Tax break for Carolina Inn guests

After a grueling 90-minute discussion and approval of the downtown redevelopment project on Lot 5, the Chapel Hill Town Council addressed UNC's 3rd request to modify their overarching campus development plan. The Council approved most of the modification at a previous meeting, but held up a portion related to the Carolina Inn to address fiscal equity issued raised by Councilmember Cam Hill. (See tonight's agenda.)

There was discussion of whether guests staying at the Carolina Inn to are subject to the Town's hotel occupancy tax. Apparently guests are not charged if they are on University business. Councilmember Mark Kleinschmidt asked if this includes UNC sporting events, and Vice Chancellor Carolyn Efland replied that their official opinion is that such guests would not be paying the tax. Kleinschmidt said this should grab the headlines tomorrow rather than the Lot 5 approval.

The papers might not agree, but this blogger does. ;-)

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Total votes: 121

Comments

In another life I had privilege to run the overnight accomodations unit at UNC Hospital. I ran afoul of my superiors when I questioned a statement made by the GM at the Carolina Inn during the property tax dispute then raging between the town and the Inn.

He alleged the Inn set aside rooms for relatives of patients at UNC Hospital. Over the years my unit had a number of relatives come to us after the Carolina Inn forced them to vacate due to a University event. Football game weekends seemed a paticularly bad time.

After my outburst to a local paper, in response to the GM's public remarks, he paraded out thank you letters. I remember the most compelling letter was from a Texas lady who " had a summer house" in the NC mountains and due to her husband's sudden illness had an extended stay at the Carolina Inn. The GM wanted me fired for disputing his claims of civic mindedness.

Back in day there were less options for accomodations so the competition issue was less of a factor in the debate. The point was that the Inn was a money making proposition that served the University not the community at large.

Despite all this I must confess I love the Carolina Inn. Have attended events there many times and stayed there the first time I visted Chapel Hill.

That said it is an interesting compromise that has been made and I wonder how it is enforced. Must be the University Honor System at work!

Catherine, while there is certainly a distinction between "university guests" and "hotel guests", the words "furnish accomodations" are not synonomous with comps (free rooms). The word "furnish" in the law includes both sales and gifts.

The reason for the exemption in the Chapel Hill/Orange County occupancy tax (and I believe ALL of the local occupancy tax laws) was a political compromise, only FOR PROFIT businesses were to be taxed. Government and nonprofits were not. The principal purpose for the exclusion was actually to exempt nonprofit groups like YMCAs that provided low cost transient housing. Do they also compete with private hotels? Yes.

Does the exemption also include the Carolina Inn? Looks like it does.

Sports is business.

What I heard Carolyn say was that university guests who were being hit up for money (fundraising) purposes didn't pay occupancy tax even if they were attending sporting events. She did not say that everyone who stays at the Inn for sporting events is exempt.

What I don't understand about this discussion is that the Carolina Inn has been here forever and has always been the venue of choice for athletic and cultural events. I don't remember how many new rooms will be added by taking over the Whitehead reshall but it can't be that many. If the lost occupancy tax is so problematic, why hasn't council raised concerns before now? Does it have anything to do with the recent opening of another hotel in downtown? And why were these concerns raised under the guise of a LUMO review instead of through the fiscal impact committee or through contact with the legislative delegation?

How about if they attend a theatrical performance? Or go to the planetarium?

Here are the appropriate local acts, Chapel Hill and Orange County each levy 3%, there is clearly an exemption for "... accommodations furnished by nonprofit ...educational organizations when furnished in furtherance of their nonprofit purpose."

1991 Orange Occupancy tax legislation, note last sentence:
http://www.ncleg.net/EnactedLegislation/SessionLaws/PDF/1991-1992/SL1991...
"Section 1. Occupancy Tax. (a) Authorization and scope. The Orange County Board of Commissioners may, by resolution, levy a room occupancy tax of up to three percent (3%) on the gross receipts derived from the rental of any room, lodging, or similar accommodation in the county subject to sales tax under G.S. 105-164.4(a)(3).
This tax does not apply to accommodations furnished by nonprofit charitable, educational, benevolent, or religious organizations when furnished in furtherance of their nonprofit purpose."

1987 Chapel Hill occupancy tax, note last sentence
http://www.ncleg.net/EnactedLegislation/SessionLaws/PDF/1987-1988/SL1987...
Section 1. Occupancy Tax. (a) Authorization and scope. The Chapel Hill Town Council may, by ordinance, levy a room occupancy tax of no more than three percent (3%) on the gross receipts derived from the rental of any room, lodging, or similar accommodation subject to sales tax under G.S. 105-164.4(3).
This tax does not apply to accommodations furnished by nonprofit charitable, educational, benevolent, or religious organizations when furnished in furtherance of their nonprofit purpose.

ignore the hyperlink on part of the word "edu"

How much lost revenue are we potentially talking about here? How many people does UNC put up at the inn for sports and other gray areas? And how does the University define "furtherance of their nonprofit purpose?" Because recently they seem to be a bit more concerned with profit...

How much revenue do those same university guests generate for local businesses and in sales tax during their visits? This is such a non-issue.

There's a distinction to be made between "university guests" and "hotel guests." Anyone can stay at the Carolina Inn. The university comps VIP's at its discretion, and writes off their expenses. No bill, no tax, right? I can swallow that up to a point, but the Carolina Inn is a money-making enterprise and the university does not "furnish" accomodations for every hotel guest.

One more comment in response to Ethan above. Sports is an entertainment business that has run amok in higher education. The Vice Chancellor, remark as reported above, is amazing to me.

College athletic departments and coaches are the executives and the "student athletes" are the workers. Talk about wage disparity!!!

 

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