Port Angeles approves lodging tax expenditures

PORT ANGELES — A unanimous Port Angeles City Council has approved $827,000 in lodging tax spending to put heads in beds next year.

A 6-1 majority of the council then voted Tuesday to direct the Lodging Tax Advisory Committee to consider other capital projects for 2018.

“It’s just a recommendation,” said Councilwoman Sissi Bruch, who moved to reconvene the Lodging Tax Advisory Committee after an hourlong council debate.

“We are not tying their hands. We are asking them to please look at these [spending requests], review them and then decide.”

Lodging tax revenue supports marketing efforts or capital projects that put “heads in beds” by encouraging overnight stays for those traveling at least 50 miles, city officials said.

The hotel-motel tax fund is supported by a 4 percent consumer tax on stays at Port Angeles lodging establishments. The tax is taken as a credit against the 6.5 percent state sales tax.

The city received more than $1.03 million in funding requests for 2018 projects.

Of the $827,000 that was awarded, an estimated $248,700 will come from lodging tax fund reserves.

“The state Legislature has been sweeping funds from accounts such as this, so we were recommended to utilize those reserves for our city’s needs at this time,” said Deputy Mayor Cherie Kidd, who chairs the Lodging Tax Advisory Committee.

The lodging tax committee recommended Oct. 12 — and the council approved Tuesday — $577,000 in operational expenditures and $250,000 in capital spending.

Bruch and Councilman Lee Whetham complained that capital spending had been reduced to about 30 percent of the total despite a council directive to invest in infrastructure that benefits visitors and city residents alike.

“We wanted to make sure that our capital expenditures in proportion to the marketing expenditures were higher,” Bruch said.

City Manager Dan McKeen said the council could not reach a consensus in a recent work session on lodging tax spending proportions.

“The only policy that we received an actual consensus on was to ensure that staff recouped the costs of administering the different programs under the lodging tax funding,” McKeen said.

Whetham maintained the council agreed to reinvest in tourism-related capital projects, which were slashed from city budgets in 2015 and 2016.

“We agreed to go by past Mayor Glenn Wiggins’ assessment of how the percentages were spent,” Whetham said.

“We’ve slipped back to our ’15 and ’16 levels as far as percentages go.”

Here is a list of the approved lodging tax spending (with requests in parenthesis) for 2018:

• $230,000 for marketing ($257,985 requested).

• $100,000 for Civic Field improvements ($150,000).

• $100,000 for directional information signs, or wayfinding ($100,000).

• $85,000 for events ($70,000).

• $74,600 for the Port Angeles Visitors Center ($74,600).

• $72,000 for recreation and sports fields ($80,000).

• $50,000 for BMX track development ($51,391).

• $38,000 for city priority setting ($38,000).

• $30,000 for the Port Angeles Fine Arts Center ($50,000).

• $26,000 for the tourism commission ($28,000).

• $19,900 for debt service transfer ($19,900).

• $1,500 for contingency ($1,500).

Here are the proposals that were denied for lodging tax funding:

• Heritage tourism signs — the funding was moved to wayfinding ($43,000).

• Port Angeles art tours ($29,930).

• Downtown inventory and historical designation ($20,000).

• Farm tours — the funding was moved to event grants ($4,480).

• Clallam Transit Strait Shot marketing ($1,750).

While several council members agreed a greater percentage should be spent on capital, a majority said they could not support Bruch’s initial suggestion that the committee fund another $50,000 for Civic Field and $50,000 for wayfinding.

“I don’t believe this is legal,” Kidd said.

“The state Legislature sets up the rules for the lodging tax. The City Council is not allowed to make these kind of changes.”

State law requires that the Lodging Tax Advisory Committee have 45 days to review new recommendations for hotel-motel tax spending, city officials said.

Sean Coleman, operator of the city-owned BMX track at Lincoln Park, said a 45-day delay could hamper efforts to install a new gate at the reconfigured track before the racing season begins in April.

“It will be top gates in the state, which will attract even more riders that will want to come ride,” Coleman told the council.

“If we have a winter like we did last year, it’s going to be a time crunch.”

Port Angeles Parks and Recreation Director Corey Delikat said the BMX track proponents would match the $50,000 from the city with volunteer labor and equipment as they continue to build a “world-class facility.”

The full council approved the lodging tax spending as proposed.

Councilman Brad Collins suggested that Bruch refine her motion by removing dollar amounts.

“You’re sending the message back to the lodging tax committee that you want to look at additional capital projects,” Collins said. “Just leave it at that.”

Kidd voted no on Bruch’s amended motion. The council action is subject to a review by the city attorney.

“This won’t even happen until next year,” Kidd said. “Secondly, I’m not sure it’s legal.

“Thirdly, we should be happy to take it under advisement, but I think the motion is superfluous at this time.”

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Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 56450, or at rollikainen@peninsula dailynews.com.