Hotel owner asks city to consider tax collection fee
Now that Abbotsford has doubled its room tax rate from 3 to 6 percent, the owner of the city’s three lodging establishments would like to keep some of that extra revenue for his businesses.
At a room tax commission meeting on Monday, Krunal Patel — owner of Abby Inn, Rodeway Inn and the Home Motel — asked about instituting a 1 or 2 percent “collection fee” similar to what is done in cities like Wausau and Marshfield.
Patel said he supported the tax increase as a way of generating more revenue for the room tax commission, but he would have liked to have seen it done more incrementally, perhaps with an annual increase of 1.5 percent.
“I don’t want to see it double in a single year,” he said.
City administrator Dan Grady said Patel could always ask the city council to revisit the issue, but he noted that the city’s proposed 2020 budget already includes revenue from a 6 percent room tax.
In addition to doubling the tax rate, the council also voted to have the city retain 30 percent of the total revenues for its general fund. Previously, all of the revenue went to the room tax commission, to be spent on promoting events that lead to overnight stays in local hotels.
Going forward, the city will keep an estimated $15,000 per year in room tax revenue, with the remaining $35,000 going to the room tax commission. For the commission, this will be a $10,000 increase over what it was taking in with a 3 percent tax.
Patel, who represents the local lodging establishments on the commission, said he would like to implement a 1 or 2 percent collection fee to recoup some of the money being collected by the city. With $50,000 in room tax revenue expected in 2020, this would total $500 or $1,000, which would come out of the city’s portion.
“That’s a question we can take to the city council,” Grady said, referring the issue to the Dec. 3 agenda.
_ David Bedroske of the Midnight Riders Snowmobile Club asked the commission to reconsider a funding request for the club’s trail grooming and signage activities, which help lead snowmobilers to local hotels.
The commission voted in August to turn down a $1,400 reimbursement request from the snowmobile club because it included work hours and equipment rental for trail grooming. Members did not feel those activities qualified for room tax dollars, which are supposed to go toward events and activities that result in overnight hotel stays.
Commission president Eric Reis said he can see how the trail signs put “heads in beds” at local hotels, but he said the commission needs receipts from the snowmobile club before it approves a funding request.
_ The commission approved $3,000 for promoting the Abbotsford Christmas Parade on Dec. 7 and $3,500 for the Abbotsford Festival next June. A $2,000 request from the Colby Show Choir Spectacular was tabled until a show choir parent could attend a meeting.
_ The commission approved $2,500 in reimbursement for the second quarter wages of Michelle Albrecht, offi ce coordinator at the Abby-Colby Crossings Chamber, and $92.50 for visitor vouchers that provide discounts to travelers.
_ The commission approved a new room tax application form, which asks applicants to provide a marketing budget for their event and an explanation of how it will generate paid overnight hotel stays.