Senate gives approval for lodging tax in Kent

DOVER — Legislation approved 20-0 by the Senate Wednesday would authorize Kent Levy Court to establish a tax on hotels and similar establishments and to then direct that revenue to the DE Turf.

The bill would enable Kent County to place a tax of up to 3 percent on hotels, motels and tourist homes, with the proceeds designated for the Frederica-area sports complex.

According to the legislation’s chief sponsor, the tax would not apply to Airbnbs.

Money generated from the tax would be used “to allow the facility to remain competitive by advertising, promoting, and providing incentives for use of the facility, to establish a program to benefit youth by providing to youth organizations and scholastic institutions the opportunity to use its facility at reduced cost, and to maintain, improve, and support the facility through the payment of costs, expenses, and associated debt.”

Filed and heard in committee just the day before, the bill appears to be in position to be fast-tracked into law before the legislative session concludes at the end of the month. The General Assembly will meet again today and Sunday, and supporters hope to have the legislation on Gov. John Carney’s desk less than a week after introduction.

While most bills take far longer to pass, it’s not unusual for a handful of proposals to be pushed through in a matter of days at the end of the annual legislative session. Such bills are generally noncontroversial, and if Wednesday’s Senate vote is any indication, the lodging tax measure fits that category.

Main sponsor Sen. Trey Paradee, a Dover Democrat, said the idea for the bill stemmed from DE Turf officials.

“It was to provide them some additional marketing money and to allow them to do some other promotional type of stuff. As I understand it, financially they’re doing great, they have plans for expansion, but having some additional money for marketing purposes really helps,” he said after the floor vote.

The product of years of planning and dreaming, the DE Turf opened in the spring of 2017 to acclaim and high hopes. Backers touted the millions of dollars they said it would generate for Kent County, while youth sports teams looked forward to having a shiny new location for soccer, lacrosse and more.

By most accounts, the complex and its 12 fields have proven to be a boon to the county. The DE Turf hosted 20 big events in its first year and continues to be busy, with its calendar for July listing 13 all-day events.

DE Turf officials said in January more than 102,000 people visited the complex in 2018, creating an economic impact of around $31 million. Per the complex, those visitors booked nearly 14,000 hotel or motel rooms in 2018.

Despite the facility’s apparent success, Sen. Paradee sees no issue with using tax dollars to fund the Kent County Regional Sports Complex Corporation, the nonprofit that oversees the DE Turf.

“This is money that’s being raised by people who are coming here from out of state, and the DE Turf has really been wonderful for the local hotels and local restaurants and so forth, and so this is a way to really derive some revenue from the people who are really using the Turf,” the senator, whose brother sits on the facility’s board of directors, said.

“It’s the people who are coming here from out of town, staying at the hotels, and so it’s not coming out of Delawareans’ pockets.”

Kent County Administrator Mike Petit de Mange said Levy Court has not had an extensive discussion about the bill but at least a few members are aware of it. Should the legislation pass, he expects to advise county commissioners to institute the tax.

“I personally think it’s a good thing to support the DE Turf and their efforts to bring economic development here to central Delaware,” he said.

Mr. Petit de Mange said he believes the legislation is intended mainly to attract national tournaments that have a variety of suitors in several states.

A message left for DE Turf Executive Director Chris Giacomucci was not returned Wednesday.

The state places an 8 percent tax on hotels and similar other short-term rentals, but the concept of letting a local entity collect such a tax is new.

Lawmakers in 2018 approved legislation allowing New Castle County to create a lodging tax of up to 3 percent, and bills giving that same power to municipalities like Newark, Middletown and Seaford soon followed.

Legislation approved by the House last week and awaiting a vote in the Senate would give Sussex County the ability as well.

The authorizing language for Kent County was originally set to be included as a provision in the capital bond bill rather than a separate piece of legislation, but Sen. Paradee concluded “it seemed a little odd to try to do it through bond” given the other lodging taxes have been created through individual measures.

Although no one expressed opposition on the Senate floor Wednesday, Sen. Bryan Townsend briefly spoke against the measure when it was proposed as language in the bond bill last week.

“Let’s just hope that when the needs for drainage or water overwhelm everything else, let’s just remember why,” the Newark Democrat, who voted for the bill Wednesday, said in the Joint Committee on Capital Improvement hearing.

And if you’re wondering why the General Assembly has chosen to establish the taxes piecemeal rather than passing one bill that would give the counties and municipalities that power, there’s an answer.

“The bottom line is we are not raising a tax. We are enabling them through their charters to raise that tax if they like,” House Speaker Pete Schwartzkopf, a Rehoboth Beach Democrat who is the main sponsor of the Sussex County bill, said Wednesday in his typically blunt fashion.

“We’re making them take a vote so they can’t come back later and say, ‘We didn’t want to raise taxes, they did.’”

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