(Source: MIRS.news, Published 10/04/2023) The House Local Government and Municipal Finance Committee took testimony Wednesday on a Rep. John Fitzgerald (D-Wyoming) bill allowing cities and townships to collect a hotel-motel excise tax, which Grand Rapids City Commissioner Jon O'Connor said would help restore a sense of community to the city post COVID-19 pandemic.
O’Connor, first ward city commissioner, said the bill is a top priority for the city of Grand Rapids.
Currently, counties can enact a hotel-motel tax ordinance to collect an accommodation tax of up to 5% of the total accommodation if the county has a population of less than 600,000 and a city located under its jurisdiction with at least 40,000 people.
Calhoun, Genesee, Ingham, Kalamazoo, Kent, Muskegon, Saginaw and Washtenaw counties currently levy an excise tax.
Revenue from accommodation fees supports construction and maintenance costs of entertainment facilities, auditoriums, stadiums, music halls and meeting rooms, along with promoting tourism and business in the county.
Fitzgerald’s HB 5048 allows cities and townships to enact a similar ordinance, collecting a separate tax of up to 2% of the total accommodations charges for tourism promotion, along with adding aquariums to the list of eligible entertainment facilities.
Before a municipality could collect the tax, it would have to be placed on the ballot for a vote.
Municipalities could reduce the tax to make it less than 2%, Fitzgerald said. The tax does not include short-term rentals.
Fitzgerald said the goal is to keep the legislation clean and mimic the existing statute for counties, though there wouldn't be population limits or caps for cities and townships.
The bill was supported by John LaMacchia of the Michigan Municipal League (MML), who said though the tax “isn’t going to be for everybody, … the choice to have it is important for everybody.”
He said the diversification of revenue streams will better municipalities’ ability to appear "more attractive to those who want to visit and live here.”
O’Connor also spoke about the changing dynamics and shifting priorities “as municipalities across the state continue to evolve” in the wake of the COVID-19 pandemic.
He said it’s necessary to encourage development to help these municipalities recover, referencing a 2,000-seat outdoor amphitheater that the city of Grand Rapids is attempting to finance at an estimated $184 million.
O’Connor called it the first step in a larger development plan intended to create a green corridor along the Grand River, providing access to the river and future investments along its banks.
The bill will provide a new local revenue option needed to pay for this and other key projects like it, he said.
“Ultimately, this bill will help create the kinds of communities where people want to live, where they want to raise their families,” he said.
He spoke about Grand Rapids’ annual Art Prize festival, which just concluded and brought tens of thousands of people downtown.
O’Connor said the festival brought life back to the community, but also made it feel safer, due to the number of people present downtown.
“Activity breeds civility,” he said, adding that influxes of people can improve the quality of life and feelings of safety in large cities.
Rick Winn, chair of the Grand Rapids Downtown Development Authority (DDA), also testified in favor of the bill, and highlighted the impact that full convention centers can have on restaurant traffic, businesses and hotel occupancy.
The bill was opposed as written by John McNamara of the Michigan Restaurant and Lodging Association, who said he’s working with Fitzgerald on the bill and agrees this is “a win for local communities and a win for the lodging community.”
However, he said that as written, it’s too broad, and could create situations where local taxes are implemented that retailers don’t support.
The bill was not taken up for a vote Wednesday.
