The House of Delegates on Monday night killed a bill proposed by Del. Richard H. Black (R) that would have required money generated by a 5 percent tax on Loudoun hotel rooms to be spent on tourism.
Loudoun County officials have been using a percentage of the funds to block development of some land, a program they say helps to attract visitors to its rural stretches. County officials also said the matter should be dealt with on the local, not state, level.
"All I can say is I was very delighted to hear that bill did die because I do feel that it is a discussion we need to have first," said Supervisor Eleanor C. Towe (D-Blue Ridge). "We're terrified what's happening down in Richmond. We just don't know what bills might negatively affect our county and take our local authority away from us."
Black was adamantly opposed to funding purchase of development rights, or PDRs, with money from the tax.
"You can't just take money and transfer it to wealthy people who own estates in the woods," Black said last week. "The problem with the PDR program is that it's really a transfer of wealth from the people to wealthy landowners."
Of the 5 percent transient occupancy tax (TOT), 2 percent goes into the county's general revenue fund. The remaining 3 percent, projected to be $2.15 million in fiscal 2003, is restricted to tourism-related programs and now PDRs.
The supervisors are authorized to decide how to spend one-fourth of the restricted fund. The other three-fourths is allocated by the Economic Development Commission to the Loudoun Convention and Visitors Association and grant applicants.
Loudoun supervisors voted Monday to spend $4.6 million to purchase development rights on six properties totaling 1,695 acres. Under the arrangement, the six property owners keep their land but give up the right to build hundreds of homes there.
The House of Delegates finance committee approved a compromise bill Friday that would have allowed the county to continue using some of the tax money to pay landowners not to develop land, through its PDR program, but restricted it to tracts adjacent to tourist sites. The House defeated that, too.
Loudoun County lobbyist Memory Porter said Black's bill would have hampered efforts to protect open space that would in turn aid tourism. For example, she said, the bill would have prevented the county from using PDR funds for a proposed trail along the Potomac River because the land wasn't next to an existing tourist site.
Loudoun hoteliers said it was wrong for the county to use the restricted portion of the tax for PDRs. They argued that the money that goes to PDRs does not directly affect hotels and tourism efforts. The portion of the tax designated for spending on tourism should be spent solely on marketing and promotion of Loudoun, its tourism sites, events and hotels, they said.
The original legislation sent to Richmond would have ensured that money from the tax would return to its collectors in the form of tourism marketing efforts.
"We had mentioned to [Black] and everybody that was on the committee that we thought it was a good idea because it would add some clarification to how that money was to be used," said Hal Powell, director of sales and marketing at Lansdowne Resort & Conference Center.
"The original legislation is exactly what was needed here to ensure that in Loudoun, the hotel community got a return on investment with the tax money," said Jonathan Schwartz, general manager of Fairfield Inn Dulles. If the tax money goes to PDRs, he said, "that does not serve my hotel well in Loudoun because PDRs have no bearing on my business, none whatsoever."
Powell said he and others would like to restart a conversation with the Board of Supervisors, not with the General Assembly.
"When [the bill] was originally proposed by Del. Black, we were for it," said Powell, who estimated the amount of TOT collected by Lansdowne at $562,000 annually. "Where we feel the TOT usage is most beneficial is when it is used to fund" the Convention and Visitors Association. "That's the organization that provides sales, marketing and tourism promotion for Loudoun County."
Bill Gallant, owner of the Stonegate bed-and-breakfast in Hamilton favors PDRs. Stonegate needs land to attract tourists, not an abundance of townhouses, he said. All 19 bed-and-breakfasts in the county are west of Route 15, indicating that people come to Loudoun for the weekend because of its bucolic reputation, he said.
The restricted portion of the tax, however, should not be what funds the program, he said. He would rather that the portion of the tax meant for the general fund go to the PDR program.
"If forced to choose between not being able to fund the PDR program or funding it from the TOT for a while, I would choose it to be funded from the TOT," he said. "I would have liked to have seen the county designate the 2 percent that goes into the general budget specifically for PDRs. That would make a known funding source."
Cheryl Kilday, president of the Convention and Visitors Association, said representatives of the tourism industry, the association and the Board of Supervisors will meet next week to discuss the restricted tax.
In a letter to Black last week, Kilday said the LCVA believed that the restricted tax has a "great deal of stress upon it" but would like to handle the situation locally, with the supervisors.
She said her greatest concern was the restricted tax would not produce enough money for so many different uses, such as the PDR funding, tourism grants and marketing.