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Tourism legislation could hamper Federal Way's economy
Federal Way leaders are concerned about the consequences of losing money for tourism promotion.
Federal Way receives about $190,000 annually in hotel-motel tax revenues. The money enables the city to support and recruit sports tournaments, festivals and events that generate tourism. In 2012, for example, the U.S. Olympic Diving Trials brought hundreds of visitors and more than $4 million to the local economy. Federal Way paid $100,000 to bid on hosting the trials.
However, a critical piece of legislation regarding the use of hotel-motel tax revenues will sunset on June 30.
Federal Way Mayor Skip Priest, city economic development director Patrick Doherty, and Hampton Inn manager Ryan Miller testified Thursday in Olympia on behalf of a bill that would keep the provision alive.
At a Feb. 13 meeting of the city’s Lodging Tax Advisory Committee, managers from three local hotels talked about how they were booked solid during last year's swimming events at the King County Aquatic Center.
If the legislation expires in June, the city would lose the ability to provide seed money for these types of events. Instead, cities would be limited to spending hotel-motel tax revenues on marketing only, and no longer allowed to put the money toward operational efforts.
Doherty said the present legislation protects “local decision-making on locally derived dollars.” He said the diving trials in Federal Way resulted in a 52-1 return on the city's initial investment to host the event.
In 2012, the Association of Washington Cities backed a bill that would have extended the legislation's expiration to December 2014. The bill, which ultimately failed, was opposed by the Washington Lodging Association.
This year, the association also opposes Senate Bill 5262, which addresses the expiration of the lodging tax provision. The association reports that the bill will "continue to undermine local destination marketing" and argues that lodging tax money is intended for marketing purposes.
The association, however, is supporting Senate Bill 5468, which would modify the definition of a tourist to mean “a person who travels for business or pleasure on a trip; away from their residence or business and stays overnight in paid accommodations; or to a place 50 miles or more one way from their residence or business for the day or stays overnight."
If passed, SB 5468 will affect the way lodging tax revenues can be spent by cities. Doherty planned to testify Thursday against the bill.
• To read more about tourism promotion through the lodging tax, click here.
• To read Senate Bill 5262, click here.
• To read Senate Bill 5468, click here.
• Check out the Washington Lodging Association's stance on the lodging tax legislation here.