TAMPA, Fla. -- The City of Tampa has responded to a lawsuit by the Speaker of the Florida House, Richard Corcoran, over a controversial hotel marketing fee, rejecting his claims that the fees equate to an “illegal tax” and requesting a judge dismiss the suit for lack of merit.
The case could have widespread impact on a city’s right to create special taxing districts, including a potential “entertainment district” that has been discussed as a way to create a specific tax to fund a proposed Rays stadium in Tampa.
The suit was filed in October following a 10Investigates story exposing how the City of Tampa was allowing downtown and Ybor City hotels to get around the state’s cap on how much tourists can be taxed when checking out of a hotel room. A new $1.50 per night “fee” is now being tacked on at check-out to guests staying in any one of 13 participating hotels.
The city’s response, filed Thursday afternoon by law firm GrayRobinson, claims the Speaker has no right to challenge the special marketing district, and that the hotel charges are not a “tax,” but a “fee,” allowable under the state’s Constitution. It also accuses the Speaker of launching “an assault” on “home rule powers.” The original complaint alleged the “tax…infringes on the Florida Legislature’s constitutional power to authorize and prohibit the local imposition of non-ad valorem taxes like the so-called Tourism Marketing Assessment.”
A dozen hotels in Downtown Tampa and Ybor City began charging the $1.50 per night fee this summer to boost marketing efforts. The fees were approved unanimously by city council, and are expected to give local hotels upwards of $1.5 million per year for a fund, controlled by the Hillsborough County Hotel and Motel Association (HCHMA).
HCHMA Executive Director Bob Morrison said the organization hoped to used the money to compliment Visit Tampa Bay’s marketing efforts, and ultimately expand it across the county.
But Corcoran’s suit claims Visit Tampa Bay has already received $55 million from the county for marketing in the last six years and spent $140,000 of it funding the HCHMA’s efforts to convince Tampa City Council to approve the new fee.
When 10Investigates asked why the marketing funds were not simply built into room rates and taken out of hotel revenues, Morrison said, “every little bit helps.” Local hotels also get to spend the money however they’d like, only having to submit an annual report to city council for re-approval of the collections. Hotels do not pay taxes on the millions collected from local tourists.
"Certainly, what (the 12 hotels) could have done, is just raise rates $1.50 per night per room and spend the money that way, independently," said Bob Morrison, executive director of the HCHMA. "But they said, if we collectively pool our resources, we're going to be stronger and the destination is going to be better."
Morrison said the more the city and county spend on marketing and tourist-driving events, the more money out-of-towners will spend at Tampa-area businesses.
Hillsborough County could allocate more of its existing bed tax revenues – approximately $30 million total per year - to marketing, but a large portion of it is already committed to stadiums for the Bucs, Lightning, and Yankees. And future revenue growth is believed to be earmarked for a potential new Rays stadium.
The city’s response on Thursday pointed out “No one appeared or spoke against the Ordinance either at its first reading on March 2, 2017, or at the duly advertised public hearing and second reading on March 16, 2017…At no time during the numerous proceedings and hearings of the City Council did anyone object to the adoption of the Ordinance, the approval of the Assessment Methodology Report, the approval of the assessment roll, the levy of the special assessment, or the approval of the Agreement.”
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