June 22, 2005 - Members of the local hotel and resort industry, as well as some residents, are concerned about how Oro Valley will spend an additional bed tax the council recently approved.

At its June 15 meeting, the council unanimously OK'd raising the tax on lodging from 3 percent to 6 percent. The increase will go into effect Feb. 1 to coincide with an expected increase of the tax in Pima County.

Oro Valley last increased its bed tax in 2000, when it went from 1 percent to 3 percent. That increase was to provide additional funding for the proposed development of a Ritz-Carlton resort in Stone Canyon.

Councilman Terry Parish asked that an increase in the tax be investigated by town staff and discussed by the town council because he said he sees it as a way to bring new revenue into the town, revenue that is not collected from its residents, which will "help the town attract quality businesses and help the hotel businesses here be successful." Based on bed taxes brought in by the town, now, the staff estimates the increase will generate an additional $475,000 annually.

At the request of Parish and Councilwoman Helen Dankwerth, meetings were held between the town and several area resort and tourism representatives to discuss a possible tax increase.

A proposal was brought before the council on June 15 recommending splitting the total bed tax among four areas. One and a half percent, or an estimated $237,500, will go to the Metropolitan Tucson Convention and Visitor's Bureau for tourism promotion; 2 percent, or $316,667, will go toward fulfilling an economic development agreement with the Tucson Hilton El Conquistador Golf & Tennis Resort; 1 percent, or $158,333, will go to the town's economic development department to be used for marketing; and the remaining 1.5 percent will go toward developing the Naranja Town Site, a 213-acre regional park site in the town.

Tim Booth, general manager of the Tucson Hilton El Conquistador, the only large resort located in Oro Valley, said using the money raised from the tax to support tourism is important to him.

"Tourism is the lifeblood of this community," he said, urging the council not to rush into a decision to appropriate the funds.

He also asked the council to "use caution" in approving the increase.

"Do it in a way that does not put us in a competitive disadvantage," he said, adding that the timing of the increase is critical to his business, because if the tax in Oro Valley is higher than in surrounding areas, he will lose business. He said professional meeting planners, for example, look at that difference in taxes among communities when deciding where to schedule big meetings and conventions.

Jonathan Walker of the Metropolitan Tucson Convention and Visitor's Bureau, said the bureau also supports the bed tax increase, if the increase is going to support tourism. He said millions of dollars are spent at the Hilton each year by tourists and the bureau has had "a long and prosperous relationship" with the resort.

"Tourism is a big part of this community," he said.

Representing the Northern Pima County Chamber of Commerce, Jeff Jones echoed some of Booth's concerns. He said that, while the chamber has taken no position on raising the bed tax, he encouraged the council to listen to the chamber members, which include the local hotels and resorts. He also said the chamber is concerned about the council setting a one-year limit for how the money is spent and wanted to know how the funds set aside to fulfill the town's economic development commitment with the Hilton would be spent once that agreement expires in August 2011.

Jones also questioned whether using the tax to support the Naranja Town Site development is appropriate.

Tom Tracy, representing the Southern Arizona Lodging and Resort Association, said the organization supports the town raising the tax and applauded the inclusion of funding for regional tourism in the plan presented to the town council. He also encouraged the town to use bed tax money to continue to support the tourism industry, saying that SALARA "would be delighted to have Oro Valley be a tourism community."

A handful of residents spoke with concern about how the money would be spent, as well.

Cheryl Smith said that, while she supports the tax increase, she wants the money generated "to be kept in Oro Valley" to pay for parks, including the Naranja Town Site, and the Greater Oro Valley Arts Council.

Art Segal, another resident, agreed, asking the council not to be influenced by those in the resort business, who he said have a vested interest in the money being spent on regional tourism.

Richard Feinberg said he believes the hotels in Oro Valley pay for their own advertising and he does not see why the town should put up additional money to support their business.

"We need to use the money to build a project so tourists will be attracted to come here," he said. "Most tourists who come and stay here now spend their money in Tucson."

Feinberg, who ran for office last year, read quotes from the five new council members, Kenneth "K.C." Carter, Conny Culver, Dankwerth, Barry Gillaspie and Parish, who, during their campaigns, said they wished to support preserving historic areas such as the Steam Pump Ranch and building the Naranja Town Site. Vice Mayor Gillaspie said all the comments heard by the council were valid, but he encouraged everyone, no matter where they stand on the issue, to remember "it takes money to make money."

"All the money is earmarked to target sustained, enhanced tourism," he said.

Gillaspie said he believes it is time for the town to "start making a statement" publicly, and through action, that it wants to be a center for tourism. He said the town's General Plan has stated as much for years, and he believes it is "time to start putting our money where our mouth is."

Although the bed tax increase was approved, how the money will be spent was a decision that was postponed until the council can meet in a study session to discuss it further.

Dankwerth, in making the motion to continue, said she believes there are many deserving projects to be funded and deciding how the money will be dispersed needs more consideration.

Parish said he thinks the way the economic development department has broken down the allocations "is very fair" and he was opposed to waiting on making a decision.

He said the June 15 meeting was set as a public hearing to give anyone interested an opportunity to discuss how the money will be spent, and he disagreed with Councilwoman Paula Abbott who wanted to hold off on making any decision to get more community input.

The motion to continue approval of how the money will be spent was approved 4 to 3, with Parish, Gillaspie and Culver opposed.

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