12 - HOTEL OCCUPANCY TAX AGREEMENT

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Item No. 12 memorandum TO: Mayor & City Council FROM: John Godwin, City Manager SUBJECT: HOTEL OCCUPANCY TAX AGREEMENT DATE: August 15, 2016 BACKGROUND: As previously reported to you, I have been meeting for several weeks with the Chamber president and board chairman about renewal of the contract with the Lamar County Chamber of Commerce to receive and manage most of the city's hotel occupancy tax (HOT) revenues. The HOT rate in Paris is 7 %, of which 5% is retained by the city for administrative expenses. Of the remainder, three- sevenths of HOT proceeds are used for the Love Civic Center and four - sevenths for the VCC. STATUS OF ISSUE: The major issue for the chamber is the ability to invest large sums to improve the center and make capital maintenance improvements when necessary. This necessitates a longer term capital lease, which is pretty common practice for management leases, though new to us. The city would have authority to approve or deny any debt incurred on the center or its grounds. Two other changes from the existing agreement include the possibility of an additional 1% (which I strongly recommend be required to be used for capital maintenance only if ever adopted), and granting the LCC board the authority to give priority to events that will bring in overnight visitors (since that is the reason the HOT legally exists). BUDGET: NA. RECOMMENDATION: Approve agreement, with any modification needed.