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Pa. Dutch visitors bureau again getting hotel tax share

By - Last modified: January 22, 2013 at 11:36 AM

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The Lancaster County Treasurer's Office is once again sending 20 percent of the county's 3.9 percent hotel room tax to the Pennsylvania Dutch Convention and Visitors Bureau.

M&T Bank, the trustee for the roughly $64 million in bonds that funded the Lancaster County Convention Center, sent the office a letter dated Jan. 15 directing it to make the change, Treasurer Craig Ebersole said.

Under normal circumstances, the Lancaster County Convention Center Authority, the public entity that manages the convention center and is responsible for paying its debt, is supposed to receive 80 percent of the tax and the visitors bureau 20 percent. The bureau also receives a 1.1 percent excise tax.

Early last year, however, the bond reserves fell below minimum levels, triggering diversion of the visitors bureau share of the 3.9 percent tax to the authority.

The bond reserves are evaluated on a quarterly basis, so the bureau will receive its portion for at least three months, said Mike Messina, managing director of sales.

Its share for November is about $70,000, according to the treasurer’s office.

“It’s definitely a plus,” Messina said. “Nowadays, every bit helps.”

The visitors bureau has not decided what it will do with the money, he said.

The revenue generated by the hotel tax and its role in assuring the financial health of the convention center authority and the visitors bureau have been debated extensively over the past year.

The bureau compensated for its reduced funding by drawing down reserves, but it warned in a report last year that losing the funding for an extended period would severely harm its ability to market the county.

The authority, too, needs an assured funding stream. In March, bondholder Wells Fargo Bank is due to reset the “risk premium” portion of the bonds’ interest rates.

Lancaster County Commissioners Chairman Scott Martin is seeking interest rate reductions from the bank in exchange for concessions from other stakeholders. Without such a reduction, a revenue increase, or both, the authority’s long-term financial stability is in doubt, the bureau’s report said.

 

Write to the Editorial Department at editorial@cpbj.com

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