AGENDA #5b

MEMORANDUM

TO:                  Mayor and Town Council

FROM:            W. Calvin Horton, Town Manager

SUBJECT:       Use of Hotel/Motel Occupancy Tax Revenues in 2002-2003

DATE:             April 8, 2002

The following report proposes allocations for hotel/motel occupancy tax proceeds for FY 2002-03.

BACKGROUND

The Town currently levies a room occupancy tax of 3% for transient lodging of less than 90 days. The enabling legislation that grants the Town the authority to collect the tax requires that not less than 10% of annual revenues be used for visitor information services and support for cultural events.

In 1995, the Council adopted a non-binding resolution expressing intent to provide $20,000 per year for ten (10) years for purchase of the ArtsCenter's building.

In past years the Council has allocated 15% of all hotel/motel tax receipts to the Chapel Hill/Orange County Visitors Bureau. 

Last year the Council made five hotel/motel funding allocations, which totaled approximately 22% of the projected total of hotel/motel tax proceeds.  All remaining proceeds were allocated to municipal services in general.

The projected total of hotel/motel tax proceeds for FY 2002-03 is $625,000. This compares to the $600,000 currently estimated in FY 2001-02 and $640,000 received in FY 2000-01.

DISCUSSION

Last year, the Council allocated a total of $30,000 to the Chapel Hill Public Arts Commission, with $7,000 from Hotel/Motel Occupancy Tax Revenues and $23,000 from general revenues. We propose that the Council include the full $30,000 allocated to the Town Public Arts Commission from the Hotel/Motel Occupancy Tax Revenues for FY 2002-03.

Unless we receive different guidance from the Council, we plan to develop a recommended budget to include 15% of the projected total revenue to the Visitors Bureau and no change in the amounts proposed to the remaining organizations that were funded last year.

Proposed Hotel/Motel Occupancy Tax Revenues Allocations for FY 2002-03:

      The ArtsCenter                                                                   $ 20,000

      Chapel Hill/Orange County Visitors Bureau             $ 93,750

Chapel Hill Public Arts Commission                                    $ 30,000

      El Pueblo, Inc.                                                                    $   5,000

      North Carolina High School Athletic Association     $ 10,000

      Total (25.4% of projected total of tax revenue)                   $158,750