Distribution of Accommodation Tax Approved

Initial approval of proceeds from a countywide tax on hotels and other accommodations has been given by the Washtenaw County board of commissioners.

For 2013, $472,846 was available for distribution. Given initial approval at the board’s April 16, 2014 meeting was a distribution that sees the county keeping 10% ($47,285) to pay for enforcement of the accommodation ordinance. The remainder will be divided between the Ann Arbor Convention & Visitors Bureau ($319,171) and the Ypsilanti Convention & Visitors Bureau ($106,390).

A final vote on that distribution is expected on May 7.

The county collects the 5% excise tax from hotels, motels, and bed & breakfasts, which is then distributed to the Ann Arbor and Ypsilanti convention & visitors bureaus and used to promote tourism and convention business. The contract calls for the county to retain 10% of that tax to defray the cost of collection and enforcement. (Until 2009, the county had only retained 5% for this purpose.) The remaining funds are split, with 75% going to the Ann Arbor Convention & Visitors Bureau, and 25% going to the Ypsilanti Convention & Visitors Bureau.

In December 2009, the board approved five-year contracts with the CVBs, outlining the distribution arrangement and creating an accommodation ordinance commission to oversee the process. A amendment made in September 2011 addressed the process for distributing excess funds that might accumulate from the county’s 10%, if that amount exceeds the expenses required to administer and enforce compliance with the tax. Beginning in May 2013, the county retained 10% of the tax proceeds, plus 10% of any remaining fund balance. If additional funds accumulate in the fund balance, they are to be returned proportionally to the two convention & visitors bureaus – 75% to Ann Arbor, and 25% to Ypsilanti.

Subsequently an ordinance change was made in October 2012, when the board voted to shift responsibility for collecting and enforcing accommodation tax from the county treasurer to the county finance director. The ordinance amendment transferred a 0.7 full-time equivalent accounting job from the treasurer’s office to the county finance department, and amended the accommodation tax policy to clarify that the tax is only assessed against the actual price of a hotel, motel or other rental – not against other amenities that the business might charge its customers, such as Internet access or an extra cot in the room.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor. A more detailed report will follow: [link]