Part I: Fundamentals of Georgia Hotel-Motel Excise Tax for Georgia’s City Leaders

September 16, 2020 Tyler Reinagel, Ph.D.

Director of Planning and Research Georgia Department of Community Affairs www.dca.ga.gov [email protected] 404-679-4996 DCA Office of Planning and Research

- Planning - Mapping - Local Comprehensive Plans - Annexation reporting and Plan Updates - [email protected] - Service Delivery Strategies - Research - Capital Improvement - Government Management Elements Indicators (GOMI) Survey - PlanFirst Program - Report of Local Government - Community Planning Finance (RLGF) Institute - Local Government Contacts - Annexation Arbitration Database - [email protected] - Debt Issuance - Geospatial Information Office - Local Government Wage and (affiliated program) Salary Survey - Keep Georgia Beautiful - Local Authority Registration Foundation (affiliated program) and Financial Reporting - Hotel-Motel Excise Tax - [email protected] Background Authorizations, History, and Changes MARTA LOST MOST SPLOST Sales-Use TSPLOST The 4% State Tax E-LOST 6.0%-8.9% HOST Lodging Receipt Base Hotel/Motel Rate State Hotel- Local Hotel- Motel Fee Motel $5 Per Excise Tax Room/Per 2.0%-8.0% Night Hotel-Motel Tax in Georgia HB 1168 reduced The first tax the number of imposition in the authorizations for DCA records is newly adopted Brunswick, which 2008 HMT or changes adopted the 3% in existing HMT to 1975 tax in December three (3) options 1976

HB248 in the By 2008 there 1975 legislative 1976 were 24 different session first Now authorization permitted counties and paragraphs and municipalities to rates available to impose a hotel- local governments motel tax of no wanting to impose more than 3% a Hotel-Motel Tax Current Authorization Paragraphs Hotel-Motel Tax Law addressed in OCGA Title 48, Chapter 13, Article 3 (Ch. 13 Paragraphs 50-56)

1-3% O.C.G.A. § 48-13-51(a)1

Hotel-Motel Tax 5% O.C.G.A. § 48-13-51(a)3 Authorization Paragraphs 6-8% O.C.G.A. § 48-13-51(b) *Requires act of General Assembly The “Grandfathered” Authorizations

• 46 of the 281 jurisdictions with a HMT are “grandfathered” in one of 17 now-retired authorization paragraphs in OCGA 48-13-51(a) • Tax ordinances that were in use prior to the 2008 code change remained as-is. • Rates range from 2%-8% and have different and unique restrictions on spending • If your jurisdiction is one of these, be in touch with us for specific information about your restricted spending, and your city/county attorney for legal direction The “Grandfathered” Authorizations Updated as of August 2020 HMT Rates Across Georgia

HMT Tax Rate Number of Local Governments 2% 1 3% 21 5% 112 6% 23 7% 21 8% 103 As of August 2020 281 By the Numbers (FY18)

Statewide HMT Revenues $350,000,000 $284.3M 279 in reported HMT collections of Georgia’s 689 local $300,000,000 statewide governments had a HMT

$250,000,000

$200,000,000 $27.5M $88.9M in restricted funds for either in restricted funds for the $150,000,000 Tourism Product Development promotion of tourism, of additional promotion conventions and trade shows $100,000,000 $50,000,000 9.4% 71% $- of jurisdictions saw growth from FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 compound annual growth rate from FY11-FY18 FY17-FY18 The Role of DCA

Repository Reporting Reminder Submit all ordinances All reporting is web- Communication of due and enabling legislation based as of 2016 dates and requirements to DCA

Compliance PRB Logistics Track reporting Convene the Assist local compliance, though no Performance Review governments with auditing or review Board annually to questions, though not review bona fide HMT with legal guidance complaints Discussing your Jurisdiction’s HMT

1. Know your authorization paragraph or the authorization paragraph you’d like to adopt. This is essential to know the specific rate, restrictions, and other potential requirements 2. Stay in communication with the DCA Office of Research regarding resolutions, ordinances, effective dates, and other “nuts and bolts” issues regarding the imposition of a hotel-motel tax 3. Be sure to consult with the city, county, or consolidated government attorney, as DCA cannot provide legal guidance or directives 4. Maintain stakeholder engagement (Elected Council/Commission members, CFO/CPA Firm, Regional Commission, Chamber/CVB/Other Tourism Contractor, Innkeepers/Lodging entities) Mechanics of TCT Restricted Spending Funds restricted to “Promotion of Tourism, Conventions, and Trade Shows, in communities with a tax of 5% and higher Defining the Restrictions- Purpose

