ACT 18 OF 2016 Hotel Room Tax Legislation Update

History of Tourism Promotion in Centre County ■January 8, 1963 – Board of Commissioners designated the “Centre County Vacation Land Council” aka Central Pennsylvania Convention & Visitors Bureau (CPCVB) as Centre County’s Tourism Promotion Agency (TPA) ■Tourism Industry Spending: “direct value of the goods and services purchased by travelers and, as such, exclude capital investment and general government support of travel and tourism” –2005: $498.7 M –2014: $720.4 M (Lodging - $125,100,000) SOURCE: 2014 Economic Impact of Pennsylvania’s Travel and Tourism Industry Report visitpa.com/articles/economic-impact-travel-report

Hotel Room Tax Rate in Centre County ■Effective September 1, 1997 – the Board of Commissioners approved a 1% hotel room tax rate ■Effective July 1, 2002 – increased to 2.5% –CPCVB Board creates a tourism grant program and forms the Tourism Grant Review Committee ■20% of tax revenue (minus admin fees) are set aside in a Tourism Grant Program account. ■2016 grant awards: $341,638.

From Legislation to Law ■HB 794 introduced on March 13, 2015 –Re-introduction of HB 2515 from Session ■All 5 Centre County legislators supported HB 794 –April 11, 2016 – Passes PA Senate 43-6 –April 12, 2016 – Passes PA House ■April 20, 2016 – Signed by Governor Wolf

Act 18 of 2016 – Changes ■Increases the ceiling of optional hotel room tax rate from 3% to 5%. ■Keeps tourism marketing, promotion spending, projects, and grants as allowed uses of hotel room tax ■Adds a general category of tourism expenditures provided they: –Are “deemed necessary” by the recognized TPA –Do not compete with the private sector tourism or travel efforts ■Requires any grants to have a cash or in-kind match of 25% ■Adds cabins on campgrounds located on State land or private property to the definition of hotel SOURCE: HB 794 Fiscal Note: bit.ly/hb794fn

Explicitly Excluded from Tax: Yurts & Walled Tents IMAGE SOURCE: pjrider.com/GrangeFairTents.jpg

SOURCE: HB 794 Fiscal Note: bit.ly/hb794fn Act 18 of 2016 – Changes ■New Audit/Financial Statement requirements –90 days after the end of the TPA’s fiscal year the County may withhold tax revenue collected –120 days after the end of the TPA’s fiscal year the secretary of DCED may require the County to withhold tax revenue collected ■Establishing an optional county administrative fee of up to 4% deducted from the revenue to cover the costs of collection –1997 Ordinance: $3,500 –2002 Ordinance: the lesser of 2% or $40,000 (adjusted biannually with the percentage growth of CPI for All Urban Consumers)

Collection and Distribution ■Centre County Treasurer’s Office receives tax from hotels. No later than 60 days after receipt the funds are sent to the CPCVB, less the 2% admin fee. –In 2015, the Treasurer’s Office collected $1,843,172 in Hotel Room Tax & $1,806,309 Transferred to CPCVB (less $36,863 for admin fee) ■80% of the net Hotel Room Tax goes towards the operations budget and marketing budget of the CPCVB ■20% of the net Hotel Room Tax are transferred to a dedicated “Tourism Grant Program” account ■Each March/April the Tourism Grant Review Committee meets to select the recipients of the grants ■Each May the recipients are announced. ■2016 grant awards: $341,638

Collection and Distribution ■Centre County Treasurer’s Office receives tax from hotels. ■No later than 60 days after receipt the funds are sent to the CPCVB, less the 2% admin fee. –In 2015, the Treasurer’s Office: ■Collected $1,843,172 in Hotel Room Tax ■Transferred $1,806,309 to CPCVB (less $36,863 for admin fee)

Going forward ■Updated Ordinance (no sooner than 1/1/17) –Add to definition of hotel the language regarding Cabins –Include new language re: Audit/Financial Statement –Change in Administrative Fee –Change in Hotel Room Tax Rate ■Discussions with CPCVB at upcoming Tuesday morning BOC meetings ■Community input