Overnight visitors in Frederick County could see a slight bump in the cost of their hotel stays soon.
County Executive Jan Gardner (D) is expected to formally introduce a bill to the County Council on Tuesday to raise the county’s hotel tax rate from 3 percent to 5 percent.
The rate increase would translate to a little more than $900,000 in estimated additional revenue each year.
The county collects the tax and passes about 97 percent of the revenue to the Tourism Council of Frederick County.
Gardner’s proposed bill includes an amendment to a memorandum of understanding agreement with the Tourism Council, which outlines how the revenue would be spent.
The agreement includes stipulations that could allow some of the tax revenue from a proposed downtown hotel and conference center to be returned to pay debt on the project through a rebate.
The tax rebate would be limited to 85 percent of the revenue from that hotel. No money from other hoteliers would be funneled to any proposed downtown hotel project in the county, according to the agreement.
County and tourism officials said Thursday the language was added to the agreement to assuage concerns about the proposed tax increase from some county lawmakers and opponents of the proposed downtown hotel and conference center project during the 2016 General Assembly session.
“We think this addresses what we heard as one of the bigger concerns,” said John Fieseler, executive director of the Tourism Council.
During the legislative session, Republican members of the county’s General Assembly delegation introduced a bill attempting to block the county from increasing the tax rate, arguing that it was unfair for visitors at other hotels in the county to help fund a competing business.
The state Legislature authorized the county to implement a hotel tax in 2004 and gave county government the authority to raise the rate to a maximum of 5 percent.
An increase to 5 percent would still leave Frederick County’s hotel tax among the lowest in the state, Gardner said Thursday.
For fiscal 2016, hotel tax rates in the state ranged from a low of 3 percent (Frederick and Cecil counties) to a high of 9.5 percent (Baltimore city). The counties that border Frederick had rates equal to or higher than the proposal: Montgomery’s rate was 7 percent, Washington County was set at 6 percent and Carroll’s rate was 5 percent.
With the increased rate in Frederick, the Tourism Council would receive an estimated $2 million each year for tourism-related programs, according to a county breakdown. A majority of the total revenue, 62.5 percent, would go to Visit Frederick marketing and operations.
The remaining funds would be divided between an existing grant program, a new grant program for municipal Main Street enhancements and a new destination-based program that would promote community events, agritourism, and other economic development and tourism projects.
Gardner said she thinks the tax proposal represents a compromise, while also expanding tourism funding.
“I think everyone involved with [the downtown hotel and conference center] project heard what the public’s concerns are and will do the best to address them. This addresses the concern that was raised about hotel taxes raised by other entities going into this center,” she said.