Seattle Southside RTA concerned with King County Exec’s new tax proposal


By Scott Schaefer

King County Executive Dow Constantine on Wednesday (May 23) announced a proposal that would change the intended allocation of lodging tax dollars away from the local tourism industry, beginning in 2021.

Constantine is proposing to shift money previously promised to support tourism promotion – first passed in 2011 as ESSB 5834 – and re-direct funds to non-marketing activities, and this has some local leaders concerned.

Constantine’s proposal would reallocate tax revenues away from the tourism biz and towards arts programs, museums, workforce housing, transit-oriented housing development and services for homeless youth.

Lodging taxes would also be allocated to two regional public facilities districts – Safeco Field and the accesso ShoWare Center in Kent – for upkeep of basic stadium infrastructure.

“To direct dedicated tourism promotion dollars to Safeco Field maintenance and the already well funded 4Culture without a conversation with Seattle Southside Regional Tourism Authority – a public development authority created for regional tourism marketing – is simply wrong,” Katherine Kertzman, President & CEO of the Seattle Southside Regional Tourism Authority told The B-Town Blog.

Seattle Southside RTA is the official destination marketing organization for SeaTac, Des Moines and Tukwila, and markets the region to leisure and business travelers as well as meeting and event planners. It is funded by a self-assessed hotel fund and supported by a lodging tax from the cities of SeaTac, Tukwila and Des Moines.

First, some background on Constantine’s new proposal from the county:

“Beginning in 2021, by state statute, King County will transfer 37.5 percent of lodging tax revenue – roughly $13.5 million annually and expected to rise over time – to 4Culture to support art, cultural and heritage facilities, as well as the performing arts.

“Also under state law, another 37.5 percent will be directed to the county Department of Community and Human Services to support transit-oriented housing development or services for homeless youth.

“King County Executive Dow Constantine proposes allocating the remaining funds beginning in 2021 to programs and facilities that attract visitors to the region, as directed by state statute. This would include a new fund, in coordination with the visitor industry, to bring tourists and business travelers to the region, an allocation to the public facilities districts that own Safeco Field and the ShoWare Center, and other investments as determined by the King County Council.

“In 2021, the Washington State Major League Baseball Stadium Public Facilities District, which owns Safeco Field, is expected to receive approximately $4 million of the $36 million total.

“The dollars would be part of a Capital Expenditure Fund to maintain the 20 year-old ballpark, such as plumbing, electrical, HVAC systems, and retractable roof upkeep. The Mariners also contribute to the Capital Expenditure Fund, as does the Washington State Major League Baseball Stadium Public Facilities District via parking and ticket taxes.

“Under the proposed motion, the City of Kent Special Events Center Public Facilities District will receive about $203,000 of lodging tax in 2021 to support capital maintenance of the ShoWare Center sports and events facility in Kent.”

Katherine Kertzman

SEATTLE SOUTHSIDE RTA CEO REACTS
“We’re looking for a conversation with Dow to modify the motion and hope to carve out a portion of the King County 2% state shared lodging tax for Seattle Southside RTA, given we represent a significant number of hotel rooms in the county,” Kertzman said. “And tourism and travel is an important industry in our communities. It is critically important we invest in destination marketing to replenish the funds as was promised in the original legislation negotiations.”

Kertzman added that Constantine’s proposal “will have a very negative ripple effect on the economic vitality of our region,” in a letter she sent to him on Thursday, May 24:

“As you well know, travel and tourism are a major economic driver for all of King County and Washington State. In the Seattle Southside cities of Des Moines, SeaTac and Tukwila, tourism generates a return on investment of more than $40 for every dollar spent marketing the region to visitors. That impact makes us the rival of many regions around the country and the world.

“Seattle Southside employs 5,000 people in the tourism industry with visitors spending a record $726 million with $75.4 million generated in local and state tax receipts.

“Our ongoing commitment to promoting tourism translates to increased job opportunities, tax receipts, and revenue for our hotels, restaurants, attractions and amenities. The next effect is that tourism saves the average homeowner in our region $916 in taxes each year.

“We fully support the original plan to invest lodging tax dollars that are earmarked for ongoing tourism promotion, 4Culture and affordable housing initiatives. But we all must realize that tourism promotion has proven to be an incredibly valuable investment in our community, providing economic benefit not just for citizens and businesses, but also for making possible many other community services.

“Please be aware that directing lodging tax dollars away from tourism promotion and marketing will have a very negative ripple effect on the economic vitality of our region and it will do nothing to generate new business that will replenish the fund.”

“Tourism Marketing is a very good investment,” Kertzman added. “We urge county leadership and budget negotiators to make certain the County honors the original intent of the 2011 legislation and invest a portion of King County lodging tax in tourism promotion and marketing that generate overnight stays in paid accommodations in our region. The lodging tax investment in tourism marketing by the County will provide almost immediate returns on the investment to State, County and local coffers.”

Here are more concerns that both the Seattle Southside RTA and the Seattle Southside Chamber of Commerce have:

  • “We fully support the original plan to invest King County lodging tax dollars that are earmarked for ongoing tourism promotion, 4Culture and affordable housing initiatives. The opportunities for a return on the County’s investment through a tourism marketing program will continue to help grow our local economies.
  • “The lodging tax investment in tourism marketing by the County will provide almost immediate returns on the investment to state, county and local coffers. The important tax and spending revenue generated by travel and tourism will make a difference for years to come.
  • “The total estimated visitor spending in 2017 for just the combined cities of SeaTac, Tukwila and Des Moines was $719.6M. Day travel represents less than 4% of all visitor spending while overnight travel in paid accommodations generates 93% of the total visitor spend.
  • “Southwest King County represents over 8,000 hotel rooms, the second largest grouping of hotels in the state. To grow local tourism revenues, King County must invest more in promoting overnight stays in paid accommodations.
  • “The creation of the Seattle Southside Regional Tourism Authority – a public development authority created for regional tourism marketing – was necessary to ensure accountability and a return on the communities’ investment.
  • “It is important for government follow through on their public promises in an open and transparent way.
  • “Four out of five tourism-related companies are small businesses.
  • “Highest employer of women and minorities.
  • “Tourism consumer marketing returns $42.86 in new visitor spending to the communities of Seattle Southside Regional Tourism Authority for every $1 spent.”

UPTHEGROVE NOT UP FOR IT EITHER
King County Councilmember Dave Upthegrove, who represents the south end’s District 5, isn’t a fan of Constantine’s proposal:

“South King County will benefit most if we spend regional tourism promotion dollars on attracting overnight guests. The hotel industry and broader service industry in SeaTac in particular is an economic engine that provides good jobs. Using $180 million to offset costs for one business (the Mariners) doesn’t do squat for our community in South King County. The Mariners are here to stay; it’s just a question of whether they pay their own cost or whether we give them $180 million in public county tourism money to offset their expenses.”

Constantine’s proposal will be forwarded to the council by December 31, 2019, “in order to inform the budget process for the 2021 – 2022 budget.”


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