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For the week of Dec. 8, 1999 through Dec. 14, 1999

Tourism drives our economic engine

Commentary by CAROL WALLER

The issue of funding community-wide marketing efforts through the Local Option Tax (LOT)—an additional sales tax on lodging, liquor, retail and building supplies—has recently been questioned by some local residents. We believe this offers us the opportunity to once again help explain the importance of the efforts made by the Sun Valley/Ketchum Chamber of Commerce (a non-profit organization) to maintain a healthy business environment. A strong economic climate in our community does benefit everyone who lives and works here.

Tourism is the main economic engine that enables local residents to enjoy a unique quality of life and special amenities that are not found in non-destination resort towns of our size. Without the business that tourism brings to our community, we would not have such a wide array of outstanding restaurants, unique shops, hundreds of top rate cultural events, and first-class recreational amenities. Most of us live here precisely because of all these wonderful assets.

It is a fact that growth is happening at a rapid pace in many small towns throughout the country, especially resort communities like ours. People are relocating in record numbers from urban areas to small towns that offer a very high quality of life.

This "urban flight" phenomenon is a result of many factors, and the raging bull market over the past decade has certainly helped fuel the displacement of urban refugees to desirable resort communities throughout the nation. This displacement has led to an influx of new residents, more building and development and more strains on the existing infrastructure.

The Chamber’s mission is to promote tourism and economic development and to preserve the quality of life in the Wood River Valley. We recognize that the unique community attributes that residents want to preserve are the same ones that appeal to visitors. While we are working hard just to maintain our existing tourism base in a highly competitive marketplace, we are also concerned with finding ways to properly plan for and mitigate impacts of the growth our community is experiencing. That is why the chamber board, staff, volunteers and members are actively involved in transportation, housing, downtown improvements and other related community planning efforts. All of us who live here, whether we are involved directly in the local business economy or not, have a vested interest in how well our community grows into the future.

The LOT was created more than 15 years ago as a vehicle for raising additional revenue (primarily from tourists) in the cities of Ketchum and Sun Valley to help fund important city services and infrastructure improvements.

Without the LOT, these services and improvements would either not happen, or they would have to be paid by local residents through increased property taxes. And while property values have risen dramatically throughout the valley, the actual percentage of property tax in Ketchum and Sun Valley has actually been decreasing because the LOT has been generating additional revenues.

For example, the percentage of property tax paid by residents is now actually higher in Hailey than it is in either Ketchum or Sun Valley. The annual LOT revenues, which are generated primarily by visitors, currently provide as much funding to the cities of Ketchum and Sun Valley as property taxes—$1.8 million per year in Ketchum and $1.2 million per year in Sun Valley. These LOT revenues are actually reducing property tax rates on property owners in both Ketchum and Sun Valley, in addition to providing many additional benefits to the community.

Over the past 15 years the LOT has generated over $32 million dollars in Ketchum and Sun Valley which has been used for a wide variety of special services and infrastructure improvements. These include police, fire and emergency services, hospital services, KART, new street equipment and storage buildings, new snowplows, road and bike path improvements, new Atkinson’s Park building and recreational equipment, the Park & Ride lot, the Forest Service Park, downtown streetscape improvements, visitor information and marketing—the list goes on.

Each year the Ketchum and Sun Valley city councils decide how to best use the LOT funds for their respective communities when determining their budgets. These decisions are based on identified needs and priorities, and input from the public is an important part of the process.

Of the total LOT funding over the years, only 12 percent to 16 percent has been spent on marketing and visitor information, yet those activities are critical to the economic health of our community. For over a decade, the cities have contracted with the Sun Valley/Ketchum Chamber of Commerce to provide these marketing and visitor information services.

This is not an unusual arrangement. In most states and cities that depend on tourism, the state travel department, local chamber or convention and visitors bureau receives the majority of their funding through some type of tourism tax revenue. For example, the state of Idaho funds the marketing efforts of its Idaho Travel Council through a 2 percent statewide lodging tax. The ITC retains 55 percent of these bed tax funds for statewide marketing efforts and grants back 45 percent of the bed tax funds to local chambers and other nonprofit organizations for promotion at the regional and community level.

Throughout the nation, many cities with larger populations have both a chamber of commerce and a convention and visitors bureau. Typically, the chamber of commerce is focused on business support, expansion and recruitment, while the convention and visitors bureau is focused on tourism promotion.

In Idaho, for example, both Boise and Pocatello have a separate convention and visitors bureau whose tourism marketing efforts are funded by a local tourism-based tax. In our small community, however, the Sun Valley/Ketchum Chamber of Commerce is responsible for not only local business support and retention (we do not actively recruit new businesses), but also for tourism, marketing and visitor information programs. We function as a combined chamber/convention and visitors bureau.

No matter what "business" you are in, you need to market your products or services in order to sell them. The local business community, which collects these tourism-based taxes, has recently encouraged both cities to reinvest 25 percent of annual Local Option Tax revenues in marketing programs to help at least maintain our current level of tourism business.

Most of these businesses also directly aid in the overall community marketing effort through sponsorships, in-kind contributions and other special promotions. Considering that 75 percent of the annual LOT funds, (nearly $1 million in Sun Valley and $1.5 million in Ketchum) are spent on other services and city infrastructure improvements, the return on this reinvestment truly does benefit the community as a whole.

Carol Waller is executive director of the Sun Valley/Ketchum Chamber of Commerce.

Kurt Nelson, is the chamber’s board president


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