Thursday, June 17, 1999
Hotel tax hike to aid Sabin
First step to convention center's expansion
BY LUCY MAY
The Cincinnati Enquirer
Cincinnati City Council on Wednesday took the first concrete step to help fund a proposed $405 million expansion of the city's downtown convention center.
Council voted 7-2 to increase the citywide hotel tax 1.5 percentage points. Under a plan proposed by Councilman Tyrone Yates, the increase will take effect Jan. 1, 2000, as long as proponents of the expansion have raised $20 million in private grants by then.
The increase means the total tax for a city hotel room will increase to 12 percent, up from the current rate of 10.5 percent. Translated: the tax on a $100 hotel bill would be $12, up from $10.50.
The hotel tax increase is expected to generate $1.2 mil lion a year — enough to pay off nearly $18 million in bonds over 30 years. It is just the first piece of a complex funding plan for the project, which will more than double the size of the Dr. Albert B. Sabin Cincinnati Convention Center. Advocates say the convention center needs to be bigger to compete with other cities.
The tax is among the politically easiest since it is an increase supported by the hotel industry that primarily affects out-of-towners.
But getting the votes to pass the tax became a struggle in recent weeks, and proponents saw council's approval as an important gesture of support for a project that business leaders have called the city's most important undone development.
“I am delighted that council is finally showing leadership on this issue,” said Gary Wachs, general manager of the Garfield Suites Hotel downtown. “This project is going to take a great deal of leadership, but it can be done.”
Councilmen Phil Heimlich and Charlie Winburn voted against raising the tax. Mr. Heimlich argued Wednesday's vote paves the way for more city funding to support a project with no firm price tag and no other funding commitments.
Greater Cincinnati Convention and Visitors Bureau President Mike Wilson acknowledged that proponents have no other firm funding commitments but said, “This whole principle is built on an important domino theory that No. 1, the city has got to step up.”
The funding plan developed by proponents also includes the creation of a citywide restaurant tax — expected to be even more hotly debated than the hotel tax increase — and a city contri bution of $3.4 million a year for 30 years from the city's general fund to pay off about $50 million in debt.
Mr. Heimlich said he expects the amount requested from the city will be even higher, and he quoted from the Bible, Luke 14:28-32:
“For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it? Otherwise, when he has laid a foundation, and is not able to finish, all who see it begin to mock him, saying, "This man began to build, and was not able to finish.'”
Mr. Winburn said he supports the expansion, but he thinks the city should instead cut $10 million a year from the city budget to pay off $133 million in bonds for the project.
Councilman Todd Portune argued it makes more sense for the city to in crease the hotel tax — which he called a “user fee” — since it does not burden local taxpayers the way cuts in city services would.
“It's important for us to take the lead,” said Councilman Jim Tarbell. “It's our real estate — it's our building and we need to take the lead.”
Mayor Roxanne Qualls agreed, saying, “We cannot look to other people to be the ones to take the first step.”
Proponents hope to unveil more steps in the coming weeks. Delta Air Lines' board of directors next Thursdaywill consider a $30 million naming rights deal for the expansion. The city and Delta have stressed no naming rights deal will remove the name of Dr. Sabin from the convention center.
If proponents secure the commitment from Delta, they then hope to announce a $10 million loan from the Cincinnati Equity Fund, which Mr. Wilson said has agreed to support the project under certain conditions.
And Mr. Wilson said he and hotel industry leaders will soon formally approach Hamilton County commissioners to ask them to increase the countywide hotel tax.
While getting getting the city hotel tax increase passed was much more difficult than proponents expected, Mr. Wilson said he isn't worried about getting city approval on other parts of the funding plan.
“As you take this first step, it's probably one of the more difficult steps,” he said. “Even though it is a user tax, I think it shows a level of conviction.”
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