Proposed Dover lodging tax on tonight’s council agenda

DOVER — The city of Dover and Kent County each have lodging tax bills on their respective tables, which — if both pass, and added to the 8 percent lodging tax already being charged by the state of Delaware — would raise the lodging tax on hotels, motels and tourist homes in Dover to 14 percent.

That is a lodging tax rate that is up there with tourist hot spots such as Washington, D.C. and Hawaii, right in the capital city of Delaware.

The proposed lodging taxes came to life when Delaware’s General Assembly passed two separate bills in late June that gave the green light to Kent County and the city of Dover each to impose an additional 3 percent lodging tax on hotels, motels and tourist homes onto the 8 percent that the state already charges.

The city of Dover’s tax hike must be approved by Dover City Council vote before it can be adopted.

Likewise, Kent County Levy Court will need to approve an ordinance to create its tax, with a public hearing required as part of the process. The legislation allowing the county’s tax hike earmarked that revenue — an estimated $950,000 — to go toward a specific beneficiary: the Kent County Regional Sports Complex Corp., the self-described “nonprofit public/private partnership” that owns the DE Turf sports complex near Frederica.

Dover is scheduled to be the first to go before the public with its lodging tax with its proposed ordinance No. 2019-16 at its bi-monthly Dover City Council meeting in Council Chambers at City Hall tonight.

However, Dover City Councilman Fred Neil has indicated that he will make a motion to delay the issue prior to tonight’s meeting due to some lingering questions he has.

“How much should the tax be and where in the city budget should it go?,” Councilman Neil asked. “Before we act on the charter amendment, I believe the city council should discuss these parameters and hold a public hearing.

“Before we act on the charter amendment, I believe the city council should discuss these parameters and hold a public hearing. As a result, I will ask for the charter change to be removed from the city consent agenda (tonight) and have it come before the City Council as a Whole on August 13.”

He added, “This may allow us to see what the Kent County Levy Court does regarding their ability to raise taxes to benefit just the DE Turf as we formulate what we should do.”

Tonight’s Dover City Council meeting will have an Open Forum in which members of the public are welcome to speak beginning at 7:15 p.m., followed by the meeting at 7:30. The first reading of the proposed lodging tax is currently scheduled to be the ninth of 11 items on tonight’s agenda.

The proposed city of Dover lodging tax was unanimously carried with a unanimous vote by the Council Committee of the Whole’s Legislative, Finance, and Administration Committee on July 9.

It appears to have the support of most city council members.

“I support adding a lodging tax,” City Councilman David Anderson said. “I think it is fair to slow down the rush on this and hold a public hearing. I was skeptical in 2011, but circumstances have changed including the fact that now most localities with hotels have one and nationally the trend now makes it more competitive to do so.

“If council does go as high as 3 percent, I want to see some of it used for a reduction in property tax next year. Dover is one of the last major destinations in Delaware not to have (a lodging tax).”

Councilman Neil agrees with Mr. Anderson that Dover has been missing the boat when it comes to lodging taxes.

“This is not a tax on citizens of Dover but helps our taxpayers by having visitors who use our infrastructure and receive police and fire protection when they are here to pay a small amount,” said Councilman Neil. “It is something I have been advocating since 2015. I intend to vote for changing the charter amendment to allow the tax.”

Legislation for the city hasn’t specified how the added tax revenue would be used, but discussion at the meeting two weeks ago suggested it would pay for investments in infrastructure, parks and building improvements.

City Manager Donna Mitchell estimated that a 3 percent lodging tax within Dover’s city limits could generate an estimated $600,000 to $800,000 in revenue.

Dover’s proposed lodging tax bill is co-sponsored by Council President Bill Hare and Councilman Tanner Polce.

Mr. Polce said Dover’s proposed lodging tax was in direct response to Kent County’s controversial proposed lodging tax in which the money raised would go directly to the Kent County Regional Sports Complex Corp. and its DE Turf sports complex near Frederica.

“This was truly in reaction to a legislative measure that was introduced by Senator (Trey) Paradee that pretty much says (Kent) County can go out and tax up to 3 percent and the monies that are generated by the city of Dover’s motels and hotels would then be diverted to DE Turf,” Councilman Polce said “Explicit language in a piece of legislation … ‘diverted to DE Turf.’

“For posterity’s sake, it’s important to understand what that means. So, monies that are generated in this city, individuals coming into this city, riding on our roads, using critical services if need be, are then using our infrastructure, and the money is diverted to Delaware Turf.”

He then added, “It was a call to action, and it was a full-court press. I am just very thankful that my colleagues, and frankly, my good friends in the General Assembly thought it was as well. This gives us an ability to be on equal footing, on a level playing field, with everyone else.”

There are plenty of murmurs to be heard on social media and around the city of Dover and Kent County regarding the proposed lodging taxes.

“They are already having trouble getting NASCAR fans to come to Dover International Speedway’s two race weekends a year due to the high cost of travel and exorbitant race weekend hotel rates,” said Bob Hice, a resident of Dover. “This certainly won’t attract more race fans to come to Dover — not to mention Firefly.

“When I moved to Delaware, they promoted this as ‘the tax-free state.’ Whatever happened to that way of thinking? Nowadays, it seems like they’d tax you on the air that you breathe if they could.”

Local businessman Sam Chick is telling people on social media to keep abreast of what’s happening in city and county politics.

“(The city of Dover) just raised our property taxes again by 9 percent last month after raising them by 20 percent in 2015,” Mr. Chick wrote. “Now they want to make it more expensive for people to stay in Dover hotels and motels by adding up to 3 percent in city lodging tax on top of the already high 8 percent state lodging tax and potential 3 percent county lodging tax.

“They weren’t expecting these lodging tax collections when they created the budget that was approved last month. At the very least, if they are going to create a hotel/motel tax, those new tax collections should go to reduce the 9 percent property tax increase (the city) just clobbered us with.”

Councilman Anderson agrees that there is much discussion that still needs to be done regarding the proposed lodging tax.

“I hope the county decides not to add a full 3 percent for DE Turf on top of Milford and Dover,” he said. “I think 14 percent (lodging tax rate) would put us too far out of step, just because we are authorized 3 percent does not mean either of us needs to go that high. That would be roughly equal to Philadelphia and Honolulu (13.8 percent). The average rate is 13.4 percent nationally.

“I think a 2 percent city and 1.5 or 2 percent county (tax) would keep us competitive both in our state (11 percent average) at 11.5 or 12 percent and nationally. We do not need to be higher than Honolulu, Salt Lake City, New Orleans and Dallas. People are used to paying 11 or 12 percent (lodging tax) now. That was not necessarily the case in 2011 just out of the recession.”

Delaware State News staff writer Mike Finney can be reached at mfinney@newszap.com.

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