The Wingate by Wyndham Hotel this week agreed with Sylvania that the city could collect a 3 percent hotel-motel tax that was enacted years ago but has not been collected by the city at the urging of the hotel.
Ken MacLaren, managing member of the hotel's management group River Center LLC, told council a Monday's meeting that the city can collect the tax, according to the law firm the hotel hired to review the city's plan to start collecting the tax Jan. 1, 2013.
When the hotel opened in Sylvania eight years ago, the tax was not collected. For the past five years, the city decided not to collect it. In December, the tax waiver came up for renewal and the city council took no action so the administration was required to begin collecting it.
The city has in recent years experienced cuts in state funding and has had annual operating deficits, so the decision was made not to waive the tax beginning this year, explained Bill Sanford, the economic development director, in a phone interview Tuesday.
However, the hotel's management had questioned the legality of paying an additional 3 percent tax rather than that amount be taken out of the already collected 10 percent tax the hotel pays to Lucas County. If paid as an additional tax, it would have increased the hotel's tax rate passed on to the customer from 16.75 percent to 19.75 percent, Mr. MacLaren told The Blade Tuesday. That amount includes the state and local sales tax of approximately 6.75 percent.
The hotel's management asked for 45 days of grace to explore the issue. Its lawyer, Mr. Joe Rideout of the Shumaker, Loop & Kendrick,determined that the city was entitled to collect the tax but that it should be derived from the tax the hotel pays currently to the county.
"This legal opinion is exactly what we were hoping for, that Sylvania be treated as other entities in Lucas County," said Mayor Craig Stough at the council meeting.
Mr. MacLaren said the hotel should continue to submit payment directly to Lucas County, making it the county's responsibility to forward Sylvania's portion to the city.
However, city law director James Moan said that, although the council would be happy to participate in talks between the business and county officials regarding how 3 percent tax would be paid to the city, that the River Center LLC was responsible to initiate the conversation and determine the payment procedure.
"I believe the impetus on what you pay to the county is more on your side of the ledger than ours," said Mr. Moan. Further, council agreed that it could not determine how the hotel management group would approach the paying 3 percent tax with the county.
Council member Katie Cappellini asked whether the city would be due back taxes from Lucas County. in light of this new information. Mr. Sanford, the city's economic development director, said Tuesday that the city is in the process of working out the collection process with the Wingate and the adminstrators of Lucas County. He estimated the yearly revenue from the tax between $50,000 and $70,000. The Wingate is the only hotel in Sylvania.
Members Douglas Haynam and Mark Luetke excluded themselves from the discussion because of a conflict of interest.
In other news, the City Council voted to approve an increase to the cost of the Safe Routes to School Project in the amount of $35,683. The increase costs are due to a change in ODOT's Americans with Disabilities Act that amended the accepted materials for street curb ramps from brick to truncated domes.
Kevin Aller, the service director advised that he would request the state funds to cover the increased cost as it was due to a change in state regulations.