City Council.
Small business critics contend motels should pay what they do because the tax doesn’t come out of their pockets.
“Every time we put a tax on our business we lose a certain percentage of it. This is well documented,” new Lodging Association President Eric Eymann said.
In addition, motel managers said they would continue to collect the $1.2 million and, through the city, place it in the hands of a BID board of directors to be appointed by the city.
“I can’t say (the quasi exemption) shined a bright light on the discussion. But I guess we felt they were taxed enough. It came out of discussions in the revenue subcommittee,” Upton said Thursday of the duty he fulfilled with former Mayor Tom Davis, who co-owns Tahoe Keys Resort. Upton also serves on the Tourism Promotion Advisory Committee, which may soon fold, that helped spearhead the plan.
“This is a tourism based economy. Directly or indirectly everything flows back to the economy,” Upton said. He said he believes more people would be supportive of the BID “if they had some assurance what the money is going for.”
The chamber plans to use its portion of economic development and efforts to run two visitor centers. The business group has been so strapped it rented space last summer to a Jeep Jamboree group at the city building, a move that would require approval by the council by next year, according to City Manager Dave Jinkens.
“The current lease (with the city) doesn’t cover subleasing the space, but personally I don’t think it hurts the city,” he said.
The city rents the building to the chamber for a dollar a year.
BIDs seem to be in full swing with cities losing funds from the state and failing to subsidize certain marketing subsidies.
Fairfield Economic Development Director Karl Dumas, who has helped to form three in that city alone, said the proposal would go a lot further if more public meetings were conducted on the subject.
During the formation of its April BID for hotel tourism, the Bay Area city met once a month for six months.
State law requires businesses that oppose the BID to issue a formal protest against the proposal to the City Clerk’s office at 1052 Tata Lane by Jan. 4, when a vote in favor or against it is expected.
If approved to advance, the board’s formal proposal will require the blessing of the city, which considers itself a conduit to the BID formation.