City ups hotel tax by 2 percentage points

Marlborough – By a 7-4 vote, the City Council approved an increase to the sales tax on a hotel room from 4 percent to 6 percent in their meeting Nov. 22. The increase will mean an extra $2 per $100 for travelers and visitors to the city.

Council President At-Large Arthur G. Vigeant said revenues collected from this tax could be used as the first step to developing a comprehensive plan for the city’s economic future by working in concert with the Marlborough Economic Development Corporation (MEDC).

The second step, to be considered next year, would be to request a home rule petition from the state to use that money to hire a company that specializes in creating long-term master plans for municipalities. The City Council and the MEDC would oversee that process.

Marlborough has not had a master plan for more than 20 years.

At-Large Councilor Steven Levy said that with the MEDC, “We get the benefit of a group that has some experience with economic development and promoting job sites. It’s more than just the master plan. Once they put that out to bid, they will start identifying parcels and decide how to market them, determine the appropriate use for the parcel and what it will take for someone to take it – for example, it could be infrastructure investment or connecting with work force development. Locally, there could be tax incentives and TIFs [tax increment financing] or other things that could bring businesses here.”

The City Council estimated that between $400,000 and $500,000 per year would be realized by the tax increase. The city now collects close to $1 million in hotel room taxes per year.

Ward 2 Councilor Paul Ferro, who voted against the proposal.

“I think this is a terrible idea,” he said. “In May 2009 and again this past year, we voted not to have this type of tax. What has changed in the past six months?”

Those who voted in favor of the tax increase were Vigeant, At-Large Councilor Patricia Pope, Ward 1 Councilor Joseph F. Delano Jr., Ward 4 Councilor Robert J. Tunnera, Ward 5 Councilor Robert M. Seymour; Ward 6 Councilor Edward Clancy and Ward 7 Councilor Donald R. Landers.

Voting against were Ferro, Levy, At-Large Councilor Michael Ossing and Ward 3 Councilor Matt Elder.

Several councilors admitted the city has to do “something” to attract new business and job growth. Delano said,

Councilors are also concerned about the state’s projected deficit of $2 billion for next year and the inevitable cuts in local aid that will accompany that.

Pope said the hotel room tax plan represents thinking outside the box, But she said she was concerned and surprised that Mayor Nancy E. Stevens and the Chamber of Commerce have been silent on the issue.

Seymour agreed that the city is correct to be cautious about implementing this new tax.

“The first year is going to be the most critical because everybody will want to see something … changeable results and where the money went,” he said.

“If the first year doesn’t go well and the master plan doesn’t get done or there’s no real concrete plan of what eff orts they’ll be making, it will be really hard for the City Council to support it because it will look like a worthless investment,” Seymour said.

Councilors said they also realize that a strong business community could close the widening gap between residential and commercial tax rates. Currently, the commercial tax rate is $25.42 and the residential tax rate is $13.41.

In fiscal year 2003, the commercial rate was $21.73 and the residential rate was $13.11.

Levy said that over time the city has shifted more and more burden on to the commercial side, which now puts it at a disadvantage compared to other towns around Marlborough, such as Westborough, which has a lower tax rate.

“By bringing new businesses here you can still lower that rate closer to the residential rate and close that gap,” Levy said. “I’m not opposed to the development component. For me it was about the funding source, and I just couldn’t support the tax.”

Short URL: http://www.communityadvocate.com/?p=8388

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