Small cities seeking big money for major projects know they need to tap into deep pockets. Some cities, including Brookhaven, Dunwoody and Chamblee, recently have seized on the idea to fund some of their multi-million-dollar plans by raising their city’s hotel/motel taxes to create a new revenue stream.
The city councils of all three cities have passed resolutions in recent weeks asking local state legislators to push through the required state bill for the tax increases. The extra money would go to pay for new parks, trails and green space in all three cities that would drive tourism and economic development to their areas.
The cities are asking for their hotel/motel taxes to be increased from 5 percent to 8 percent.
City leaders now are making a mad dash to try to convince their lawmakers to pass legislation backing the tax increase by the March 30 Sine Die deadline. If just one lawmaker doesn’t sign on, however, there is no tax increase.
For Brookhaven, the estimated extra $650,000 a year from the tax increase would go to kickstart the Peachtree Creek Greenway, a linear park and trail system designed to connect to Buckhead’s PATH400 trails and eventually to the Atlanta BeltLine. The council approved the $35 million Greenway master plan last year to a room full of supporters who brought party horns to toot in celebration.
“If this doesn’t go through [at the General Assembly] then there will have to be a tax increase on our residents” to pay for the Greenway, said Mayor John Ernst.
At a recent Dunwoody City Council meeting, state Rep. Tom Taylor (R-Dunwoody) said state Rep. Meagan Hanson (R-Brookhaven), who represents both cities, would not sign onto the Dunwoody bill because she did not want to be perceived as a legislator who raised taxes.
Hanson did not return a request for comment about Taylor’s statement by press time, but has said in the past via email that she has received emails and other communications from Brookhaven constituents who support and oppose the tax increase and wanted to continue to hear from residents.
State Sen. Fran Millar (R-Dunwoody), whose district includes parts of Brookhaven and Chamblee, said he has serious reservations about Dunwoody’s resolution because it does not include a specific project list.
And while Brookhaven may have a specific project, the bill must first come through the House of Representatives, he noted.
State Rep. Scott Holcomb (D-Atlanta), whose district includes Chamblee and Brookhaven, said via email he was unaware Chamblee was seeking a tax increase. Holcomb also said he was speaking to Brookhaven city leaders and listening to constituents to get their feedback on the proposed tax increase.
Chamblee Councilmember Tom Hogan was surprised to hear Holcomb was not informed the city passed a resolution asking for the tax increase. He said the council has passed a resolution asking for the tax increase for the past several years to fund parks and trails to no avail.
Chamblee wants to create more connectivity among its trail system to bring tourism to the area, but does not have a specific project in mind, Hogan said.
There is a “tremendous amount of political pressure” on politicians to not support tax increases in a climate that supports “mudslinging,” Hogan said.
“They are browbeaten to vote against tax increases,” he said. “Our hope was that with Brookhaven and Dunwoody also passing resolutions this year, that pressure would be subsided.”
Brookhaven Councilmember Bates Mattison agreed that fiscally conservative politicians tend not to support tax increases because they don’t want to give challengers any ammunition. “Politicians worry about what future opponents will use against them,” he said.
The extra money coming to Brookhaven from the proposed hotel/motel tax increase is estimated at $650,000, giving the city resources to finance a $9 million revenue bond.
That $9 million would be used to pay for permits, easements and right of way costs and as well as pave some trails on the section of the linear park between North Druid Hills Road and Briarwood Road.
State law requires that half of the hotel/motel tax increase be used to build some kind of project to bring tourism into the city. The other half goes to Discover DeKalb, the county’s convention and visitors’ bureau, to promote tourism in the area.
What makes the tax increase helpful to a young, small city is that the revenue comes from non-residents, Ernst said. Paying for a major project from an outside revenue source means more locally raised dollars can go to pay for paving, parks and police, he said.
The linear park will bring tourists to the areas, much like the Atlanta BeltLine has tourists to Midtown, Ernst said. That means more money to the city as well.
Jim Sprouse, executive director of the Georgia Hotel & Lodging Association, said his agency only becomes involved in issues if hotel management ask for it.
He did say the idea of using hotel/motel tax to pay for new parks and trails “does not seem to fit the intent” of what the money is designated for.
The city of Atlanta, for example, is using its hotel/motel tax to help cover costs for the new Mercedes-Benz Stadium. As the home for the Atlanta Falcons and United FC, the stadium will attract tourists to the city.
Parks and trails are “a gray area,” Sprouse said. “I would question how they drive tourism.”
Residents staying in hotels near the Greenway benefit by having a park to visit. But most of all, the residents of the city benefit by having a multi-use, linear park that will one day connect to the Atlanta BeltLine as well as to Chamblee and Doraville.
It would also be the first park in District 4 and Councilmember Joe Gebbia has said for every $1 the city spends on the park, the park will generate some $6 in revenue for the city.
James Tsismanakis, executive director and CEO of Discover DeKalb, said hotels would not lose business due to a tax increase.
“It’s not a selling tool because no one asks if the tax is 5 percent or 8 percent,” he said.
The 8 percent rate would put Brookhaven at the same rate with most cities across metro Atlanta, he added.
“We want to do anything to bring economic development to the city and county,” he said. “The Greenway brings more people to town … and brings connectivity to parks. This is a very good project.”
Betsy Eggers, chair of the Peachtree Creek Greenway board, thanked the council for its support. Paved trails for running, biking and walking was the No. 1 “most wanted” item in the Brookhaven Parks & Recreation master plan, she said.
Mayor Ernst will ask you to approve a $122m bond referendum and increase the City of Brookhaven’s Total Debt to income to 3.3:1. DeKalb County is 2.75:1 and it took decades to get to those levels of unsustainable debt. And he wants to raise your taxes to do it.