PERRYSBURG – An additional hotel tax may keep the booming farmers market blooming.
Mayor Tom Mackin is proposing an additional lodging excise tax (hotel tax) of 2%.
This request, which is less than the allowable 3%, would allow for a stable ongoing funding source for the market, public arts, the fireworks, and possibly even more events.
The city issued a news release outlining the proposal on Monday.
Thhe tax will be paid by individuals that stay at lodging facilities.
Once this funding source is acquired, the administration will utilize the city’s procurement process to procure an entity to manage the market and possibly other events.
The administration is also recommending:
1. Consider a slight increase in the cost of obtaining a food truck license. The price has not been increased since it was originally established.
2. Hire a firm to monitor and enforce hotel tax collection from short term rentals.
3. Stabilize support for community events and programs that attract visitors and have a positive economic impact.
4. Evaluate what cost savings could be achieved by performing some functions internally.
Background
The city established the Convention and Visitor’s Bureau in the 1990s and funded the CVB through a hotel tax of 3%. Half of that tax is allocated to the CVB and half to the city’s general fund.
At the time the CVB was developed, there were only a couple hotels in Perrysburg and one of the CVB’s primary focuses was to manage the farmers market. Over time, as new hotels have been added to the city, the CVB’s revenue has increased. With that revenue increase, the CVB has also seen an increase in the scope of its responsibilities beyond managing the market.
The Thursday market has been averaging 60 vendors and 17 food trucks with upwards to 6,000 visitors,
As part of the restarting of the farmers market after COVID, the city created a DORA district to attract more individuals to the market and other community events.
The city saw an increase in costs related to providing safety and services to the market. To keep the burden of the additional costs off residents, in 2022, the city began charging these additional costs back to the entity organizing the event.
These charges were incurred by the entities organizing the farmers market, Winterfest, Fall Fest, Perrysburg homecoming, and Zip the Burg. They were charged for the actual costs incurred by the city in providing safety and services to clean trash, clean the public restroom, and monitor the DORA.
Though the Administration knows that these events are worthwhile to the community, the Administration believes that the entities organizing these events, and the individuals attending these events should bear the burden of paying for the additional services and the costs should not be pushed back onto the resident taxpayer.
For the farmers market, in 2022, the city charged the CVB $10,186 for safety and services. While this increase may not have been initially budgeted for by the CVB, it is necessary to note that the CVB’s budgeted revenue in 2022 was $250,000, while its actual revenue in 2022 was $367,368, which is an increase in revenue of $117,368.
This year, the market has continued to be a success. The city anticipates that the cost of providing services and safety to support the event will be $16,196. The CVB’s expected revenue for 2023 is on track to exceed its approved budget by over $60,000.
Current Situation
In November, the CVB voted to discontinue managing the farmers market. That vote was amended to continue to manage the event through 2023, while attempting to find another entity to manage the event.
Even though the CVB was unable to recommend to the city another entity to manage the event, in June, the CVB affirmed its decision to stop managing the market after the 2023 season.
The CVB then submitted an offer to contract with the city to provide management services for the farmers market and certain other community events for a term of 5 years. In this offer, the CVB requested their portion of the hotel tax be raised by 20% and all charges associated with safety and services provided by the city be waived.
The proposed agreement has an annual cost to the city of $167,000. Conservatively, the approximate total value of the five-year agreement would be at least $750,000, with an additional waiver of at least $85,000 of cost incurred by the city.
In addition to moving away from managing the market, the CVB has also withdrawn financial support and sponsorships for other events.
The CVB notified the city that it would no longer sponsor or manage the Sculpture Walk at Woodlands Park or contribute toward Perrysburg’s share of paying for the July 4th fireworks.
The city assumed the cost of the Sculpture Walk, $16,450, and fireworks, $24,375, using the general fund.
While appropriate to ensure these events continued in 2023, paying for these events from the general fund shifts the burden of these events onto just the Perrysburg residents, not to all those who benefit from them. The administration does not believe that this is a viable long-term solution for funding these events.
The CVB’s proposal, which requires additional funds to be diverted from the general fund instead of from utilizing funds previously allocated to the CVB, has prompted the administration to evaluate how to move forward in the best interest of the city and its residents and businesses, while staying consistent with state and local laws.
Due to the estimated cost of providing the services offered by the CVB being over $50,000, the city must procure the services through a formal competitive process. Unfortunately, that means that the city is unable to accept the CVB’s proposal. The city has notified the CVB of that decision.
City’s Solution
The administration is requesting that the city assess an additional 2% tax on individuals staying at a hotel in Perrysburg.
In utilizing the estimate of costs provided by the CVB, the cost associated with managing the market and other community events, including the costs that were requested to be waived, is approximately $167,000 annually.
If the city also includes the costs of the July 4th fireworks and the Sculpture Walk at Woodlands Park, the total cost of maintaining those services is over $200,000 annually. The current 3% hotel tax does not provide sufficient funds to support these events without placing an additional burden on the residents and businesses.
The administration believes that a slight, 2% increase in the hotel tax, would collect sufficient funds to support public art, the m arket, the fireworks and possibly other community events without reducing the amount of funds available to provide police, fire, recreation and other services.
The administration is recommending 2% even though it has the authority to recommend an increase of 3%.
At 2%, the tax paid by the individual staying at a hotel in Perrysburg would increase by $2.50, if the hotel charged $125/night; $3, if the rate is $150/night; and $3.50, if the rate is $175/night.
Having a stable, sustainable funding source will also help address uncertainty that has been created by the city assessing costs for safety and service and the CVB withdrawing support of local community events.
Events like Downtown Perrysburg Inc.’s Zip the Burg and Winterfest and the chamber’s fall Homecoming Festival may receive additional benefit from the increased tax.
Next Steps
The proposal be reviewed by council’s finance committee and then moved forward to the entire council at the Aug. 15 meeting for a first reading.
The proposal can then be voted on at the first meeting in September after its second reading.
Tangential Issues
Food trucks have been a huge success at the farmers market. The cost of obtaining a license to operate in the city has not increased since the original rate of $100 per year was established in 2017. The administration asks council to consider whether that rate should be increased.
The CVB has pointed out that some house rentals are not paying the applicable tax. The administration has reviewed this matter and believes that the city should retain a firm to enforce the collection. The company would be paid from the taxes it helps the city collect.
 of 2%.){kind=link}