New tax, new benefits?

Fall Lake leaders come around to countywide lodging tax

by Tom Coombe
As Lake County moves ahead with a new four percent lodging tax, the opposition that had formed in Fall Lake Township over the proposal seems to have waned.
Tourism officials who voiced angst several months ago now appear on board with the plan, which could be implemented sometime in 2020.
Kerry Davis, a longtime local resort owner and tourism industry leader, endorsed the proposal when Lake County commissioners came to the Fall Lake Town Hall for a Nov. 21 public meeting.
“I think overall there will be advantages to doing this,” said Davis.
Davis, other resort owners and Fall Lake leaders all voiced opposition when the plan first surfaced during the spring, but Lake County offiicals said they heard the concerns and worked to soothe them.
The most significant is a promise by county officials to return whatever tax revenues are generated by Fall Lake lodging establishments to the area so that funds will continue to be used to promote local tourism.
“Our number one concern was that we wanted (our tax money) here,” Davis told a delegation that included the Lake County board and county administrator Matt Huddelston“And the first time we hammered you pretty hard over here... I don’t feel there’s any problem with that, and I feel you will do what you say you’re going to do.”
As proposed, and authorized by state legislation, all lodging establishments in Lake County will collect a four percent tax.
Three percent will be set aside for maketing and tourism promotion, and an additional one percent will help fund local events.
For decades, establisments in Fall Lake have already collected a three percent tax, and the township is part of a joint powers agremement with neighboring entities includine Ely and Morse Township. The revenues are funneled to the Ely Area Tourism Bureau, which annually comes up with a marketing and promotion plan to lure visitors to the area. Officials indicated last spring that the local three percent “bed tax” generates about $300,000 annually.
Much of the meeting at Fall Lake focused on the machinations associated with dissolving the existing tax agreement and implementing the new one, and representatives stressed that when the dust settles, the new tax rate for lodging establishments in Fall Lake would be four - and not seven - percent.
Davis and other local officials had voiced concerns in the spring about revenues from Fall Lake establisments going to Two Harbors, home of the Lake County seat.
But Huddelston and other county leaders said their intent has always been to benefit the entire county.
“We’d be looking to collect that and then work on a process on how we give the three percent back to the Ely tourism bureau,” he said.
County commissioner Rick Goutermont said he’s been supporting the concept of a county-wide lodging tax for more than 20 years, adding “we heard your concerns and we’re doing what we can to make it work the way you want it to work.”
County officials said the new tax will have advantages, bringing more lodging establishments under the taxing umbrella - including campgrounds and vacation rentals.
Goutermont said the net impact might be an increase in lodging tax funds available to market the Ely area.
Davis agreed.
“I think we’ll show an increase,” he said.
Enforcement will also be more stringent, with the state taking on collection duties and providing a means to ensure establishments collect and pay the tax.
Janelle Jones, who heads the tourism bureau in Two Harbors, added “we want what’s best for everybody up here too. That’s the message we want to send tonight.”
County leaders and local tourism officials also said they were excited about how the additional one percent might be utilized by individual entities across the county, including Fall Lake.
A county advisory board will be set up to determine how to distribute the one percent tax for local events, but funds must be sent back to the entities where tax funds were generated.
“I think that can be good for us up here,” said Davis.
He pointed to an upcoming ATV event as one of many functions that could benefit from lodging tax funds.
“There could be 350 to 400 ATVs up here in the fall,” said Davis.
Like Fall Lake, both Two Harbors and Silver Bay currently collect a three percent lodging tax, but county leaders sought a countywide initiative to bring all establishments in and create a larger fund to market the region.
“We’re looking to strengthen our shoulder seasons and existing events,” said Huddelston.
Cook County has a similar tax that pumps nearly $400,000 into local promotion, and Lake County leaders say they hope to build synergy with the Ely area.
Davis also downplayed concerns that Fall Lake may be competing against entities within the county.
“I think the North Shore is marketed very differently than this area,” said Davis. “We wish we had your fall color business. We have never been able to capture that market.”
Board chairman Rich Sve said “for my part, we are promotin each other.”
It’s not yet clear when the tax will be implemented, given deadlines and legal requirements.
Davis and others said they were hopeful the switch could be made before the start of the summer tourist season.
“It’s not the doom and gloom when we first heard about it,” said Davis. “It’s better than we anticipated. I’m looking at the bright side of this personally.”