After months of discussion and debate, the Red Bank Borough Council has finally introduced an ordinance authorizing the imposition of a municipal hotel and motel occupancy tax.
Mayor Edward J. McKenna Jr. said at the July 27 Borough Council meeting that he has spent time over the past few weeks working out the details of the tax with hotel owners.
Because the owners of the Molly Pitcher Inn and the Oyster Point Hotel donate money to support the borough’s visitors’ center, McKenna took pains not to alienate them.
"I had asked for the council to give me a little time to meet with the hotel owners on this," said McKenna, "to try to work out an arrangement where they would not object to the passage of this and, in turn, continue to support our visitors’ center. I believe that if we could have this [center] funded privately, it would be the way to go."
A main concern has been how would the visitors’ center be funded if the hotel owners protest the tax and withdraw their support.
McKenna said he is pleased that the center can remain a privately funded entity but can still help to support the community.
"I really want to thank everyone for their patience in working this out," said McKenna. "By doing this, we’ve really come out with a win-win situation."
"I have to thank the mayor and congratulate the mayor for a wonderful job," said Councilman John Curley, one of the leading advocates for the ordinance.
The hotel/motel occupancy tax will allow the borough to collect up to a 3 percent tax on every room rented in any hotel or motel in the borough.
The surcharge on the cost of hotel and motel rooms provided for an 8 percent occupancy tax and gave municipalities the option of passing their own ordinances.
The legislation stipulated the state would retain 7 percent of the tax the first year and municipalities could collect 1 percent of the tax during the first year the tax was on their books. By the second year, the state bite out of the revenues would fall to 5 percent and municipalities had the option of increasing their share up to 3 percent.
The borough’s only hotels are the Molly Pitcher Inn and the Oyster Point Hotel, both owned by OPI Holdings, which is owned by members of the Hovnanian family.
Because the hotels have common ownership, the tax would be collected from only one group in the borough.
The tax is passed along to consumers because it is added on to the charge for rooms.
The Borough Council has been discussing the tax since it was adopted by the state last summer.
According to borough Chief Financial Officer, Bruce Loversidge, the borough is still not quite sure what kind of revenue it will collect from this new tax.
Loversidge said a conservative estimate is that the tax could generate $100,000 per year, based on 50 percent occupancy of rooms at the hotels, which amounts to about 1 cent off the tax rate.
The ordinance is due for final reading, public hearing and final vote on Aug. 10 at 5 p.m.
BY LAYLI WHYTE
Staff Writer
Hotel tax is finally before Boro Council