Lodging Tax – Increase Will Require State Statutory Authorization

September 12, 2012
To: Columbia City Council, and Mayor
From: The Missouri Hotel and Lodging Association
Subject: Taxes on Hotels to Fund Construction of a New Airport Terminal
Copied to: U. S. Senator Roy Blunt, U. S. Senator Claire McCaskill, U. S. Representative Blaine Luetkemeyer, Columbia City Manager, Missouri Senator Kurt Schaefer, Missouri Representative Mary Still, Missouri Representative Stephen Webber, Missouri Representative Chris Kelly


The Missouri Hotel and Lodging Association (MHLA) appreciates the opportunity to comment on the discussion by the Columbia City Council and staff regarding the use of hotel taxes for the construction of a new airport terminal. MHLA has been following the issue closely for several months. The Columbia Hospitality Association (CHA) is a City associate member of MHLA.

MHLA is committed to its members and their interests related to hotel taxes in the State of Missouri. We actively monitor and influence hotel tax initiatives and issues on a local and state-wide basis.

We are in possession of a report to you from your City manager and staff dated September 4th, 2012 addressing the use of hotel and motel taxes to fund construction of a new airport terminal.

The report is incomplete and misleading in its present form. The report purports that the City of Columbia could impose an additional 3% hotel tax for construction of a new airport terminal with voter approval. Additionally, the report claims that the City of Columbia can impose a license fee on hotels and motels based on daily room occupancy with voter approval.

The report cites Section 67.1366RSMo., which only applies to a charter city in a charter county of the first classification. Columbia is not in a charter county. The telling action for Columbia is that Independence, Missouri had to receive State statutory authorization to impose a tax to impose a tax up to 7% on sleeping rooms. Columbia would also be required to receive State statutory approval. The report accurately points out that this particular section does not limit powers of constitutional charter cities in non- charter counties to impose a business license tax on hotels.

The report also cites Kansas City Code of General Ordinances Section 40-111 as justification to impose a business license tax on hotel rooms. This ordinance was updated in 2005, and is now Ordinance 050136. Subsequent to passage of this Kansas City ordinance Missouri Revised Statute section 94.270 was altered. Specifically, sections 6.(1) and (2) limit the business license tax on hotels to one eighth of one percent of the hotels gross revenue or the tax on May 1, 2005, whichever is greater.

Therefore, a business license fee similar to that in Kansas City is not available today without approval of the Missouri State legislature. This section applies to Columbia. Columbia will be required to seek approval of the Missouri State Legislature to impose a license fee tax on hotels as they are suggested in the report.

For many years, the Missouri State Legislature has sided with the MHLA on each hotel tax initiative that requires legislative approval.  The MHLA takes a well-reasoned approach to hotel tax legislation. If the initiative has the blessing of the local hotel community as a win-win with the appropriate governmental agency-and provided the collected funds will be used in a manner that improves tourism visitation at a high impact level, the MHLA supports the initiative or remains silent as needed.

If the above criterion is not met, then, MHLA will oppose the initiative and encourage both parties to continue to work toward a favorable solution. Columbia saw the effect of MHLA’s opposition to the present hotel tax initiative in the last legislative session.

The report presented to the City of Columbia accurately characterizes the construction of a new airport terminal as “infrastructure.” It is neither tourism development, nor tourism attraction. It is a satisfier, and would be a lowest and least use of tourism funds. The perceived need for a new terminal is to accommodate more airline passengers. It would be similar to using a hotel tax to widen a road to accommodate more cars.

This use is not appropriate for this type of tax.

MHLA suggests that you continue to work with the Columbia Hospitality Association to look for opportunities to use hotel taxes as a way to increase hotel occupancy in a high impact tourism attraction-focused way.  As well, you are encouraged to find alternate financial vehicles to fund the airport infrastructure project you are now discussing.

Thank you for your time and consideration surrounding this issue. We will continue to monitor your progress and provide resources and input as needed in the scope of our interest.

Yours sincerely,

Gail Myer,
President MHLA

Jorgen Schlemeier
Gamble and Schlemeier
Governmental Consultants





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