Visitors bureau board wants bed tax on ballot

PALMER – The Mat-Su Convention and Visitors Bureau Board of Directors voted Monday to formally ask the Mat-Su Borough Assembly to consider adding a proposed 3 percent bed tax increase to the Oct. 4 election ballot.

The move was the latest step in a hotly debated issue among the board as well as the rank-and-file members of the CVB. The borough currently has a 5 percent tax, and the 3 percent increase would go toward funding the final phases of an estimated $5.8 million Mat-Su Valley Gateway Visitors Center.

Along with a potential hike in the bed tax, Mat-Su CVB executive director Bonnie Quill said a committee also has been looking at alternative sources of funding for the new center. Those include the formation of a 501c(3) nonprofit arm for the CVB as well as potential U.S. Department of Agriculture loans.

The new center would be built on borough-acquired land that was once the Homestead RV Park, near the Parks-Glenn highway interchange. The borough bought the parcel for $1 million from the Matanuska Electric Association. The borough has already spent $3.6 million of mainly state funds on a new facility, according to 2015 CVB figures.

The most recent, unaudited figures show the borough took in $1,117,249 in bed tax revenue for fiscal year 2015. Quill said Monday the 3 percent increase would bring in an additional $660,000 annually.

The 6-4 board vote was indicative of the sentiment on both sides of the issue. An added wrinkle in the debate came in the form of an internal email written by board vice president Zack Steer urging the group to move quickly on getting the measure on the ballot and taking to task Upper Susitna Valley and corporate opposition to the tax increase. Steer apologized to the board for the tone of the email.

“I meant no ill will or harm toward anyone,” Steer said via a teleconference connection.

Holland America Group, which owns and operates Mount McKinley Princess Wilderness Lodge, circulated a letter last year opposing the increase. The lodge generates more bed tax revenue than any in the borough.

Other opposition has come from Talkeetna businesses like Mahay’s Jetboat Adventures. Director of operations and CVB board member Israel Mahay — who voted no — said Monday that he didn’t see the Upper Susitna getting the benefit from a tax hike to fund the center, adding that if a bed tax had to be advanced it should be to improve community infrastructure.

“I am not opposed to a bed tax, but that money should go toward improving infrastructure,” he said, adding that the state’s economic climate posed another set of challenges.

“But with state finances right now, every industry, every sector is being looked at for taxes,” Mahay said. “That 3 percent could turn into 11.”

Guests at Monday’s special board meeting included Suzanne Rust of Rust’s Flying Service and K2 Aviation in Talkeetna and Rick Peterson, general manager of the McKinley Princess Wilderness Lodge.

“There are strong feelings with both positions, I understand that,” Rust said before the vote, “but if this goes forward we will be on the other side.”

Board member Craig Saunders of Iditarod Trailside Lodging pointed to the borough’s low bed tax as compared with the rest of the state. He said the increase is the only way to get the center funded.

According to visitors bureau numbers, Anchorage, Juneau and Sitka tie for the highest at 12 percent, followed by Kodiak at 10 percent, Fairbanks at 8 percent and the Denali Borough at 7 percent.

Saunders voted in favor of sending the board’s recommendation to the assembly, along with Steer, board president Cheryl Metiva and members Mark Austin, Mark Fleenor and Karen Harris. Mahay, Cole Ouellette, Travis Taylor and Roberta Caenepeel were opposed.

“As we have always said, this has been a last resort,” Saunders said of the tax increase. “But based on all the information we have in what this center is going to do to promote economic development in the borough — for all businesses, not just tourism — I think that this is the only way we are going to be able to fund the center. It needs to be done.”

Contact reporter Steven Merritt at 352-2269 or steven.merritt@frontiersman.com