City considering transient room tax as source of revenue for potential indoor sports complex

August 3, 2022 | 12:10 am

Updated August 16, 2022 | 11:14 pm

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In an effort to bring in money that would help fund a potential indoor sports complex, City Commissioners are considering two ordinances — one of which would push Owensboro near the top of the highest transient room tax rates in the state.

City Manager Nate Pagan said that officials found the often-called “Hotel/Motel tax” could be a significant source of revenue for the funding of a sports facility. The tax would apply to all visitors that are staying in temporary lodging like hotels and Airbnbs/VRBOs. (State lawmakers passed legislation that, effective Jan. 1, 2023, changes the terminology on the tax to include visitors staying in Airbnbs, VRBOs, etc. less than 30 days.)

County officials recently approved a 6% transient room tax rate, and the ordinance being considered by the City of Owensboro would stack a 4% rate on top of that — making it a total of 10% inside city limits. That would put Owensboro next to McCracken County and Paducah at a 10% rate.

“Because of these provisions, almost all transient room tax revenue will be generated by visitors as opposed to our local residents,” Pagan said.

Nonetheless, Pagan said that any impact from the taxes is more than offset by the significant economic impact that will be generated by what officials are calling the SportsPlex (which has not been approved but has been discussed in recent meetings).

Estimates suggest that the facility will conservatively generate 12,360 new room nights in the city per year — an increase to the local hotel occupancy of 3 percentage points.

Pagan said that the taxes would be received by a monthly return from the lodging entities. It would operate on a 30-day delay. He added that all primary hotels in the area have been notified already about this ordinance.

Subsequently, the state requires a companion ordinance to be enacted should the transient taxes be enacted. The second ordinance would require the formation of a tourist commission to promote and develop convention and tourist activities in local facilities.

However, Pagan noted the city already has similar organizations with the Owensboro-Daviess County Convention & Visitors Bureau (CVB). 

“We envision this new tourist Commission created by this ordinance to contract with the city of Owensboro for facilities and the existing visit overall CVB to market our community,” Pagan said.

As this was the first reading, neither ordinance was passed. They can be voted upon after a second reading at the next commission meeting.

August 3, 2022 | 12:10 am

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