In 2002, Hamilton County Commissioners authorized a 3.5% increase (from 3%) in the county’s hotel tax to finance an expansion of Sharonville’s convention center and retiring debt from the Duke Energy Center expansion. In 2008, a lower-than-expected price tag for the Duke Energy expansion resulted in an early retirement of about $11 million in convention center debt; in turn, yielding a $2.1 million excess. On February 4, 2008, the commissioners heard a series of presentations on how to spend the money. Options under consideration included the Cincinnati USA Convention and Visitors Bureau’s idea to spend at least half of the revenue on new marketing initiatives to boost tourism within the region and a pledge of $400,000 a year to the city of Blue Ash for the construction of a conference and performing arts center.
The original financing plan assumed no growth in hotel-tax revenue, yet revenue has been growing at the rate of 3 percent to 7 percent each year. In March 2010, Business Courier reported the Greater Cincinnati’s convention industry was “outpacing its peers up and down the Eastern United States when it comes to future bookings.” Dan Lincoln, CEO of the Cincinnati USA Convention and Visitors Bureau, reported that in 2009, the bureau booked more than 198,000 future room nights with an estimated economic impact of $59 million, marking the fifth year it has increased future booking results despite the economy. Conventions like the 2012 World Choir Games and the 2013 Fraternal Order of Police Grand Lodge will continue to generate revenue.
The Duke Energy Center expansion has been completed and the expansion and renovation of the Sharonville site will commence in 2012. The county commission has not voted to return the hotel tax to its original 3%. With the apparent success of the local hotel and convention industry, the county hotel tax funds (no longer earmarked for the Duke Energy expansion) should be made available to local arts programs and organizations through a grant application process. The local arts scene (i.e. murals) and the abundance of arts organizations (i.e. theater, opera, museums) are vital entities that make Cincinnati attractive to conference and convention planners, students, and professionals.
County patronage of these organizations and programs will continue to attract more people and more money to Cincinnati. Use of revenue generated by the hotel tax will not only benefit visitors to the city, but residents as well. Residents will dually continue to develop and nurture an appreciation for the arts and recognize the benefits of a flourishing arts scene to the local economy without the fiscal responsibility. While other cities have experienced a decline in tourism, Cincinnati has not and should reward the organizations and programs responsible for attracting people to the city.
Other cities have successfully implemented hotel tax funds for the arts. Since its inception in 1961, Grants for the Arts/San Francisco Hotel Tax Fund (GFTA) has distributed over $300 million to hundreds of nonprofit cultural organizations in San Francisco. In 2010/11 nearly $8.8M has been allocated to 217 groups and activities. (See pie chart below for distribution of funds.) While Cincinnati may not turn over that much revenue from the hotel tax, a scaled down model of San Francisco’s program would be beneficial.
With respect to Cincinnati’s convention centers’ expansions being supported by the increase on hotel tax, county commissioners could model funding for local arts organizations and programs on the King County Lodging Tax for Culture.
In 1987, the state legislature established a cap on the annual tax revenues servicing construction bonds for the Kingdome (former home of Seattle’s professional sports teams). According to the website, a portion of the Seattle county’s tax revenues above $5.3 million per year are dedicated to arts and heritage programs through the year 2012, when the original Kingdome debt is scheduled to be retired. Between 2001 and 2012 cultural programs receive 70% of the excess revenue above $5.3 million, with a requirement that 40% of the revenues for cultural programs be set-aside in an endowment intended to fund arts and heritage after 2012. The website lists several impacts of this fund including
- more than 250 arts and heritage organizations receiving annual support for public programs,
- $844 million in economic impact annually, including $300 million in "new money," spent by visitors, and
- 7 million visitors to cultural events each year.
This model would fulfill the original purpose of the Hamilton county hotel tax increase (convention center expansion) while stabilizing arts organizations and programming.
-Auna R. Hearne
http://www.bizjournals.com/cincinnati/stories/2008/02/04/daily12.html
http://www.4culture.org/lodging_tax.htm
http://www.sfgfta.org/grants_html/history.htm
http://www.hamilton-co.org/DAS/hotel_m.asp
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