Council supporting new hotel tax legislation

Drafting resolution of support
Fri, 05/03/2019 - 8:15am
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Rhode Island’s tourism districts are fighting for one singular formula for distributing hotel tax revenue in the state with newly introduced legislation. Per legislation that passed in the general assembly in 2015, the state’s Tourism Councils were excluded from collecting taxes from the hotel hosting platform portion of the revenue sharing pie. 

Hosting platforms, such as Airbnb, are collecting a greater share of room rental fees these days, but state legislation precludes tourism districts from receiving their share of the hosting platform tax. As Jessica Willi, Executive Director of the Block Island Tourism Council said, it’s “significant.” The Associated Press reported in Sept. of 2018 that Airbnb collected $4.6 million in lodging taxes since the state’s legislation was enacted. Willi said that revenue amounts to about $25,000 to $30,000 for a summer season on Block Island.

Willi took the matter to the New Shoreham Town Council, which is drafting a resolution that would align hosting platform tax revenue with the state’s overall hotel tax formula. Under the current legislation, while Block Island’s tourism district is excluded from receiving the hosting platform tax, the Rhode Island Commerce Corporation receives 75 percent, and the Town of New Shoreham is allocated 25 percent.

Block Island Tourism Council receives 45 percent of the five percent of the hotel tax that is divvied up for rooms booked directly by a hotel. The town and the Rhode Island Commerce Corporation receive 25 percent, with the Greater Providence-Warwick Convention and Visitors’ Bureau receiving its five percent share of the pie.

Willi said two House bills (H5950 and H5960) introduced in April call for tourism districts to receive 45 percent of the hosting platform tax revenue. The town and the Commerce Corporation would receive 25 percent, while the GPWCVB would be allocated five percent. “The bills both say the same thing,” she said.

The matter was discussed during the council’s April 24 meeting. During the meeting, the council decided that the resolution Willi proposed needed to have “more teeth,” and should be revised. The council continued the item to its Tuesday, May 7 meeting, when it will be voted on.

“I think the resolution should be stronger,” said Councilor Sven Risom. “If we’re going to fight we need to take the gloves off. It’s clear why the governor’s office created it. The governor and Commerce Corporation like this new formula, because they’re making three times as much.”

Willi said that hosting platforms account for about 15 percent of the lodging business for the summer season on Block Island. “It’s significant,” she said.

Willi explained to the council that the language regarding a 75 percent share from hosting platforms was slid into the hotel tax legislation back in 2015. The new legislation would include hosting platform revenue under the same umbrella and distribution formula as hotel tax revenue for rooms booked directly by a hotel. (A pie chart explaining the hotel tax accompanies this article.)

“What happened is, about five years ago the governor and the Rhode Island Commerce Corporation discussed changing how much the divisions got in hotel tax revenue,” she said. “They were going to leave Newport and Providence untouched, but take the other four regions: Block Island, South County, Blackstone Valley, and Warwick) and cut us down to 22 percent, instead of 45 percent. Luckily, Newport and Providence said you can’t do that; you’re going to decimate them.”

Town Manager Ed Roberge asked Willi if the state’s tourism lobby was in support of a one-payer system. “Does everybody agree that if it’s the hotel tax, or Airbnb, or a hosting platform, that it should just be one formula?”

“Yes,” said Willi, who noted that Middletown has approved a resolution in support of the legislation, and other towns are following suit. She also said that there are tourism lobbyists at the state house fighting for passage of the new legislation.

“It’s complex. Why not simplify it?” said Roberge.

“It seems that some of this is politically driven,” said Risom.

“When is this going to be heard?” asked Councilor Chris Willi.

“I don’t know,” she said. “But I will be there. It will be heard. It’s been introduced. It’s been referred to the House Finance Committee.”

In other news, the Town Council unanimously approved the warrant for the May 6 Financial Town Meeting. First Warden Ken Lacoste made the motion that was seconded by Second Warden André Boudreau.

The Town Council unanimously approved executing agreements with National Grid to: (1) establish town ownership of a conduit at the public safety building site; (2) grant an easement to National Grid for its existing conduit at that site, and potential placement of a future hand hole; and (3) codify changes represented by this exchange and the as-built infrastructure with an amendment to the Sept. 14, 2015 fiber use agreement between the town and National Grid.

The council unanimously approved granting a special temporary permit to allow Harbors Department employees to park on Block Island Land Trust property, known as the K&H lot, for the 2019 summer season.

The council also unanimously approved (4-0), with Councilor Martha Ball recused, to grant Dr. Peter Paton, from the University of Rhode Island, with a special temporary permit to erect two 20-foot bird-tracking telemetry towers on the Southeast Lighthouse property near the foghorn. Ball recused because she sits on the Southeast Lighthouse Board of Directors.

The next Town Council meeting is scheduled for Tuesday, May 7 at 7 p.m.