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10 Things You Need to Know About City’s $800K HOT Tax Accrual

1. City’s Coffers Swell: By the end of September, the city is set to accumulate a significant $800,000 in interest on the hotel occupancy tax (HOT) deposit, previously earning no returns with the Park Board of Trustees.

2. Revenue Expansion Efforts: The city council has been on a mission to broaden its revenue streams and strengthen the general fund, leading to a collision course with the Park Board and its financial holdings in 2022.

3. New Contract Agreement: To address the HOT collections and their allocation, the city council and the Park Board reached a new contract agreement in March, outlining the specifics of depositing hotel occupancy taxes collected by the Park Board into the city’s coffers.

4. Record-Breaking HOT Collections: The Park Board, responsible for island tourism oversight, collected a staggering 15 percent tax from hotel and rental stays last year, amassing a record-breaking $29.6 million from around 8.1 million tourists.

5. Spending Constraints: State law imposes strict restrictions on how HOT revenue can be used, primarily limited to tourism-related endeavors such as advertising, promotion, funding the Beach Patrol, and maintaining public beaches.

6. Unrestricted Fund Debate: The city has been exploring the possibility of utilizing unrestricted money, including accrued interest on HOT deposits, for a more diverse range of expenses, leading to contrasting perspectives with the Park Board.

7. Interim Agreement: Following discussions, the city and the Park Board agreed on an interim arrangement in March, requiring the Park Board to deliver collected hotel occupancy tax to the city twice a month.

8. Leadership Changes: Several changes have occurred within the Park Board, including the resignation of the CEO and two trustees, one trustee opting not to seek reappointment, and a former chairman failing to secure sufficient votes for reappointment.

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9. Streamlining Financial Transactions: Both parties are considering reducing the frequency of HOT deposits and transactions between the city and the Park Board, with the idea of biannual deposits gaining traction.

10. Pending Legal Agreement: Despite progress, finalizing an interlocal agreement, which will legally formalize the financial relationship between the Park Board and the city, may take up to a year. Until then, both parties balance revenue diversification and supporting tourism-related efforts.

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