Promotion of Tourism, • Depending on the authorization Conventions, and Trade Shows paragraph, a percentage of revenue goes toward restricted spending (TCT) • Always a percentage, not a fixed “Planning, conducting, or amount participating in programs of • Expended by the Destination information and publicity designed Marketing Organization (DMO) to attract or advertise tourism, conventions, or trade shows.” O.C.G.A. § 48-13-50.2 Defining the Restrictions- Recipient

Destination Marketing • Primary responsibilities are to Organization (DMO) “encourage travelers to visit their destinations, encourage meetings and “A private sector non-profit expositions in the area, and provide organization or other private entity visitor assistance and support as which is exempt…under Section needed.” 501(c)(6) of the IRS Code of • Can be a Chamber of Commerce, 1986” CVB, Regional Travel Association, or other private group, so long as it is a O.C.G.A. § 48-13-50.2 tax-exempt 501(c)(6) • Also, any recreation Authority or CVB created by General Assembly or the State, a Department of State Government, or State Authority How about DDAs, Main Street? DDAs, Tourism Authorities, and Main Street other Local Authorities

Organization Local Authority created by General Statute, Department within local government, or Local Law, or Local Constitutional Amendment Stand-alone non-profit organization, or Component of Chamber of Commerce

Flexibility from DCA ODD Structure and As defined by OCGA 36-42 If City department, defined by Mayor/Council; Restrictions If non-profit/Chamber component, as defined by bylaws Relationship with “Creature” of city government If department, part of city government; if non- City profit/Chamber, contractual relationship with city Hotel-Motel Tax No. Local Authorities in Georgia are inherently It depends. Revenue public entities and not eligible. If the Main Street program is a city department, it is a public entity and not eligible. If the Main Street program is a stand-alone 501(c)6 non-profit, it is eligible. Non-Profit Status- (C)3 versus (c)6

501(c)3 501(c)6 Hotel-Motel Tax Revenue Not eligible to receive Eligible to receive Purpose Charitable Organization Business/Membership Organization Donation Tax deductible for donor Not tax deductible Lobbying Prohibited from political activity Political activity permitted, but taxable Social Activities Social activities must be Social activities permissible, not “insubstantial” “primary” Examples Charitable foundations, Business league, Chamber of universities, churches, charitable Commerce, CVB support groups

***Main Street programs in Georgia are largely self-determined. For those that are stand-alone non-profits, some have status as 501(c)3 and some as 501(c)6. Always confirm the tax-exempt status of a DMO receiving/potentially receiving Hotel-Motel Tax revenue restricted to TCT O.C.G.A. § 48-13-51(a)(3) – 5%

60% of 40% HMT Revenue TCT

Non-Restricted Restricted Proceeds can be used for any legal At least 40% of HMT revenue must be general fund purpose in the city, used for TCT. county, or consolidated government So, how can our DMO use TCT restricted funds?

- Generally… - Community-wide tourism advertising - Social media and internet marketing campaigns - Radio and Television Commercials - Soliciting convention or trade show contracts - Supporting/operating a convention facility - Only in certain situations and under certain authorization paragraphs, consult attorney - Always be sure to consult with city/county/consolidated government attorney So, how can’t our DMO use TCT restricted funds?

- A clear example of an inappropriate use of TCT restricted funds… - Fireworks - Not “programs of information and publicity” or an advertisement for an event - They are the event - Other examples may include paying musical artists for concerts, performers for events, or other instances in which they are the event - Always be sure to consult with city/county/consolidated government attorney Examples of Promotion of Tourism, Conventions and Trade Shows (TCT) Spending Local Governments across Georgia using TCT funds to promote their community TCT Spending Bulloch County

TCT Example: Bulloch County TCT Spending City of Cartersville

TCT Example: Bulloch County TCT Spending Columbia County

TCT Example: Bulloch County Mechanics of TPD Restricted Spending Funds restricted to “Tourism Product Development,” for local governments collecting a 6%, 7%, or 8% tax under Authorization Paragraph 51(b) Jurisdictions collecting HMT under Authorization 51(b) – TPD funds available

As of August, 2020 Defining the Restrictions- Purpose

Tourism Product Development • Depending on the authorization (TPD) paragraph, a percentage of revenue goes toward restricted spending “Creation or expansion of • Always a percentage, not a fixed physical attractions which are amount available and open to the public • Project should be identified as TPD in and which improve destination jurisdiction’s annual budget appeal to visitors, support visitors' • Must involve physical renovation of experience, and are used by existing tourism facility, or construction visitors. Such expenditures may of a new one include capital costs and • Only applicable to jurisdictions with a operating expenses.” 6%, 7%, or 8% tax under 51(b) O.C.G.A. § 48-13-50.2 • Expended by the Local Government or other entity What Qualifies as TPD?

