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Agenda - 03-18-2025; 7-b - Occupancy Tax Uses Discussion
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Agenda - 03-18-2025; 7-b - Occupancy Tax Uses Discussion
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BOCC
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3/18/2025
Meeting Type
Business
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Agenda
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7-b
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1 <br /> ORANGE COUNTY <br /> BOARD OF COMMISSIONERS <br /> ACTION AGENDA ITEM ABSTRACT <br /> Meeting Date: March 18, 2025 <br /> Action Agenda <br /> Item No. 7-b <br /> SUBJECT: Occupancy Tax Uses Discussion <br /> DEPARTMENT: County Manager, Economic Development <br /> ATTACHMENT(S): INFORMATION CONTACT: <br /> 1) Orange County Occupancy Tax Kirk Vaughn, (919) 245-2153 <br /> Authorization Laurie Paolicelli, (919) 245-4322 <br /> 2) North Carolina Occupancy Tax <br /> Guidelines <br /> 3) PowerPoint Presentation <br /> PURPOSE: To discuss the potential usages of Occupancy Tax proceeds for future year <br /> budgeting. <br /> BACKGROUND: The County has collected Occupancy Tax for several decades through State <br /> authorization of Session 1991-392 (Attachment 1). This three percent (3%) levy on all room and <br /> lodging rentals is collected by the County and used to fund the Visitors Bureau division of the <br /> Economic Development Department, the Arts Commission division of the County Manager's <br /> Office, and some related Outside Agencies. This authorization provides broad flexibility to the <br /> County to utilize Occupancy Tax. However, the law applicable to Orange County predates the <br /> current State guidelines for Occupancy Tax statutes (Attachment 2). The current guidelines <br /> recommend that new authorizations restrict two-thirds (2/3) of Occupancy Tax proceeds to be <br /> used to promote tourism and travel, and one-third (1/3) to be used for tourism-related <br /> expenditures. The information below relies on this higher standard in its analysis, as the County's <br /> authorization is subject to change by the North Carolina General Assembly. <br /> In reviewing the prior year actual expenditures and current year budget for the Visitors Bureau <br /> Fund, the County easily exceeds the two-thirds (2/3) standard for Occupancy Tax. The Visitors <br /> Bureau also maintains a long-term contract with the Town of Chapel Hill that the Town provides <br /> a set amount of its Occupancy Tax funds to the County to support the County's Visitors Bureau. <br /> The funds have been used to increase advertising for summer events in Chapel Hill in FY 2025. <br /> In the table immediately below, the expenses in the Visitors Bureau Division exceed both the <br /> revenue generated by the Town contract and two-thirds (2/3) Occupancy Tax guideline by <br /> $234,740 in FY 2024, and is budgeted to exceed the guidelines by $801,423 in FY 2025. <br /> BudgetRevenue and Expenses OW"I flr_lww-_ FY 2025 Revised <br /> Town of Chapel Hill Contribution $ 457,439 $ 531,855 <br /> 2/3rd of Occupancy Tax $ 1,482,399 $ 1,526,871 <br /> Guideline Revenues $ 1,939,838 $ 2,058,726 <br /> Visitors Bureau Division Expenses $ 2,174,578 $ 2,860,149 <br /> Expenses Above Guidelines $ 234,740 $ 801,423 <br />
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