BID stands for ‘Business Independence Day’
If you want something done right you’ve got to do it yourself.That is the situation facing the local business community. We need to create a Business Improvement District. And in our case BID should be redefined as “Business Independence Day.” Here’s why:
In 1982 the voters of South Lake Tahoe directed the City Council to create a new 2 percent tax on lodging properties dedicated exclusively to the LTVA and Chamber of Commerce for marketing and visitor services. LTVA used 85 percent with 15 percent going to the chamber for answering the thousands of calls and helping the thousands of people looking to do business here. Over a million dollars was raised to attract visitors, creating hundreds of local jobs. For 22 years lodging has added this tax to for each room knowing it was a good thing to market for future business. Businesses in Tahoe have benefited directly or indirectly from this tax without having to pay for marketing campaigns that attracted tourists.
Council after council upheld the commitment to advertising our beautiful lake. Now, even though voters were clear in their direction to the city, the institutional memory has faded.
The budget is tightening as the state steals money from cities and counties. They’ve begun to seek every source available to keep services. However, every business manager knows the last thing you cut is marketing – or the death spiral begins.
If marketing is cut then the revenue pie will certainly shrink, leading to more taxes. It will chase away businesses and customers, as well as residents who lose their jobs. That is not the right route. The chamber and Lodging Association along with a coalition of other entities have done our part. We recognized the need to keep safety services, so we backed Measure Z, a four-year plan to assist the city in getting its financial house in order. It raised the business license fee and added another $1.50 per room night to the already high 10 percent (12 percent in redevelopment) collected by lodging.
Yet, having the city go under was not seen as acceptable. With fire danger high and 9-11 concerns fresh, safety services had high priority. The voters agreed and passed the measure. The idea was to grow our economy, nurture marketing and to assist the city in replacing Z with a modest sales tax (Measure Q) as well as have them right-size their departments in light of the available tax base. They would have to find a way to live within the means while a modest sales tax would serve to diversify the heavy tax burden being born by lodging. It is well documented that as TOT rises above 10 percent greater numbers of lodging guests get sticker shock at the end of their stay. The effect: a drop off in room nights. That has happened here. In addition, Indian gaming has cut into our market share. While redevelopment has been a virtual lifesaver, more must be done.
So what is the answer? We believe it is time for businesses to take action to protect our future by creating an independent fund dedicated to marketing. It will grow our businesses and create good jobs. The Lodging Association has shown willingness to consider continuing the $1.50 per night if it is put into the BID. That would raise more than $1 million from lodging alone. They are asking that the rest of the businesses do their part by assessing taxes at about one fourth that amount. This would be the first time the merchants (restaurants, retail, big boxes, etc.) would contribute to cooperative marketing in more than two decades.
The amount raised is being decided upon and self-assessed by the businesses. We have worked with the city to retain a firm from Utah, Rosenthal & Associates, who came up with a fair share formula. Under this plan, 72 percent of all the businesses will only pay $30. Very large, high-grossing businesses that have tourism as a high part of their gross income will pay a higher fair share amount. That is the “what” of a BID. The following is the “how”.
When a group of businesses wants to raise funds for improvements that will benefit them, the law allows them to form a district apportioned to practicality for each business type. The structure is based on how much each business benefits by what is being improved. In this case it is the relative benefit each business derives from tourism. The method is called a Business Improvement District or BID. It can be set up for improvements such as street lights, curbs and landscaping such as the recent one set up by the merchants on Ski Run Blvd. A BID can also be set up to perform a valuable function like marketing. The businesses in the proposed district can request that their local government (i.e. city council) set up the mechanism, but thereafter they can only be a pass-through to the improvement district board run by the merchants. The funds cannot be redirected by the city for other purposes. That’s the key element in setting up a BID in South Lake Tahoe. The funds can’t be directed somewhere other than where the BID directs.
So, is it “Business Independence Day?” Should we have a larger say in marketing ourselves? We will have the opportunity to answer that question within the next few months. Our hope is that you are with the chamber and Lodging Association in our effort to create an independent fund aimed at regaining the customers we have lost over the last few years.
You will be receiving information from the city about the same time as this column is pubished. Please feel free to contact me at the chamber at (530)541-5255 Ext. 26, or e-mail me at firstname.lastname@example.org.
– Duane Wallace is CEO of the South Lake Tahoe Chamber of Commerce.