As identified in O.C.G.A. § 48-13-50.2(6)(A-P), Tourism Product Development may include… Parks and Trails Auto Racetracks Fishing Preserves Meeting/Convention Facility Campsites Wayfinding Signs Amusement Parks RV/Trailer/Camper Sites Zoos Golf Courses Sightseeing Planes and Helicopters Hunting Preserves Information Centers Drag Strips Sightseeing Boats Aquariums Performing Arts Facilities Arenas Sports Stadium Permanent Carnivals Exhibit Hall Museums What Qualifies as TPD?

And other “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.” Jurisdictions collecting HMT under Authorization 51(b) – TPD funds available

As of August, 2020 O.C.G.A. § 48-13-51(b) – 6%

50% Non- 8⅓% Restricted TPD

41⅔% TCT . Non-Restricted Restricted Proceeds can be used for any legal Up to 8⅓% of HMT may be used for general fund purpose in the city, TPD, otherwise used for TCT county, or consolidated government

Restricted At least 41⅔% of HMT revenue must be used for TCT O.C.G.A. § 48-13-51(b) – 7%

42.86% Non- 14.28% Restricted TPD

42.86% TCT . Non-Restricted Restricted Proceeds can be used for any legal Up to 8⅓% of HMT may be used for general fund purpose in the city, TPD, otherwise used for TCT county, or consolidated government

Restricted At least 41⅔% of HMT revenue must be used for TCT O.C.G.A. § 48-13-51(b) – 8%

37.50% Non- 18.75% Restricted TPD

43.75% TCT

Non-Restricted Restricted Proceeds can be used for any legal Up to 8⅓% of HMT may be used for general fund purpose in the city, TPD, otherwise used for TCT county, or consolidated government

Restricted At least 41⅔% of HMT revenue must be used for TCT Examples of Tourism Product Development (TPD) Spending

Local Governments across Georgia using TPD funds to build visitor-focused infrastructure and capital investment in their communities TPD Spending City of Fayetteville • Funded the development of an area known as “The Ridge” • New entry and gateway signage • Installation of a fishing dock • Installation of underground utilities to the restroom area • Parking lot grading TCT Example: Bulloch County TPD Spending City of Fitzgerald • Grand Plaza Park Umbrellas and Signage

TCT Example: Bulloch County TPD Spending City of Griffin

TCT Example: Bulloch County TPD Spending City of Vidalia • Vidalia Onion Museum

TCT Example: Bulloch County TPD Spending City of Hogansville • Hogansville Hummingbird Trail TPD Spending Thomas County • Shooting Range

TCT Example: Bulloch County TPD Spending City of Carrollton • Downtown Amphitheater

TCT Example: Bulloch County TPD Spending City of Canton • Wayfinding signage and downtown branding Part II: Special Topics of Georgia Hotel-Motel Excise Tax for Georgia’s City Leaders

September 16, 2020 Part II: Agenda • Moving to 51(b) • Shifting to a 6%, 7%, or 8% under Authorization Paragraph 51(b) • Short Term Vacation Rentals • Challenges, Considerations, and Resources • City of Savannah Case Study • Local Government-DMO Relations • Enhancing relationships with Chambers, CVBs, and other eligible recipients of your community’s TCT dollars • Annual HMT Reporting Requirements • DCA and DOAA requirements and timelines Moving to 51(b) Process, Resources, and Support for adopting a 6%, 7%, or 8% HMT Jurisdictions collecting HMT under Authorization 51(b) – TPD funds available

As of August, 2020 The Unique Demands of 51b

Requesting Resolution Local Act Ordinance Council/ Commission General Assembly Council/ Commission

• Local government must • A Local Act by the General • After passage and being adopt a resolution Assembly must be passed. signed by the Governor, an including: • The session is ordinance is created and • The tax rate (6%, 7%, typically only from sent to the DCA Office of or 8%) January to March/April Research. • Identification of • Be in touch with a tourism projects. (TCT member of your and TPD) legislative delegation • How the proceeds will be allocated

Provided by DCA as courtesy to help guide structure of hotel-motel excise tax effort – this document and any portion thereof are not a legal document or guarantee of legal standing. Consult City/County Attorney in development and adoption of all document related to the hotel-motel excise tax. Provided by DCA as courtesy to help guide structure of hotel-motel excise tax effort – this document and any portion thereof are not a legal document or guarantee of legal standing. Consult City/County Attorney in development and adoption of all document related to the hotel-motel excise tax. Provided by DCA as courtesy to help guide structure of hotel-motel excise tax effort – this document and any portion thereof are not a legal document or guarantee of legal standing. Consult City/County Attorney in development and adoption of all document related to the hotel-motel excise tax. Short-Term Vacation Rentals (STVR) Understanding and Responding to STVR Challenges at the Local Level How to Approach STVRs

