The Oregon Village Board Monday took initial steps to adopt a new ordinance creating a room tax that could generate funds for economic development and to promote tourism.
The tax would apply to hotels, motels or bed and breakfast businesses in Oregon. The ordinance is being created in anticipation of a new hotel being built on Park Street. Commercial developer Paul Lynch's plan to build a Holiday Inn Express was approved by village officials in April. At the time, Lynch said he hoped to begin construction on a 69-room hotel in June, but so far there's no sign of action at the 2.8-acre site.
At Monday's Village Board meeting, village administrator Mike Gracz said the village ought to create a tourism commission, which would be led by the Oregon Area Chamber of Commerce. He said state statutes require that 70 percent of any room tax proceeds be used for tourism promotion and development. He suggested that the tourism commission, led by Chamber of Commerce executive director Marechiel Santos-Lang, would be in charge of how those funds are spent.
Gracz and finance director Renee Hoeft have been working with village attorney Matt Dregne to craft the new ordinance.
In a staff recommendation adopted by the board Monday:
n the village creates a new special revenue fund for the room tax
n the room tax rate is set at 5 percent
n 70 percent of the tax would go to the Chamber of Commerce, of which 10 percent would be paid directly to the Greater Madison Convention & Visitors Bureau
n 30 percent of the tax would be retained by the village
In a memo to the board, Hoeft suggested that the tax rate percentage not be included in the ordinance, but rather put in an annual fee schedule.
She said the money that's paid to the Greater Madison Convention & Visitors Bureau would guarantee that the organization includes any hotels in Oregon in its promotional materials.
In 2009, the village budgeted $1,500 for economic development, Hoeft noted in her memo. "For the 2010 budget, we would show this coming out of the room tax fund vs. the general tax levy," she wrote. "This would also give the village funding to produce brochures for potential developers, purchase of additional banners, flags, holiday lights, a new welcome sign, etc."
Gracz told trustees that the village would not receive any revenues until a hotel opens in Oregon, but now is the time to get the ordinance in place.
He also said he would meet with Santos-Lang to determine how often she would report to village officials about how the room tax revenue is being spent.
A second reading for final adoption of the ordinance is set for the Aug. 3 board meeting.
