By Jeff Parrott
South Bend Tribune
SOUTH BEND – South Bend area elected officials and business and tourism leaders are pushing a hotel tax increase they say would bolster projects aimed at drawing more visitors.
South Bend Regional Chamber President and CEO Jeff Rea said the move would be especially welcome by restaurants and hotels, which have been hit hard by the COVID-19 pandemic.
“We’re thinking ahead to the post-pandemic period and how we can help drive economic recovery,” Rea said Monday while briefing South Bend Common Council members on the proposal. “We know one of the best ways to do that is to improve product.”
New funding from the tax hike would benefit existing venues, such as the Morris Performing Arts Center and Potawatomi Zoo, as well as a planned sports complex in Mishawaka.
An Indiana Senate bill would allow the St. Joseph County Council to increase the tax, paid by anyone staying at a hotel or motel in the county, to 8% from 6%.
Mishawaka sports project
The bill would increase annual revenue from the tax to the planned Mishawaka Sports Complex, from 0.6% to 1%, as youth sports is the fastest-growing tourism segment, Rea said.
The city plans to build the complex, targeting indoor sports such as basketball, volleyball and possibly hockey, on land between Douglas and Cleveland roads.
Visit South Bend Mishawaka in 2016 commissioned a feasibility study that found there would be strong demand for the complex, which would be city-built and owned but run by a private company, similar to Four Winds Field in South Bend.
Rob DeCleene, executive vice president of the chamber, said he, Mishawaka Mayor Dave Wood and Mishawaka City Planner Ken Prince in December visited a youth sports complex in Pendleton that could serve as a model.
DeCleene said the city is working with a Westfield-based developer. Asked what the project might cost or how it would be paid for, he deferred to Prince, whom The Tribune could not immediately reach.
The zoo and the Morris
The bill would increase the tax’s revenue distribution to the Potawatomi Zoo from 0.4% to 0.5%. Critics, however, have complained that the zoo doesn’t attract out-of-town visitors who would stay in hotels.
The bill, for the first time, also would earmark some of the hotel tax money to the Morris Performing Arts Center, giving it 0.5% of the 8%, or roughly $500,000 annually under recent trends.
The Morris, owned by the city of South Bend and marking its 100th anniversary next year, plans to soon launch a fundraising campaign for renovations to draw bigger shows.
The bill also would carve out 1% of the tax revenue annually for a new Tourism Capital Development Fund, which would give matching grants to organizations and businesses that propose projects with the potential to boost hotel business.
As a hypothetical example of a grant, Rea mentioned The Ice Box might add another rink that would let it attract more youth hockey tournaments.
Partly because Century Center, Visit South Bend Mishawaka, and capital projects overseen by the local hotel tax board would retain their combined 5% annual take from the tax, South Bend Mayor James Mueller said he is “really excited about this package.”
The pandemic made 2020 comparisons meaningless, but in 2019 the tax generated about $6 million, meaning a percentage point in the tax roughly corresponds to $1 million, Rea said.
Rea said of the 15 Indiana counties that have hotel taxes, five have their rates set at 8%, and Marion’s tax is 10%. Four of the counties with 8% rates — Vanderburgh, Hendricks, Vigo and Howard — are smaller than St. Joseph.
The bill, authored by Sens. David Niezgodski, D-South Bend, Linda Rogers, R-Granger and Ryan Mishler, R-Bremen, is slated for a hearing Tuesday before the Senate Tax and Fiscal Policy Committee.
If it’s approved by the state legislature, the St. Joseph County Council would need to adopt an ordinance enabling the increase and new revenue distribution.
County Council President Rafael Morton said he wasn’t ready to say he’s supporting the tax hike but that “it’s worth consideration” because smaller counties have higher rates and it generally would not affect county residents.
Morton said he has asked DeCleene to brief council members on the proposal at their Feb. 25 meeting.
Rea and DeCleene told South Bend council members that travelers don’t typically select their hotels based on the county’s tax rate, and don’t even see it until they check out. Niles doesn’t have a hotel tax but that doesn’t drive people visiting St. Joseph County to stay in Niles hotels, Rea said.
JSK Hospitality, which operates six hotels in the county, including the Holiday Inn on Douglas Road in Mishawaka, less than a mile from the proposed sports complex site, would appreciate any increased business, said Kristina Palmer, executive vice president of sales and operations.
“If the funds generated by this increase are utilized to bring more lodging room nights to this market,” Palmer said, “we’re all in support of that.”
This article was made available through the Hoosier State Press Association.