Williamsburg City Council is considering the establishment of a Tourism Development Fund (TDF). The proposed program is modeled after other tourist destinations across the United States including Asheville and Virginia Beach. The program is designed to operate as a grant fund with a committee who will review applications for funding and make recommendations for Council approval. Projects are intended to be tourism-based. This means that a new convention center, a new festival, the Capital Trail extension, park greenways, an expanded theater program, or even downtown lighting enhancements could be considered for a grant award. The fund is not intended for projects such as a new tire store, a water line replacement, or a new office building. The drafted policy states the purpose of the fund as:
“The purpose of the Tourism Development Fund (TDF) is to increase patronage to restaurants, attractions, hotels, and events in the City of Williamsburg through financial assistance and reinvestment in tourism products, place-making projects, special events, public-private partnerships, and destination marketing.”
HOW IT WORKS
The intention of the program is to provide a mechanism for both public and private investment in tourism infrastructure throughout the City of Williamsburg. This investment can be in new projects or in expansion of existing assets. This investment must be designed to increase visitation at area hotels, attractions and restaurants.
Competitive markets are investing approximately $4 million in these types of projects. Here are some city revenue streams and the corresponding amount generated (approximate) for each 1% increase:
Property Tax = 1 penny increase $185,000
Meals Tax = $1,300,000
Lodging Tax = $660,000
Sales tax is limited by the Commonwealth to only 1%. Therefore, it cannot be included in our list without action by the General Assembly. The Commonwealth of Virginia empowers Virginia localities to enact a tax on admissions. This means a tax can be placed on tickets to things like concerts, tours, movies, shows and museums. We estimate that if this tax were enacted every 1% would generate $314,000. If we add an admissions tax and remove sales taxes the list looks like:
Property Tax = $105,000 or for each 1 penny increase $185,000
Meals Tax = $1,400,000
Lodging Tax = $660,000
Admissions = $314,000
As you can see no one revenue stream can or should be expected to support such a funding need.
These are all taxes that the City of Williamsburg can collect. Where they differ is who pays them. The majority of meals, lodging and admissions taxes are paid by visitors to our community. However, the real property tax is paid exclusively by property owners.
The proposed revenue generators to create the TDF include meals, lodging and admission taxes. Several scenarios have been proposed with one goal, reaching the competitive investment amount of $4 million annually.
WHERE DO WE GO FROM HERE?
City Council will, over the next few weeks, continue to evaluate this proposal and work toward a policy and revenue plan that is broadly supported. Ultimately, support exists for renewed tourism investment and for increased visitation. How to fund that investment and who decides which projects are suitable for funding remain to be decided.