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Will a Tourism Improvement District Boost Local Business?

Industry leaders say the tax increase would provide economic growth – but is it enough equalize its financial impact?

 

The city of Sonoma is reliant on the tourism industry to bring in tax revenue and provide jobs, especially in these economically uncertain times.

That's why, for the past few months, the city has been debating plans to create a Tourism Improvement District (TID) to assure a steady flow of cash to pay marketing initiatives – which industry leaders say are crucial for drawing tourists into town.

To create a TID, the city would add an extra 2 percent charge to the transient occupancy tax – a, currently, 10 percent tax added to the price of any lodging, including hotels, bed and breakfasts, inns and vacation rentals. It's estimated to produce about $440,000 each year, which would be spent according to the desires of the businesses who pay into the fund, on marketing and publicity.

Business owners argue that the tax is necessary considering the economic peril facing Sonoma's main marketing initiative: the . The Bureau stands to loose the $218,000 provided by redevelopment funds, if the state Supreme Court upholds the dissolution of redevelopment funds.

Creating a TID would "provide a mechanism for a strong and sustainable marketing program for tourism promotion, and to alleviate the funding uncertainty for the Sonoma Valley Visitors Bureau," according to city documents. The report also said that local residents will not face the economic impact of the tax, since they're unlikely to rent a room in town.

But it's difficult to assess how much of an economic advantage the tax will provide to residents who don't work in the hotel industry. A staff report estimates that, to equalize the tax revenue given to the TID, hotel income would need to increase by $4,660,000 – an aspirational sum, to say the least.

If the City Council moves forward with plans, they'll first have to adopt a resolution of intention and set up a public hearing, to consider the varying costs of the assessments. The city can approve the creation of a TID for one through five years; it would begin on July 1.

The Sonoma City Council meets Monday, April 2 at the Community Meeting Room at the . The open meeting begins at 6 p.m.; the council meets in closed session starting at 5:30 p.m. View the full meeting agenda, at right.

Irene Morgan April 02, 2012 at 10:38 PM
Like it or not, tourism does help Sonoma. And looking at the figures, the residents will gain from a Tourism Improvement District.
Suzanne Barbara April 02, 2012 at 11:36 PM
The tax is basically an occupancy tax so it should not affect those of us who actually live in Sonoma. And most tourists do not consider taxes when the rent a room.
Albert David April 03, 2012 at 12:45 AM
Tourism is a basic industry in Sonoma and an important part of our local economy. The Tourism Improvement District should be good for us.

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