County council discussion focuses on allowed uses for transient room taxes
by Molly Marcello
The Times-Independent
Apr 20, 2017 | 1532 views | 0 0 comments | 117 117 recommendations | email to a friend | print

To dispel some concerns and confusion, the Grand County Council re-opened a discussion this week regarding the legal uses of transient room tax (TRT), which raises millions in local revenue each year.

While a portion of the tax, levied on overnight rentals, must be used for tourism promotion, another portion can, and is, used to mitigate the impacts of tourism on the local community.

Council member Chris Baird broached the discussion April 18, saying he hoped to clear up confusion among fellow council members and citizens regarding the complicated state code associated with TRT.

“I get a lot of questions from citizens about why we don’t use TRT for lots of different things that are needs in the community,” Baird said. “I think it’s worth understanding that the law restricts the way we can spend that money.”

Under TRT, a 4.25 percent tax is levied on overnight rentals. According to state law, two-thirds of 3 percent — about 60 percent of the 4.25 percent tax — must be used to establish and promote tourism, film, and conventions. In Grand County, that money goes to the Moab Area Travel Council for tourism promotion and operations.

The other one-third of that 3 percent, along with the remaining 1.25 percent of the tax monies, may fund services that “mitigate the impacts of recreation, tourism or conventions.” State code lists solid waste disposal, emergency medical services, search and rescue and law enforcement as approved uses of such TRT revenues.

The county has also allocated some TRT money for its affordable housing set-aside fund, which is now at $40,000. Although not specifically spelled out in state code, the previous council considered the lack of affordable housing to be an impact of the tourism economy.

“The big question we’ve had over the last couple years, is [rationalizing] putting that money into an affordable housing line item,” Baird said.

Council member Evan Clapper said there are other impacts beyond those listed in state code that could be eligible for TRT revenue.

“I feel like there’s more impacts from tourism that affect our community than what’s specifically mentioned in the legislation,” Clapper said. “... Hopefully there will be some other things that we could look at mitigating the effects of tourism in a way that we can continue to keep our residents’ property taxes low and offset general fund costs.”

But council member Greg Halliday told The Times-Independent he has concerns about using the TRT revenue for issues like affordable housing because it may violate state law.

“I understand trying to figure out a way to help with affordable housing but I’m not comfortable without having a legal review coming back saying that it’s okay,” Halliday said.

Although he said there is a “fair argument” that the state’s TRT list is not exclusive or exhaustive, Grand County Attorney Andrew Fitzgerald suggested a legal memo to justify the county’s position allocating the revenue to entities like affordable housing.

“Sometimes when you’re a little nervous about going in an area where it doesn’t specifically say, it’s good to have a legal memo justifying [that decision], something where you have stats to back it up,” Fitzgerald said.

Council members said that an upcoming economic nexus study – likely funded by both Grand County and Moab City – may identify hard data showing how tourism affects affordable housing, becoming the legal justification they need.

“It’s a complex piece,” Clapper said of the TRT discussion. “All of the conversations around it are helpful.”

Moab Area Travel Council Executive Director Elaine Gizler also acknowledged the complications and misunderstandings surrounding TRT. Gizler said her office plans to get information out to the community soon about how the tax is used locally.

“It’s really about education,” Gizler said. “We’re preparing an ad that really spells out what happened last year, and how the funds were allocated.”

According to council member Mary McGann, the county council and the travel council necessarily have different jobs when it comes to TRT revenue.

“Our job as a council is to spend the money as wisely as possible to help the citizens of Grand County. The job of the travel council is to promote Grand County,” McGann said. “For us to be in competition for some of the same pool [of money] is part of the process, part of the checks and balances.”

Gizler acknowledged the severe “growing pains” of the local tourism economy, including challenges related to infrastructure. However, she said she is optimistic that the tourism industry can really be a “stepping stone” to greater economic diversity.

“We have tourism right now, but other [industries] will be coming,” Gizler said. “Yes, it’s difficult. We have some challenges, but [tourism] can open up some doors ... I look at everything we do from this office as tourism and economic development.”

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