Municipal accommodation tax examined

Luke Edwards

Grant Haven Media

They have some work to do before it becomes a reality, but Norfolk County has taken a significant step towards creating a municipal accommodation tax (MAT).

Councillors approved the creation of the tax, in principle, at the Feb. 11 council-in-committee meeting. However, an amendment from Mayor Amy Martin will mean no money will be collected until a direct marketing organization (DMO) is established, its governance structure finalized and a short-term rental (STR) bylaw is approved and in effect.

“There would be no collection nor would there be any spending of funds until such time as some of these community concerns have been alleviated,” she said.

Earlier in the meeting local business owners Helene Larochelle and Michael Nimchuk shared some of those concerns that would later be reflected in Martin’s amendment. Nimchuk summed up their concerns in four major areas: the lack of an STR bylaw, the need to have industry input, arm’s length separation of the DMO from the municipality, and financial accountability.

Consultants who were hired to explore the MAT acknowledged the need to regulate STRs, though they suggested it could be done in parallel with development of a MAT.

“We are cognizant of the fact a short-term rental bylaw is something that needs to be done,” said Peter Thoma, from urbanMetrics.

Nimchuk preferred to get a STR decision finalized first.

“Let’s address this big elephant in the room that’s been discussed for years before but no one’s ever done anything with,” he said.

Larochelle told councillors the existing tourism marketing efforts for Norfolk remain lacking. According to some research she performed using Google analytics, only the Port Dover Friday the 13th event ranked in the Top 40 for Ontario. Using internal staff like the economic development department would not only increase their burden, but it would leave valuable marketing expertise on the sidelines, she said.

“Let members of the industry lighten that load and run the tourism marketing entity instead,” she said, supporting a “fully independent DMO operated by representatives from the tourism sector and tourism marketing specialists.”

A municipal accommodation tax is an extra fee placed on people staying in accommodations like hotels or Airbnb locations. It applies to most overnight stays of 30 consecutive days or less, though there are some exceptions.

The proposal in Norfolk would see a four per cent fee, which Thoma said is fairly standard among the roughly 80 similar taxes in Ontario.

Under provincial legislation, half the revenue raised would go to a DMO, and the other half would go to the municipality, to be used for infrastructure and initiatives related to tourism. 

Staff have suggested the DMO could be operated through a possible municipal development corporation. A report outlining MDC options is expected to come before council in March.

“Tourism is a key economic driver in our community and our consultation throughout this process revealed near universal agreement that tourism is critical economic development priority within our county,” said Stephanie Potter, manager of corporate initiatives for the County.