Tourism Improvement District Proposed Legislation
Summary of the Legislation Throughout the country, many cities and counties are creating Tourism Improvement Districts (TIDs) to invest more funds into tourism at the local and regional level. While three counties have created a TID within the state of Pennsylvania—current law does not allow for a streamlined, clear process to be used. Further, as we have historically seen with county hotel taxes, if the law doesn’t delineate proper uses, then these funds can be misappropriated and not achieve the goal of investing and bringing business and leisure travelers to a specific area. Therefore, draft legislation is being written to enable, not mandate, TIDs throughout the state of Pennsylvania.
PRLA’s Position As the trade organization that represents the entirety of the hospitality and tourism industry in Pennsylvania—PRLA does not support legislation unless there is agreement among our hotel and tourism partners. To ascertain if this is a proposal PRLA should advocate for—we are asking our hotel partners to complete a brief survey. The results of this survey will be presented to PRLA’s Lodging & Tourism Committee, which will then determine if PRLA should move forward in full support of the proposal.
The bill would be enabling legislation, meaning each individual county can then determine whether they move forward with creating a TID.
A TID would be controlled by a board that is separate from existing county government. It would also be separate from an existing board that is in place for a destination marketing organization (DMO).
The bill would assess a fee on lodging businesses within a county.
Lodging business is defined as: A building or buildings in which the public may, for consideration, obtain sleeping accommodations. The term "lodging business" shall not include any charitable, educational, or religious institution summer camp for children, hospital, or nursing home. The term "lodging business" shall include a person or entity which facilitates or collects payment for lodging business accommodations on behalf of or for a lodging business operator.
Only those that would be assessed a fee (lodging business) may vote to create a TID.
Only those assessed a fee (lodging business) may sit on the Board of TID. The Board develops the plan of use of funds, authorizes the use of funds and ensures funds are being used correctly.
In short—the legislation makes it clear that every aspect of the TID is controlled and voted upon by lodging properties only.
Creation of the TID
There can only be one TID in a county operating at any single time.
If a county wants to move forward in establishing a TID, a petition, plan, objection procedures as well as the date and time of a public hearing must be sent to ALL lodging businesses located within the TID.
If 40 percent of lodging businesses (actual locations, not rooms) vote against a TID or to end a TID, then the TID will not go into effect/will end.
Any substantial changes to the TID plan must be approved by lodging businesses.
A TID will sunset in five years unless the lodging community votes to extend it.
Fees on Lodging Businesses
Fees can either be in the form of a percentage of the cost of an overnight accommodation or a flat fee.
The fee must be assessed on the customer.
Fees will be paid to the County Treasurer.
The county will retain four (4) percent of the fee for administrative costs.
Use of Funds
Only lodging businesses can sit on the Board and approve of uses of funds.
A five-year plan shall be developed in advance of establishing a TID and TID funds can only be used to implement that plan.
Funds cannot be used for any project that would benefit a single lodging property in the TID.
Funds can be used for but are not limited to the following: publicly owned meeting or event facilities, nonprofit attractions, marketing, promotions, advertising, business retention and recruitment, joint advertising, research and planning.
Funds can NOT be used for, capital improvement projects such as traditional streetscape renovations, street lighting, parking lots, parking garages, pedestrian walks, rest areas or other projects traditionally funded by other government related funds.
Funds cannot be used for bonds.