January 24, 2013 | Vol. 39, No. 4

Ordinance for Transient Room Tax is defeated by Assembly

Ordinance 2013-2 will have to start all over for approval now that it has been defeated due to confusion regarding combined-price packages.

The rate for a combined-price package was computed by charging the transient room tax on 30 percent of the total cost of the package price.

Mike Payne of Rocky Point Resort spoke on behalf of lodge owners who charge a combination package price.

“We are wanting to make the numbers justifiable for us and make it easier for everybody to figure out,” Payne said. “I would like to propose that each lodge representative come in prior to the season and justify their bed charge that will be reasonable for both parties.”

Payne explained that his clients do not stay in his rooms for the amenities, they are there for the fishing experience and in a price breakdown the room would end up costing nothing.

“I know that is not going to work in this situation,” Payne stated. “But to charge a tax that would end up costing my clients more than if they stayed in town doesn't make a lot of sense.”

Payne stated that his rooms do not have television, internet, daily room service or even a bathtub. He explained that his package price is a per person or per bed amount.

“If we could charge a specific amount, such as $40 per person would be easier for us to add up at the end of the season, “ Payne explained. “We could easily figure out how many people or beds we sold for the season and pay that amount.”

Petersburg Borough Manager Steve Giesbrecht stated that he and Petersburg Borough Finance Director Jody Tow and the Borough attorneys discussed the language that could be stated in the ordinance.

“When we started this process, our attorneys suggested that we say 30 percent or $8 per day whichever was higher,” Giesbrecht said. “We thought that amount was too high and we decided the percentage alone would be easier to figure, but since that time we have begun to re-think that.”

Tow suggested charging a percentage on the base price and break the lodging charges down to the guests in an invoice form.

“This ordinance is going to affect businesses in the city as well so we need to listen to what the finance director has to say,” Petersburg Borough Mayor Mark Jensen said. “But we don't want to price our businesses so much that people won't return.”

Payne explained that he is not worried about the single person that comes out to his lodge. He is concerned with those that bring out big groups of 10 or more because those taxes can add up significantly with a group that size.

“I would like to see something that is easy to work with and for us to be able to come in and just pay it,” Payne stated. “Having a set number would make it easier for us.”

A suggestion was made by Assembly Member John Hoag to table the discussion until staff had a chance to revisit the ordinance and work something out that would be favorable for all parties.

All motions concerning Ordinance 2013-2 failed during this meeting and the ordinance will have to be re-submitted in its first reading at the next Assembly meeting that will be held at noon Monday, Feb. 4.

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