City Council members want a little more discussion before making a decision on a funding disbursement formula for revenue generated by Lawton’s 7 percent hotel-motel tax.
And, the Lawton Economic Development Corporation (LEDC) wants the council to reconsider its decision to totally eliminate hotel-motel tax funding for that entity, rather than relying solely on economic development funding in the 2019 Capital Improvements Program.
The fee, charged on the rental of hotel and motel rooms and similar facilities such as Airbnbs, is projected to generate $1.45 million in the fiscal year that begins July 1. Adjusting for $200,000 allocated to Hilton Garden Inn for recovering costs associated with building the structure in a Tax Increment Financing District, that leaves $1.25 million to allocate to four broad funding categories: the Lawton Economic Development Trust Authority, tourism, economic development and the Lawton Fort Sill Chamber of Commerce.
Until this fiscal year, the chamber and LEDC had shared 70 percent of the revenues generated by what was a 5.5 percent tax, with the remaining 30 percent allocated to the other categories. This fiscal year, the chamber’s allocation was cut to 60 percent and total projected revenue total was cut in half to reflect the expected economic downturn and drop in hotel occupancy rates from the COVID-19 pandemic.
The proposal for the 2021-2022 fiscal year would keep the chamber’s allocation at 60 percent or $750,000, then give 18 percent or $225,000 to tourism (it had been 14 percent), 15 percent or $187,500 to the city’s economic development fund (it had been 11 percent) and 7 percent or $87,500 to LETA (it had been 5 percent). The proposal tabled by the council was different than what members indicated they would May 21 at a budget workshop: give 14.4 percent ($180,000) to the LEDC and allocate 0.6 percent to the city’s economic development fund. However, this week’s decision — which was not discussed by the council in open session — was a return to indications earlier this year that LEDC funding would be eliminated.
LEDC Chairman Ron Nance said he and his board question the decision when that entity has received $313,000 in recent years for the activities designed to attract new industry and retain existing industry in the roughly 1,000 acres available in industrial park tracts in west Lawton and near Lawton-Fort Sill Regional Airport.
While LEDC has been allocated funding through the 2019 Capital Improvements Program’s economic development categories, Nance said it is important that entity also receive its traditional hotel-motel tax allocation. He said the entity meets the criteria for the funding, explaining economic development increases population and jobs, while providing more taxes that fund local entities. But, local financial support hasn’t been great.
“We’re funded at one-third of what Duncan gets,” Nance said, adding that while LEDC saw increased funding in this fiscal year, it still lags behind economic development entities in other communities and that is important in the fight for industry. “We need to get the hotel-motel tax.”
Nance said recruitment efforts are paying off, explaining the announcement earlier this spring by Carter Wind Energy is the first of what members expect to be other announcements. He said there is the expectation of adding 5,000 jobs to the community over the life of the 2019 CIP, adding it is “urgent we continue to get the same amount of hotel-motel tax.”
Mayor Stan Booker said he has concerns about cutting all funding to the LEDC, explaining while money is available in the CIP, $14 million is tied to the FISTA/Central Mall project, which allowed the city to purchase the mall and provides the collateral to back a loan FISTA secured to fund renovations. Booker cited other projects that could make claims on CIP revenue: plans to install a new gas main for the west industrial tracts, and rebuilding Goodyear Boulevard and possibly extending that arterial to tie into the Rogers Lane/U.S. 62 overpass.
“We need to figure out how to get LEDC back into the hotel-motel tax,” he said.
City Manager Michael Cleghorn said it is possible to allocate funding to LEDC from the city’s economic development fund, whose $925,000 balance is expected to grow to $1.1 million at the end of the fiscal year. That fund helps provide financial incentives for development and it could be used to supplement LEDC’s budget, he said.
Ward 4 Councilman Jay Burk, who cast the only “no” vote on the motion to table, said the chamber’s activities are important to the community and Fort Sill, and the council needed to make some decisions.
“We’ve got to find a full-time funding source,” he said of an LEDC revenue stream, adding that while $313,000 will help fund the entity, it is “not near enough money.”
Council members noted the relatively small amount of money generated by the hotel-motel tax versus the number of entities funded (nine entities or activities get money from the tourism category, for example). Ward 8 Councilman Randy Warren said it was a matter of deciding “whose ox is going to get gored” when cutting funding to support the LEDC.
Warren said designating CIP funds to the LEDC was not intended to be a permanent solution; the ultimate solution is getting all the involved entities around a table and “hammer it out.” Ward 6 Councilman Sean Fortenbaugh said the decision is important.
“So many jobs are heading for Lawton,” he said, of economic development recruitment efforts that, because they have not been finalized, cannot be announced yet.