Tax for arts-and-culture district causes discomfort for Park City lodging industry
City official says increase needs to be in place in January for Bonanza Park land purchase
September 8, 2017
Roughly two months after Park City announced plans to raise a tax on overnight visitors to buy land in Bonanza Park for a high-profile arts-and-culture district, the town's lodging industry is readying for the ramifications as the busy season nears.
Many in the lodging industry say they support the idea of the district, where city leaders envision combining the headquarters for the Sundance Institute and the Kimball Arts Center with retail, dining and residential space. To raise the $19.5 million to buy the land, though, the city will levy a 1 percent municipal transient-room tax, effective Jan. 1. That will be in addition to a countywide 3 percent tax and a 0.32 percent tax state legislators voted last winter to implement, also beginning next year.
The timing of the municipal tax is what's causing the most discomfort for lodgers. Rhonda Sideris, president and founder of the property management company Park City Lodging, Inc., said many people who will visit Park City this winter have already booked accommodations. With ski season drawing closer, lodging owners are now having to go back to customers and raise rates to pay for the tax.
"It doesn't matter when they booked it," she said. "If they're here on Jan. 1, that 1 percent is due and payable. That's still a big concern. I have to question the sense of urgency that the city felt."
Greg Gendron, president of the Park City Area Lodging Association, said a better solution for lodgers would have been to levy the tax in at the end of ski season in April, because not many leisure visitors are on the books past then. He added that the industry would have preferred to have more time to discuss options with city officials after the arts-and-culture district announcement. The City Council voted to move forward with the tax roughly two weeks later.
Nate Rockwood, capital budget manager for Park City, acknowledged the tight timeline and said the city is sensitive to any trouble the implementation date may cause for the lodging industry. However, delaying the tax wasn't feasible because the city needed it in place before the scheduled close of the property purchase in January. The city is buying the 5.25 acres of land from the Bonanza Park partnership of Mark J. Fischer and John Paul DeJoria.
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"It was really the only solution that worked for us if we were going to that funding source to buy the property," Rockwood said. "… There wasn't a whole lot we could do other than apologize. You give them as much time as you can, but at some point you kind of have to say, 'This is what it is.'"
Another factor the lodging industry has grappled with is whether the municipal transient-room tax creates a competitive advantage for lodgers outside city limits.
Gendron said that will mainly be a factor for those who rely on corporate travel because businesses focus on maintaining the bottom line when they visit Park City. A 1 percent difference may be enough to sway some of them to stay at hotels in the Snyderville Basin.
"It could be a disadvantage when selling group business," he said.
Sideris said it will matter much less when it comes to leisure travelers because the tax isn't large enough to persuade people who want to be in the heart of Park City to find accommodations outside of town.
"If you're staying out in the Junction or in the county, it's a completely different feel and experience than if you're staying in the city," she said.
Rockwood noted there has always been an imbalance between the city and the county because of differing sales tax rates, but the bigger concern was ensuring the municipal transient-room tax wouldn't make Park City less attractive compared to other ski towns throughout the West.
"We felt like we were still competitive," he said.
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