Photo provided by Town of Middletown

Middletown Town Councilwoman Terri Flynn is proposing a new additional fee on hotel stays she said could generate serious non-tax revenues for Middletown to pay for improvements to local schools.

The Town of Middletown shares the following;

FLYNN: NEW ADDITIONAL HOTEL, LODGING FEE  COULD HELP SCHOOLS

MIDDLETOWN, R.I. (FEBRUARY 8, 2022) – Town Councilwoman Terri Flynn thinks she has a potential solution to the funding woes for the community’s aging school buildings.

Instead of asking residents and businesspeople to again shoulder the bill for renovations and upgrades to the schools through a bond or tax dollars, Flynn has another idea — add a new $1 to $5 room tax for those who stay in local hotel rooms.

If approved by the state, Flynn said the money would go into a dedicated, restricted account to pay for improvements to the four schools and educational outreach work. Flynn said a very conservative estimate showed the Town stood to gain $365,000 a year and up to $3.7 million on the most aggressive stance.

Council members generally spoke in favor of the idea, but wanted more information, including input from the hotel community, business owners, state legislators and others.

The item is slated to be discussed at the council’s next regular session on Feb. 22 at 6:30 p.m. in Town Hall. Even if the council signs off on the new tax, it must be approved and signed into law by the General Assembly.

“This does not seem like a big ask for visitors to help the community that they enjoy visiting and help Middletown residents,” Flynn said. “If Middletown didn’t need it Middletown would not ask this of its visiting guests. However, the Middletown taxpayers cannot do it alone anymore.”

The idea is not a new one for the community. As recently as 2018, the Town teamed up with the City of Newport to try to add a new fee on meals and hotel stays. Town Administrator Shawn J. Brown said when the proposal got to the General Assembly, it went nowhere.

Council President Paul M. Rodrigues said a similar discussion took place before the council close to 20 years ago, but didn’t take hold.

The council is currently engaged in a dialogue with the School Building Committee about whether a $60 million bond should be put before voters on Election Day for improvements to local schools, mostly Middletown High. 

Part of the press to get the item before voters on Nov. 8 is to take advantage of state reimbursement money on school improvement work. Previously, consultants working for the Building Committee have said Middletown would receive at least 35 percent reimbursement on its school improvement work.

“I certainly think it has some merit because…this school issue wasn’t in front of us previously,” Rodrigues said. “Doing some quick math up here, maybe there’s a way we can do this for a reasonable amount.”

Without taking a position on the proposal, Discover Newport President and CEO Evan Smith took the council and crowd through the basics of the local hospitality industry.

Smith said there currently is a 13 percent tax on any traveler who stays at a hotel and inn in Newport and Bristol counties. That’s comprised of a 7 percent sales tax as well as a 6 percent lodging tax. Of the lodging tax, Smith said 5 percent is distributed to the cities and towns based on a formula and 1 percent of that funding goes directly to Middletown.

According to Discover Newport numbers, Middletown received the third most hotel tax money in the state in Fiscal 2021 at about $410,000, trailing only Newport at $1.1 million and Westerly at $472,000. The Town also received $33,500 from short-term rentals, or about 8 percent of the funds generated by hotels and inns.

Noting the sector of the economy took a hit from COVID-19, Smith said the numbers also showed the resiliency of the hotel, restaurant and tourism industries in Newport and Bristol counties.

“Many destinations across America really suffered for the last two or three years,” Smith said. “Fortunately, resort areas, mountain resorts, lake resorts, coastal resorts, were actually the winners over the last three years versus inner cities and other areas that actually lost.”

“Middletown has done really well in terms of holding its own over a really difficult period of time…” Smith said. “Those numbers, you should feel really good about. I can tell you not many cities in America have a profile that looks like this. It shows real resiliency and some good strong recovery to be pleased about and optimistic about.”

A computer slideshow presentation from Smith showed there were 23 hotels, motels, inns and boutique suites in Middletown. That amounts to more than 1,450 rooms, not including short-term rentals. Smith’s statistics indicated there were close to 500 short-term rental listings in Middletown in 2021. To see Smith’s report, visit https://www.middletownri.com/DocumentCenter/View/3876/Discover-Newport-Lodging-Report-272022 online.

“You want to be fair and you want to be competitive…” Smith said. “We already do pay an enormous amount of taxes and fees. I believe they deserve a lot of credit and recognition for all the taxes and fees that they do pay. I think our industry is an enormous driver of the local economy and statewide economy.”

In response, Flynn said she wanted to work with her colleagues to get the best proposal for Middletown. 

“Middletown has serious education infrastructure, learning loss and outreach needs…” Flynn said. “This could be one of the funding sources for those great needs. Now is the time to consider this proposal.”

“I don’t think that anyone would say a $1 a night alone is going to close down hotels or Airbnbs,” Flynn added. “I think our taxpayers, I think we owe it to them to explore all possible avenues.”

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