Park City’s lodging industry has reservations about tax for Bonanza Park district
Some say it could make town less competitive for business travel
July 11, 2017
Park City's lodging industry is checking in with some concerns about the effects of a City Hall plan to impose a tax on visitors to pay for a significant purchase of land and development in Bonanza Park.
In a major announcement last week, City Hall unveiled preliminary plans to buy the 5.25-acre parcel of land for $19.5 million, then sell portions to the Sundance Institute and Kimball Art Center and develop the surrounding area to create a high-profile arts-and-culture district. Officials, eager to talk about how the project will reshape a vital Park City neighborhood, envision it cementing the town's status as a cultural magnet.
But to pay for it, City Hall says it will levy a 1 percent municipal transient-room tax, which lodgers would pay when they stay at hotels or rental properties in town. The tax would be added to the 3 percent transient-room tax Summit County currently imposes. The municipal tax is expected to generate $2.2 million to $2.4 million in revenue annually.
Some in the city's lodging industry, however, are concerned that the tax may drive down business. Rhonda Sideris, president and founder of the property management company Park City Lodging, Inc., said she is supportive of the city creating an arts-and-culture hub in Bonanza Park. But she remains apprehensive about the tax, especially given that a statewide 0.32 percent transient-room tax is already slated to go into effect Jan. 1.
The tax, she said, would make Park City a less attractive destination for companies and large groups considering the town for business meetings and conventions because that segment of visitors is primarily concerned with the bottom line.
Already, Park City's total lodging tax rates — including the county transient-room tax and sales tax — are higher than that of Colorado competitors Telluride, Vail and Aspen, according to data from City Hall. A municipal tax coupled with the statewide tax would push Park City above Steamboat Springs, Breckenridge and Crested Butte, as well.
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"When they look at where they're going to stay, they don't just look at the nightly rate of $400," Sideris said. "They look at the total package."
Nate Rockwood, capital budget manager for Park City, disputed the notion that the tax will hinder the lodging industry. In fact, he said, the district will be a boon for lodgers, along with the rest of the community. The Sundance Institute brings in thousands of visitors each year and generates millions in economic impact through the Sundance Film Festival. Pairing it with the Kimball Art Center — along with retail shops and housing properties that will fill out the neighborhood — will elevate the town's tourism experience.
"There's one more reason you might want to stay one day longer in Park City," he said, adding that the city has a great working relationship with the lodging industry.
Funding the project through a municipal transient-room tax made sense for a number of reasons, Rockwood added. For one, it will allow the city to plan the development based on factors other than how much sales and property tax revenue it can generate. It also means residents won't have to pay for the project, which was an important consideration in light of other local tax increases that have been passed recently or are under consideration, such as a potential Park City School District bond.
Greg Gendron, president of the Park City Area Lodging Association, said Monday that the organization's board won't meet until next week to discuss its formal position on the project. However, members he's spoken to seem intrigued by the opportunities the development could bring, and by the chance to strengthen Park City's relationship with the Sundance Film Festival. But reservations about the tax linger.
"We're optimistic the city's vision is moving in the right direction," he said. "We just want to make sure we're not losing any current competitive advantages we have."
The Park City Council is scheduled to discuss the tax at public meetings Thursday, July 13, as well as July 20.
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