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|February 25, 2021 City Council Regular Meeting|
40. Approval of a Resolution Requesting the Georgia General Assembly Adopt Local Legislation Authorizing the City of Savannah to Adopt the Hotel/Motel Excise Tax under O.C.G.A. 48-13-51(b)
The City of Savannah has a hotel/motel excise tax, which was set at a rate of 6% in 1995, imposed upon every room rented in a hotel, motel, inn, or short-term vacation accommodation within the City of Savannah, pursuant to the provisions of O.C.G.A. §48-13-51(a)(3.2). In 2019, total hotel/motel tax collections in Savannah was $22.6 million. State Law prescribes and restricts how and to which entities this hotel/motel tax revenue is to be distributed. In the City of Savannah, this revenue is currently allocated as follows:
Under the City's current authorization paragraph, O.C.G.A. 48-13-51(a)(3.2), Savannah's hotel/motel tax rate is capped at 6%. In order to increase the rate to 8%, the Georgia General Assembly must approve local legislation authorizing the City to adopt a new tax under provisions of O.C.G.A. 48-13-51(b), an act that then must be signed by the Governor. The proposed resolution in front of City Council would officially request that the Chatham County Legislative Delegation introduce this local legislation to the General Assembly, moving the City of Savannah to this new authorization paragraph.
If approved by the State, City Council would then consider adoption of an ordinance officially setting the hotel/motel tax rate. The resolution would delay increasing the tax rate until January 1, 2022.
Facts and Findings
Should the City move its hotel/motel tax to 8% as authorized by O.C.G.A. 48-13-51(b), State law again prescribes the revenue distribution. Moving to the 8% collection rate would lower the percentage share directed to the City's General Fund, but the dollar amount would remain the same as what was allocated under the 6% rate, as the increase from 6% to 8% would increase overall revenue. The City would gain revenue through a new category of funding, called Tourism Product Development. Both Visit Savannah and the Savannah Convention Center would receive 0.5 percent increases in their shares.
Distribution would be as follows:
State Law defines Tourism Product Development as “creation or expansion of physical attractions which are available and open to the public and which improve destination appeal to visitors, support visitors' experience, and are used by visitors." The law then goes on to narrowly define those allowable projects.
The City would use its hotel/motel tax TPD allocation to fund the following capital projects:
Close to 100 jurisdictions in Georgia have a hotel/motel tax collection rate of 8%, including the City of Atlanta. An analysis of six cities in the Southeast with large tourist economies -- Charleston, Atlanta, Nashville, Charlotte, New Orleans and Asheville -- shows Savannah's total tax and fee burden on hotel rooms is lower than all but one. Increasing the hotel/motel tax rate to 8% would increase the tax bill by $5 on a $250 hotel room in Savannah.
The global pandemic has been devastating on the entire economy, but hotels have been particularly hard hit, with occupancy rates dropping to under 10%. While visitors to Savannah will likely be increasingly price-conscious, it is also true that our community desperately needs aggressive destination marketing to invigorate the economy.
Last year visitors spent an estimated $3.1 billion in Savannah, an amount that effects nearly all segments of our economy. An opportunity exists for Savannah to be bold when other communities are contracting, thus increasing Savannah's share of what will likely be a smaller market in the short term. The increase would also provide the Convention Center additional operating and marketing revenue as it prepares for major expansion. And lastly, it would allow the City of Savannah to make significant investments -- without burdening taxpayers -- that will enhance our community's attractions for all to enjoy, including an overhaul of our waterfront, and development of an urban trail system and the downtown expansion area surrounding the new arena.
Bret Bell, Chief Municipal Operations Officer