Tourism Council explores a new funding model

Thu, 03/25/2021 - 5:45pm
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The New Shoreham Tourism Council is funded by a portion of the hotel taxes collected on Block Island, but the exact percentage can vary according to the whims of those who make the state budgets each year. The uncertainty makes it hard to plan a budget on the local level, and Tourism Director Jessica Willi has been exploring alternative sources of funding that will be more reliable than a sometimes fickle state – especially with changes like having a new governor.

While Rhode Island’s newly sworn-in Governor Dan McKee hasn’t made any pronouncements on the matter, Council member John Cullen put it best when he said that in all the years of his serving on the Tourism Council there was a “constant fear.”

Willi arranged for a presentation by Tiffany Gallagher for the Council’s latest meeting on Tuesday, March 23. Gallagher is the eastern U.S. branch manager for Civitas Advisors, a legal and consulting firm out of Sacramento, CA. Gallagher works out of Syracuse, NY, where she has experience in hotel management and currently sits on the board of directors for the New York State Hospitality and Tourism Association.

Civitas specializes in the assistance of developing “tourism (or business) improvement districts,” a concept that involves the pooling of money between businesses to invest in projects such as cooperative marketing or other investments that may benefit the members as a whole, such as beautification of downtown areas, signage, or infrastructure. Funding normally would come from some sort of user fee, such as an additional percentage added to the local hotel tax. But, it depends on the area and what is being promoted. Willi gave an example of an area with lots of skiing areas that might put an additional fee on lift tickets purchased. Gallagher said they have done work for wineries and even the cannabis industry.

Rhode Island, as well as a hotel tax, has a one percent meals and beverage tax. Gallagher said adding on to this type of tax did not usually go over well. Users of hotel rooms are almost certainly coming as tourists, whereas restaurant customers could just as easily come from the local population and not appreciate the additional fee.

There are many models for business improvement districts. Gallagher says there are about 2,500 across the country, with at least one in every state. They are, and this is key, dependent on a state having enabling legislation in place. In Rhode Island, she said, the legislation exists, but it only includes provisions for Providence, Pawtucket, and Newport. Modeling and pushing through the necessary legislation is a key component of what Civitas does for its clients. There also needs to be buy-in from the local government and public.

There is a business improvement district in Newport called the Newport Hotel Collection. Gallagher said that, pre-Covid, that collective, which includes hotels with 20 rooms or more, was taking in $350,000 per year. She added that there were many possibilities for the funding Block Island could utilize – if hotel-oriented, it could involve all room stays, or just during the busy season, or particular days of the week.

Another key is that all the money collected must be used for the purpose stated. Gallagher said: “The only rule is money has to benefit those who pay for it.” Further, local governments may not pull back on services they already provide because of the perception that others will fund things for them.

The concept seemed interesting to the Tourism Council. Member Steve Filippi said he had property in a district. “It helps a lot,” he said, and enhances the properties around the district also. “I’m all for it,” he said. “It’s wonderful.”

“This is a first step,” said Willi. “We will continue to talk about it.”

What else could be funded besides marketing by a cooperative hotel group? More public restrooms? More trash receptacles? Maybe a visitors center. Block Island Chamber of Commerce Executive Director Lars Trodson joined the virtual meeting with a funding request of $25,500 to support the Visitors Center, which has recently been spun off on its own as a limited liability corporation, and is located at the Chamber office in Old Harbor.

Tourism Council Chair David Houseman said: “$25,500 seems a bit excessive.”

Trodson said: “That’s the median salary for 2017, 2018, and 2019,” referring to the people who staff it in the summer with seven-days-per-week coverage.

Trodson said he had a “three-pronged approach” to the visitor center, which includes the Chamber of Commerce, the town, and the Tourism council. “This is, obviously, my first stop.”

There was some push-back, especially in the area of the Chamber’s financial involvement. Member John Cullen said that the “Chamber’s share of the third prong wasn’t financial,” but included training and the providing of facilities. He added that the town’s share was in providing free rent on the building. He suggested each entity contribute one third.

There were also a few questions about the use of Chamber dues. When Filippi asked Trodson what percentage of Block Island businesses were members of the Chamber, he responded that it was “probably around 90 percent.”

Trodson stressed that although they were asking for funding for summer salaries, the center is open year-round, and that it was quite busy over the past weekend.

The Tourism Council asked for Trodson to provide them with a budget for the Visitors Center. In the end, they agreed to fund half of the $25,500, or $12,750 with funds coming out of the fiscal year that starts July 1, as they had already contributed $10,000 out of their current year’s budget for last summer’s staffing.