A jitney, cruise ships and the hotel tax

Reviewed by Town Council
Thu, 03/14/2019 - 6:00pm

Three items received close attention from the Town Council at its March 6 work session: exploring operation of a hop-on, hop-off jitney service on the island, charging a landing fee for passengers arriving via cruise ship, and the local impact of an increase in the hotel tax. The council discussed the items, but did not take action on them.

The council seemed to agree that there was a local opportunity for a jitney service, but thought the Motor Vehicles for Hire Commission should be consulted as an advisory group before any decisions are made on the matter. The MVFH informed the council of its disapproval of the service, feeling it would encroach on the island’s cab businesses.

After deliberating the topic for 20 minutes, the council decided to make it an agenda item for its next meeting, which is March 20. Councilor Martha Ball recused herself from the discussion due to her ownership of a taxicab.

First Warden Ken Lacoste explained that Matt Houston, a Delaware businessman who has been a seasonal visitor for 30 years, proposed the idea of operating a jitney service to the Town Council and the MVFH in the fall. Houston’s proposed service would run from New Harbor to Mohegan Bluffs and the Southeast Lighthouse, stopping at pull-offs to avoid traffic backups. In his proposal, he noted that a daily pass for the seasonal service would cost $10 and operate from 9 a.m. to 8 p.m.

Councilor Chris Willi said if the town was going to consider operating a public transportation service “the taxi commission should have first crack at it.” He noted that as much as he “was in favor of public transportation, this requires a license issued by the Town Council. So I think this guy needs a response” from us about it.

“I guess he would need a bus license,” added Willi, since the proposed jitney service would be operated via a bus-like vehicle.

Town Clerk Molly Fitzpatrick said, “It’s a motor vehicle for hire, and there’s no available license. You would have to change the ordinance to permit its” operation on the island. New Shoreham prohibits transportation of passengers for hire without a motor vehicle for hire license. This seems to be taking passengers for hire without a motor vehicle for hire license. So it would seem to be prohibited on a local level.”

The Town of New Shoreham has a waiting list for its taxicab licenses, with 32 separate taxicab licenses having been issued. Most of the cabs operate on a seasonal basis — from Memorial Day to Columbus Day.

Second Warden André Boudreau said, “As a town I think there is support for moving people more efficiently. Like Chris said, I would like to see the taxi commission come up with a way to do this.” Boudreau said that the MVFH would need “a directive” from the council to proceed. “I think we can find a way to do this with the taxi commission.”

Former First Warden Kim Gaffett said she thought the town should “think about looking at more efficient ways of moving people around, especially in the core areas.” Gaffett noted that the MVFH is a commission that makes regulatory recommendations to the council. “It’s within your right,” she said, “to amend the town ordinance to accommodate” that type of service.

Councilor Sven Risom said the council should direct the town manager to “understand the regulatory situation” for an island-based jitney service, and report back with the information. Risom said the council should also ask the MVFH for a proposal.

“That’s not their job at all,” said Fitzpatrick of the MVFH, noting that the commission writes regulations, and fields complaints. “They have their hands full.”

“I would love for them to give us an opinion,” said Risom, who floated the idea of issuing a Request for Proposals that he hoped would be responded to by an island-based entity.

Lacoste questioned issuance of an RFP. “It sounds like the first step would be to have another conversation with the taxi commission. The council might say that it’s interested in seeing the formation of some sort of jitney service.” He directed Town Manager Ed Roberge to place the item on the council’s next agenda.

Cruise ships

The Town Council is exploring charging a landing fee for passengers that come ashore from cruise ships anchored offshore. 

Lacoste said the town has discussed this topic before, and the concern is that “a cruise ship in the middle of a busy July weekend will anchor offshore and send in multiple launches” that carry a total of thousands of people coming ashore for a two-hour time period. “There would be all kinds of issues and problems” if that were to happen, he said.

“There is the idea of charging landing fees,” said Lacoste. “So it’s a matter of opportunity, but it’s also a matter of control. Newport charges per head for people that come ashore there.”

“To and from,” said Willi, who brought the subject to the council’s attention, and said it was time to start a discussion about it. “The intent with this item is to get something legislatively on the books.”

Willi said, “A cruise ship entity wants to be able to deliver a product, and if the island isn’t going to deliver the product they want, then they’re not going to entertain it.” He noted that Newport instituted the landing fee charge a while ago, and cruise ship traffic has increased since that time.

Council members felt that community input was important to see if charging landing fees for cruise ships passengers would be an acceptable practice. The council will discuss the issue at a future meeting, after receiving the town manager’s assessment of the legal aspect of the issue and public compliance with the current landing fee.

Hotel Tax

Gov. Gina Raimondo’s proposed state budget is calling for a recommended one percent increase in the hotel tax. Per the legislation, H 5151, the hotel tax would be raised from five to six percent, with the additional revenue going into the state’s general revenue fund. 

“If you stay in a traditional hotel room you’re charged a one percent city and town tax, seven percent sales tax, and five percent hotel tax, or a bed tax,” said Block Island Tourism Executive Director Jessica Willi, noting that the total “is 13 percent right now. The governor’s proposal would raise that to 14 percent. That additional one percent would be part of the five percent hotel tax, so it would increase to six percent.”

“It’s a very complicated distribution model,” she said. “The new distribution model would give the additional one percent (in total) right to the state’s general fund, probably never to be seen by any tourism entity” in the state. “There is very little support for this around the state. The bill was heard last week at the State House. The tourism districts submitted a letter to the House Committee on Finance” stating why they oppose the tax.

The letter notes that “total hotel tax rates are among the important fiscal considerations evaluated when choosing a location for lucrative meetings and convention business. Increasing the hotel tax would impair Rhode Island’s competitive profile, jeopardizing the strategic positioning and advantages held over other destinations in our region and national peer groups.”

“The national average is 15 percent across the country, so bringing the tax up to 14 percent still keeps us below the average,” said Jessica Willi. “In our view, the regional divisions’ view, the hotels are already highly taxed, and this is opening a new door to putting some of that money in the state’s general fund. The hotel tax was created to bring money back into tourism. But once that door is opened, they’ll push it a little wider open in the years to come.” She encouraged the council to contact the town’s representatives in the state legislature to oppose it. 

The next Town Council meeting is Wednesday, March 20 at 7 p.m.