STVR regulation and taxation could generate more HMT revenue in jurisdictions with few traditional hotels, but keep in mind; • It is a local issue, so consult with the City or County Attorney • Communicate with stakeholders (Hosts, Chamber, Destinations, Neighborhood groups) • Make regulations clear and enforceable based on available data • Avoid subjectivity in the rules • Ex. Required license must be posted outside the rental visible from the street (Enforceable) • Ex. Rental cannot interfere with neighborhood character (Subjective) Challenges to Consider

Multidimensional Enforceability Non-Uniformity Relates to issues in The approach should Not all units are zoning, taxation, property be realistic, homogenous, some rights, safety, historic unenforceable are single bedrooms in preservation, and regulations may just a home, some are tourism, among others cause more vacation homes rented confusion a couple times a year, and others function like hotels STVR Policy Considerations

Improving Safety Preventing Disruptions Preserving Character

Public registry Off-street parking requirements Neighborhood caps

Maximum Subdivide types (Accessory vs Local agent requirements occupancy/bedrooms commercial) Required notices to neighboring ‘Good neighbor policies’ Exclude from certain zones properties Additional building/safety code Complaint hotlines requirements

STVR insurance requirements

*Not an exhaustive list- this is a local issue with unique solutions* How can DCA Help?

• We now collect data on which communities collect the HMT on STVRs • Provide insight based on discussions with other communities in GA • Share examples and case studies

•We cannot provide interpretations or directives involving the collection of the HMT or regulation of STVR STVR in Savannah: A Case Study Understanding and Responding to STVR Challenges at the Local Level

Registry and Certificate Example Application and Return

Healthy Local Government-DMO Relationships Building and maintaining healthy relationships between the city/county and the Chamber, CVB, or other DMO City of Hapeville & ATL Airport District City of Hapeville & ATL Airport District Annual Hotel-Motel Excise Tax Reporting Requirements Annual reporting requirements to DCA, DOAA, and the IRS Local Government Requirements

DCA DOAA • Unique form for each authorization • Determination of compliance with paragraph authorization paragraph’s expenditure • Verify authorization paragraph and rate requirements • Report HMT revenues received • Identification of any non-compliance • Project Contractor Information • Amount of HMT receipts during fiscal Schedule (PCIS) [O.C.G.A. § 48-13-56] year • Tourism Product Development (TPD) • Expenditures, as a percentage of tax List if under Paragraph 51(b) [O.C.G.A. receipts [O.C.G.A. § 48-13-51(a)(9)(B)] § 48-13-50.2] Hotel Motel Tax Report

• Within six (6) months of the end of the fiscal year, each jurisdiction imposing a HMT is responsible for completing an online Hotel Motel Tax Report with DCA • This uses the same login as DCA’s other web based reports • Remember restricted spending is percentage based, regardless of authorization paragraph, not a fixed dollar amount Project Contractor Information Schedules (PCIS)

• Maintain open communication with your Chamber, CVB, or other 501(c)(6) (DMO) receiving restricted HMT funds • Have an established mutual agreement on how restricted HMT funds will be expended • Additional funds can go to the DMO, but PCIS form to DCA focuses only on restricted funds • Have contracting entity (DMO) complete TCT PCIS and submit to local government for review and upload to HMT Report

*Only applies to 51b jurisdictions DMO Requirements

As a recipient of As a 501(c)(6) nonprofit restricted HMT Funds organization

• Audit verification that the DMO “makes • The Chamber, CVB, or other 501(c)(6) use of such funds in conformity with the organization receiving restricted funds requirements” of the HMT authorization for TCT spending might be required to paragraph (O.C.G.A. § 48-13- submit an financial audit to the state; 51(a)(9)(B)) • If 501(c)(6) expended ≥$100,000 in a • Completion of PCIS form(s) and fiscal year, a full financial audit is providing to the local government(s) for required submission with their annual Hotel Motel • If 501(c)(6) expended <$100,000 in a Tax Report to DCA fiscal year, financial statements should be sent to the state auditor Know your Authorization paragraph

Restricted spending is always percentage based An open line with the City/County Attorney is critical Final Tips Build a strong partnership with the DMO and DCA cannot provide legal interpretations or opinions, but if you have a question specific to your jurisdiction, or Suggestions something unaddressed on the DCA website at https://www.dca.ga.gov/local- government-assistance/research- surveys/hotel-motel-excise-tax, please contact us. Thanks! Any questions?

Tyler Reinagel, Ph.D. Jackson Lilly Director, Office of Planning and Research Program Coordinator, Office of Research 404.679.4996 404.679.3105 [email protected] [email protected]