Dover City Council approves lodging tax

DOVER — Dover City Council on Monday approved a 0.5 percent lodging tax on hotels and motels within city boundaries that will become effective in 2020.

The one-half-of-1-percent tax will increase incrementally to 1.5 percent by 2022. It will be imposed in addition to the existing 8 percent state tax on hotel and motel stays.

City Council passed the ordinance Chapter 102 — taxation of the Dover Code by inserting a new article VII — lodging tax by a 7-2 vote with Councilmen Roy Sudler Jr. and David Anderson voting against the measure.

The city’s lodging tax was enabled through state legislation passed in June and has been watched closely because it could be stacked with a potential lodging tax under consideration by Kent County Levy Court.

Five people spoke against the lodging tax at a committee meeting on Sept. 10, with no one speaking in support of it.

Nobody spoke publicly about the tax at Monday night’s hearing prior to the vote.

City Councilman Tim Slavin said he believed the council used fair judgement in passing the ordinance.

“We had prepared some amendment language that reflects the spirit of the discussion that we had at the last committee hearing” he said, of the Sept. 10 meeting. “There is one minor adjustment to that. I believe Councilman Anderson made a good suggestion along with Council (President Bill) Hare about the effective date.

Tim Slavin

“The amendment would establish the tax beginning on July 1, 2020, at the rate of one-half of 1 percent for the balance of the calendar year of 2020. And then the rate itself would be 1 percent for 2021 and 1.5 percent for subsequent years. All the revenue we would receive we be accounted for in a Committed Fund Balance account to be used only for infrastructure.”

Councilman Sudler said he voted against the measure after hearing from hotel owners and his constituents.
“At this point I will not be supporting any taxation or lodging tax initiative although I know that one will be coming soon,” he said. “I just don’t believe it’s the right time.

“Although I believe that just because we have the right to do it doesn’t mean that we need to do it or should do it. At this present moment, I will not be supporting the raising of any taxes based on my talks with my constituents.”

Councilman Anderson didn’t vote in favor of the ordinance because he said he wants to see an amendment for the less fortunate added to it.
“I think the motion that is being put forth moves forward in a positive way because we will set a measure of leadership so that we do not end up pricing ourselves to a competitive disadvantage, and I think there’s some very positive feedback,” he said. “I wouldn’t be surprised if (Kent) County didn’t do a full 3 percent, either, so this is a positive step. I’m very happy for this particular action.

“I would like to eventually add an amendment to exclude people (from the tax) who are using the lodging as their permanent home.”
Dover received the ability to impose and collect a lodging tax in late June after the General Assembly approved several bills enabling municipalities as well as Kent and Sussex counties each to do so.

Two separate bills gave the green light to Kent County and the city of Dover each to impose up to an additional 3 percent lodging tax on hotels, motels and tourist homes.

Legislation enabling Kent to raise its tax earmarked the additional lodging tax revenue — an estimated $950,000 — for the Kent County Regional Sports Complex Corp., the nonprofit partnership that owns the DE Turf sports complex near Frederica. Kent County Levy Court, the body that must approve a countywide tax, has not scheduled discussions on the increase.

Joe Fitzgerald, with the Delaware Hotel and Lodging Association, warned against the dangers of adding the taxes to the industry during the Sept. 10 meeting.

“We oppose this tax increase,” Mr. Fitzgerald said. “We are concerned about the economic impact of this tax.
“Obviously, if we got to the 14 percent … New York City has a 14 percent lodging tax … Philadelphia. I’m not sure this market can sustain that, and frankly, we’re concerned about the economic impact.”

City Councilmen Fred Neil leant his support to the proposal.
“Should we implement this lodging tax, (hotels) will not pay that tax nor will the city taxpayers,” Councilman Neil said. “It is a lot cheaper to pay the small additional fee than to pay for the gas to travel to New Castle or Sussex County to stay — and more convenient, too.
“If the city uses this additional money for infrastructure, as I hope it will be used, then I regard this as a User Fee that currently falls solely on the city taxpayers.”

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