AB 1009

This bill authorizes any city, village, town, or county (political subdivision) to create a tourism promotion improvement district (district). A district is an area that includes at least two hotels or motels. The bill allows a political subdivision to levy assessments on hotels and motels within a district to pay for the cost of improvements and activities within the district. Under the bill, “improvements” means acquiring, constructing, installing, or maintaining tangible property or infrastructure that is designed to increase room nights sold within the district; “activities” includes promoting public events that generate increased paid overnight stays in a hotel or motel, promoting tourism within the district, marketing- and tourism-related economic development, and other services that benefit hotels and motels within the district.

Under the bill, a political subdivision may create a district if the owners of at least 50 percent of the hotel and motel rooms located in the proposed district petition the political subdivision to do so and have developed an operating plan for the proposed district; the political subdivision holds a public hearing on the proposal; the political subdivision approves the creation of the district and an operating plan for the district; and the owners of at least 50 percent of the hotel and motel rooms located in the proposed district do not object to the creation of the district as approved by the political subdivision.

The bill specifies the information that must be included in a proposed operating plan for a district, such as a map identifying the boundaries of the district; the improvements and activities that will be completed within the district and their cost; the source of financing for those improvements and activities, including whether bonds will be issued; and the method and basis for levying assessments on hotels and motels within the district. The bill provides that a city, town, or village may establish a district within the unincorporated territory of a county if the county consents; that a city, town, or village may form a district within the jurisdiction of another city, town, or village if the other city, town, or village consents; and that a county may form a district within the jurisdiction of another county if the other county consents. The bill also provides that a county may establish a district within a city, town, or village located in the county without the consent of the city, town, or village, unless the operating plan outlines improvements specific to infrastructure, in which case the county must obtain the consent of the city, town, or village.

After a district is created, the bill requires the political subdivision to contract with an owners’ association to complete the improvements and activities described in the operating plan. The bill requires an owners’ association to be a private, nonprofit entity that is tasked with promoting tourism. The bill provides that an owners’ association may use assessments received from a district only to fund improvements and activities included in an approved operating plan.

The bill allows a political subdivision to levy assessments on hotels and motels within a district for the purpose of providing supplemental funding for the improvements and activities described in the operating plan. Under the bill, the political subdivision must determine the amount or rate of assessment to be levied on each hotel and motel within the district based on the method and basis for levying assessments described in the operating plan for the district. The bill prohibits a political subdivision from reducing any existing tourism promotion funding based on assessments received from a district.

Under the bill, the Department of Revenue must collect the assessments levied on hotels and motels in a district. A hotel or motel within the district must pay the assessment and file a return with DOR in the same way that the hotel or motel submits returns for retail sales taxes. DOR must then distribute a proportional amount of the collected assessments, at least quarterly, to owners’ associations responsible for administering the operating plans of districts.

The bill allows an operating plan for a district to be modified if the responsible owners’ association requests a modification. The political subdivision must hold a hearing on the proposed modification and notify all hotel and motel owners in the district. The modification may not be adopted if the owners of at least 50 percent of the hotel and motel rooms located in the district object to the modification.

The bill also allows for the dissolution of a district if there is a misappropriation of funds, malfeasance, or a violation of law in connection with the district’s management and requires the dissolution of a district without undue delay if, during the first 30 days of any year of the district’s operation, the owners of at least 65 percent of the hotel and motel rooms located in the district request in writing that the district be dissolved. The political subdivision must hold a hearing on the proposed dissolution and notify all hotel and motel owners in the district.

Under the bill, upon the expiration or dissolution of a district, any remaining revenues, after all outstanding debts are paid, derived from the levy of assessments, from the sale of assets acquired with the revenues, or from bond reserve or construction funds must be spent consistent with the operating plan and with any resolution of dissolution.

Finally, the bill provides that a person may not contest the validity or amount of an assessment levied under the provisions of the bill unless an action is commenced within 30 days after a resolution adopting or modifying the assessment is enacted.