A 3 percent user tourism tax is set to be on the November ballot for residents of Holiday Island, and if it passes, will establish an Advertising and Promotion Commission for the city.
At its regular monthly meeting held April 16, the Holiday Island City Council voted unanimously to approve ordinance 2024-004 which calls for an election “on the issue of a three percent tax upon the gross receipts of hotel, motel and other accommodations to be used exclusively for advertising and promotion of the tourism for the City of Holiday Island …” While a tourism tax on restaurants was once part of the discussions, it was intentionally left out of the ordinance approved by the city council.
The ordinance reads that according to Arkansas code, the city is authorized to “levy a gross receipts tax of up to three percent upon the gross receipts of hotels, motels, and certain accommodations within the city limits…” Section 3 of the ordinance gets more specific on what would be levied the 3 percent user tax mentioning “gross receipts or gross proceeds from renting, leasing, or otherwise furnishing a hotel, motel, house, cabin, bed and breakfast, campground, short-term rental, or other similar rental accommodations for sleeping, meeting, or part room facilities for profit in such city, but such accommodations shall not include the rental or lease of such accommodations for period of 30 days or more.”
The ordinance goes on to explain that, if approved, the tax would be collected monthly beginning March 1, 2025, and would be used to promote the city’s advertising and promotion endeavors.
The tax cannot be used for “general capital improvements within the city,” “the costs associated with the general operation of the city of Holiday Island Suburban Improvement District,” or “general subsidy of any civic groups or chamber of commerce,” according to the ordinance.
The council also approved Ordinance 2024-005, which would establish the A&P commission and lays out how it would be formed and how it would operate.
“The City Council of the City of Holiday Island … has determined that tourism is a major economic driver for the city,” Ordinance 2024-005 reads. “The City Council has determined that advertising and promotion of Holiday Island is critical to the orderly development of tourism in the city.” If the 3 percent tourism tax is approved, the second ordinance would create the A&P commission to “collect, determine the use of, and distribute the tax funds collected.”
The ordinance to establish the A&P commission states that it would have seven members.
“Four members shall be owners or managers of businesses in the tourism industry in the City of Holiday Island,” the ordinance reads. “The owner or manager may reside outside the City of Holiday Island but shall reside within Carroll County. At least three of the four shall be owners or managers of hotels, motels, or restaurants, and shall serve for staggered terms of four years; two members of the Commission shall be members of the governing body of the City of Holiday Island, who shall be selected by the City Council, and shall serve at the will of City Council; and one member shall be from the public at-large, who shall reside in the City of Holiday Island, and shall serve for a term of four years.”
The initial commissioners would be nominated by Mayor Dan Kees and then would need to be approved by the city council “for staggered terms so that one member will serve for a term of one year, one member will serve for a term of two years, one member will serve for a term of three years and one member will serve for a term of four years,” according to the ordinance.
“The industry positions will be allocated to the 1, 2, 3, and 4-year terms based on Mayor Decision.”
“We’ll get a copy of this over to the county and see what we have to do to get it on the ballot,” Kees told council members after the two ordinance approvals, which included a pair of emergency clauses.
The approvals come after many discussions in recent months over the possibility of an A&P commission in the city.
At its March 19 meeting, the city council discussed the benefits of having an A&P commission along with the feedback of residents.
A committee appointed by Kees met Feb. 26 to discuss the possibilities and benefits of an A&P commission and reported back to the council.
“Mayor Dan Kees set the ad hoc study committee responsibility to determine potential sources of revenue for the advertising and promotion and estimate on annual revenue potential and the most beneficial uses of the A&P revenue,” Peggy Lodewyks, president of the Holiday Island Chamber of Commerce and chair of the ad hoc committee, told council members at the March 19 meeting. “It became apparent the misconception about the A&P tax, its purpose, potential impact and origins, and the main challenges to getting this tax passed by the general public at the next election .”
While many residents originally felt that the tax would be on them, once it was explained that the tax is actually “a user’s tax,” those with concerns about the tax seemed more at ease, Lodewyks told council members.
