Spokane Valley opts to go it alone with $731,569 in hotel fees | Washington

(The Center Square) – The Spokane Valley City Council has decided to go it alone on marketing paid by lodging taxes. Is reaching out to hoteliers to ask that they support that decision.

The city has been dissatisfied with its return on investment in the regional Tourism Promotion Area (TPA) program. This week, the council decided to terminate the interlocal contract with the City of Spokane and Spokane County that set up the TPA.

Erik Lamb, deputy city manager, told the council Tuesday that the assessment had generated $731,569 in Spokane Valley during 2021. He said that figure was likely to be lower than 2022 because the nightly rate had increased from $2 to $4 last April.

“The amount we’re talking about is not unsubstantial,” he said.

The TPA agreement has been in place since 2004, and modified several times. Last year, Spokane Valley began looking at moving away from the regional approach to distributing funds collected from hotels with 40 units or more.

Lamb said revenues for the regional TPA had historically been about $3 million annually at $2 per room. Between $50,000-$60,000 of that revenue was awarded as grants to differing groups. Seventy two percent of the funding was directly allocated to Visit Spokane and 28% to the Spokane Sport Commission.

The majority of spending on marketing campaigns benefitted Spokane but not its neighboring city, he said.

Even if hoteliers in Spokane Valley wanted the fee to revert back to $2, Lamb said the city could still invest more in marketing than under the current formula.

City Attorney Cary Driskell briefed the council on its legal rights with termination at the March 8 meeting. He walked the elected body through steps taken since November 2020 when a termination clause was added to the interlocal agreement.

In October 2021, a resolution was adopted to terminate the TPA agreement. A couple weeks later, city staff hand-delivered letters with a copy of that resolution to Spokane and the county.

“From a legal standpoint, the city has met all requirements,” said Driskell.

He said the agreement would lapse at the end of the year. To ensure a continuation of funding, 60% of local hoteliers would need to initiate a petition for a new TPA that would needed to be ready to go by mid-October 2022.

Councilor Ben Wick said years of trying to get a different funding distribution system in the existing TPA had been unsuccessful, so he felt termination of the interlocal agreement was justified.

“We’ve been trying to work with them but, in my opinion, we’re still struggling to get the attention from the regional system,” he said. “I’m hopeful we’ll stay the course [with termination] and put Spokane Valley in a better position for tourism marketing.”

Councilors Brandi Peetz and Laura Padden asked Lamb to make it a priority to initiate discussions with hoteliers about the issue. They said there was a lot of misinformation floating about and it had caused a lot of confusion.

“I think educating everyone would be better in the long run,” Peetz said.

Padden asked what feedback the city had already gotten about the issue. John Hohman, city manager, said there had been concerns expressed about the termination, but most hoteliers he had conversed with “didn’t see the benefit” of the program.

“To me, that’s indicative of why we’re here,” he said.

He said hoteliers could see the money going out, but not coming back in. He agreed with Padden and Peetz that a series of meetings needed to be set up with hoteliers to decide how the tax for overnight stays could best benefit Spokane Valley.

“I think that’s a big piece,” he said.

Wicks said Liberty Lake has its own TPA that is customized to maximize benefits for its hotels. He said that example should be pointed out so that hoteliers in Spokane Valley could see the possibilities.

“I think we would be way, and far above, ahead to do our own – but we don’t have a say, the hoteliers have a say,” said Councilor Arne Woodward.

Councilor Tim Hattenburg agreed that local control would be the best option.

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