Council decides how to divvy up bed tax - Tucson Local Media: Import

Council decides how to divvy up bed tax

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Posted: Tuesday, September 6, 2005 11:00 pm

August 31, 2005 - Despite objections from several members of the community and the council, the Oro Valley town council has reached a decision on how to spend money expected to be generated by an increased bed tax.

At its Aug. 24 meeting, the majority of the council decided to stick with the plan proposed by Councilman Terry Parish to use the money from the increase to support both regional and local tourism promotion, economic development and the town's parks, both current and future.

The council unanimously voted to increase the tax collected from stays at its hotels and resorts from 3 percent to 6 percent earlier this year. The increase is expected to generate about $450,000 annually, according to town finance staff estimations.

Under Parish's proposal, a majority of the bed tax revenue would continue to go into the tourism industry, fulfilling the rest of an economic development agreement with the Tucson Hilton El Conquistador Golf & Tennis Resort, which gets a 2-percent tax rebate through August of 2011. One percent of the revenue will go to the Metropolitan Tucson Convention and Visitors Bureau to help it continue to promote the entire region as a tourist destination.

The rest of the money will be distributed between two programs in the town that Parish said are vital to the future of Oro Valley.

Under his plan, 1.5 percent of the tax will go toward funding the development of the Naranja Town Site, a 200-acre regional park site that the town owns but does not now have the funding to build and maintain.

The remaining percentage of the tax will go to Oro Valley's economic development department to increase its marketing efforts.

One half percent of the tax will be earmarked for the town's parks and recreation department to help it maintain the town's existing parks. Parish said it seems that the town's parks department is often one of the last to get funding and this additional money should provide a dedicated source of revenue.

Both the economic development department and the parks and recreation department are expected to bring prioritized lists of how the money will be spent before the council for approval.

The final proposal was adopted by the town council at the Aug. 24 meeting by a 4-2 vote.

Councilman Kenneth "K.C." Carter and Councilwoman Paula Abbott objected to the proposal, both wanting to rework the numbers so more money would go toward the parks and recreation department and the completion of the Naranja Town Site.

Carter also opposed the proposal because, he said, he thinks it is bad business for the town to promise a fixed percentage of the money to various interests and thinks the town instead should have placed caps on the amount given to each of the areas listed in the proposal. He said as the town continues to bring in new hotels there will be more money generated by the tax and he thinks that if a percentage is used to determine how the money is divvied up too much money could end up being spent on promotions and marketing.

He wanted the council to look at the bed tax allocations again as early as June to see how much was actually being doled out.

Parish said the money levied from the increased tax "will not be nearly enough to fund the Naranja Town Site," which is why he did not propose using it that way. And a majority of the council members agreed that waiting until 2007 to take another look at the allocations would give the council more data to examine than if they looked at it six months after the changes were put into effect.

A handful of residents, including several members of the political committee Stop Oro Valley Outrageous Giveaways, a group opposed to several tax sharing incentives on the books in the town, spoke against the proposed allocation of funds, saying that sending money to regional agencies may not be the best way to promote the town and that the money should be limited to projects that are specific to Oro Valley. Several of the members also criticized the tax-sharing agreement in place with the Tucson Hilton El Conquistador Golf & Tennis Resort, saying the privately owned company should be able to promote itself without the use of public dollars.

One resident in particular, Chris DiSimone, spoke harshly of the Metropolitan Tucson Convention and Visitor's Bureau saying that he had done business with the agency and had been disappointed and he did not believe the town should be contributing to it.

"To give any more money to this underperforming organization is a disservice to Oro Valley," he said.

But the majority of the council members disagreed with this point of view. Gillaspie called the agreement with the Hilton an investment in the community, not a "giveaway," because of the business it generates within the town.

Tim Booth, general manager of the Hilton, said $360,000 that comes to the hotel in bed tax generates about $750,000 in sales taxes that go back to the town each year. Booth also defended the visitor's bureau, saying the agency is well respected both locally and across the nation.

In other business:

* The town disbanded its economic development think tank after accepting its final recommendations.

The group was composed of 11 members, representing various businesses and industries and including several "citizens at large."

The members of the group were thanked by the mayor and council for their eight months of work to examine the town's economic development policies and procedures.

The council will review the recommendations at its Sept. 28 meeting and decide at that time which, if any, of the suggestions it will move to put into effect.

Although the think tank will no longer meet, its members agreed that issues of economic development and sustainability should continue to be discussed and so recommended that the town form an economic development advisory committee to be appointed by the council in the same way other committees are appointed.

The recommendations of the think tank also include the continued use and expansion of the existing incentive policies; the creation of a small business advisory council; an expansion of the town's ombudsman efforts; and the annexation of specific properties, including the Westward Look Resort, the Omni Tucson National Golf Resort & Spa, the Foothills Mall and the state lands to the north and west of the town. The town is pursuing the annexation of the Westward Look, after being asked to initiate the procedure by resort representatives.

The think tank members also want the council to consider several new revenue sources that could address the town's financial health. One suggested option, a bed tax increase, already has been approved by the council. Another, a 4-percent utility tax, is expected to be discussed by the council in the coming weeks. Other recommendations include a 4-percent telecommunications sales tax, a project-specific secondary property tax, as is being proposed to construct the Naranja Town Site, and the creation of franchise agreements with Tucson Electric Power and Southwest Gas Corporation.

* The town will begin planning the new municipal service center that for years was a source of contention for the town, first for neighbors who wanted the site moved from a West Calle Concordia residential neighborhood and then by a local home-building company that owned land that was being condemned so the town could build the center on the property.

But town officials say the controversies have been laid to rest and they are ready to move forward with the multimillion dollar project.

The 24-acre site is in Rancho Vistoso, south of Rancho Vistoso Boulevard and east of Innovation Park Drive.

In the 2005-06 budget, $6 million is allocated to purchasing the land and beginning construction on the site, according to the town's Finance Director David Andrews.

Andrews said that the town plans to do a master plan of the site and that some buildings will be constructed as soon as possible but that there will be land left to build on in the future.

In June, the town council asked the town staff to prepare a scope of work for a consultant to be hired to plan the future site construction.

The first step in the project will be to master plan the site and then to move all of the public works and water utility operations from the Calle Concordia location.

In the future, the staff involved in developing the scope of this project suggested the town consider building additional facilities on the site for the public works department, including a vehicle repair and maintenance area, offices for the engineering division's design section, offices for the traffic engineering division and offices for the storm water division of the town. Staff also suggested that the administration and engineering offices of the water utility be relocated to the new site from the current La Cañada location.

Also included in a list of future possible uses at the service center are a slew of uses for the police department, ranging from training facilities and classrooms to weight training areas, weapons storage, a firing range, a substation, an impound lot and a crime lab. Police Chief Danny Sharp said Oro Valley is being considered as the possible location of a Southern Arizona Crime Lab, a project that would be complete through a partnership with the town and the Arizona Department of Public Safety. There is no DPS crime lab in Southern Arizona and one is needed to speed up evidence processing, Sharp said.

The master plan will address the immediate needs of the public works, water utility, transit and police departments, but the council has asked that the consultant hired to do the work also look at the town's general plan and its projected needs for all town departments to determine if any other operation should be moved to the new site.

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