Public hearing set for hotel-funded Providence tourism district

CITY OFFICIALS are considering tourism improvement district funded by a 2% assessment on all lodging revenue from hotels, including the Graduate Providence shown above. /PBN FILE PHOTO MARY MACDONALD

PROVIDENCE – The city finance committee on Tuesday set a public hearing on a proposal to create a special district to raise revenue in support of the city’s tourism and hospitality industry.

The Providence Tourism Improvement District, if enacted, would be funded by a 2% assessment on all lodging revenue from hotels with 50 or more rooms “existing and in the future” within the city limits. A public hearing on the ordinance will be held by the finance committee on Dec. 12 and requires approval by the City Council before final adoption, according to council spokesperson Parker Gavigan.

With the passage of the Tourism Improvement Districts Act by the General Assembly back in May, sponsored by Rep. Lauren Carson, D-Newport, Rhode Island became the first state to pass enabling legislation establishing tourism improvement districts this year, following similar legislation enacted in 2021 by Massachusetts, Virginia and Louisiana. The law allows for the creation of special tourism districts in all Rhode Island municipalities “upon submission of a successful petition of the assessed business owners located within the boundaries of the district,” and requires 60% of impacted business owners to sign on in support.

The state legislation mandates the designation of a nonprofit corporation, in this case the Providence Warwick Convention & Visitors Bureau, which is lobbying for the ordinance, and who “shall create a committee composed of a majority of assessed business owners, or their authorized representatives … charged with managing the funds raised by the PTID and fulfilling the obligations of the plan.”

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Kristen Adamo, PWCVB CEO and president, says that if approved, the improvement district will not only double the bureau’s annual budget, but it will proportionally boost the tourism marketing resources needed to attract more visitors to regional hotels that surrounding businesses rely upon.

The bureau is also in the early stages of establishing an identical district in Warwick, Adamo said.

The resolution states that hotel operators may pass the 2% cost to customers at their discretion, but the assessment “must be disclosed in advance and separately stated from the amount of rent charged and any other applicable taxes.”

Adamo pushed back against any notion that this was a tax.

“This is hotels saying [they] need money and we can’t go to the taxpayers, so we are going to assess ourselves,” she said. “This is a great way to let the industry help itself.”

According to Adamo, similar initiatives in other cities have resulted in increased tax revenue to municipal coffers, such as in Boston, whose hotel tax revenue is projected to increase by $30 million in 2022.

A chart included in committee documents provides a list of hotels that support the measure, making up close to 90% of the city’s total 2,556 room count.

The assessments will form the annual PTID budget, which is projected to be approximately $1.6 million in the first year “with a similar budget … expected to apply to subsequent years but [may] fluctuate as room sales do,” according to a budget document accompanying the resolution.

The collected revenue will “pay for marketing [and] advertising programs, sales programs, opportunity funding, and related administration and operations fees,” according to the resolution, with 3% paid to the city for collection and enforcement.

The resolution establishes an initial five-year term beginning on Feb. 1, 2023, with payments collected monthly. The district can be dissolved after two years, and during a 30-day period each year thereafter, if 60% of participating businesses subject to the assessment formally object.

But Adamo envisions widescale support. She says the feedback from hotel owners to date has been positive.

“This benefits the taxpayer because we will be bringing in more hotel tax revenue,” she said.

(Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com)

 

 

 

 

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