YOUR BUSINESS AUTHORITY
Short-term rentals will be assessed the city’s 5% occupancy tax if voters in April approve a proposal Springfield City Council on Jan. 9 voted to send to the ballot.
Under the current voter-enacted tax, hotels, motels and motor court accommodations are assessed a 5% tax, but short-term rentals, like Airbnb and Vrbo, are exempt.
Tracy Kimberlin, who retired in 2022 as president of the Springfield Convention & Visitors Bureau Inc., spoke on behalf of the CVB in favor of the measure, saying it was time to level the playing field.
He said the city has around 400 short-term rentals, many with two to three bedrooms, and he estimated the capacity equals some 1,000 hotel rooms. Kimberlin’s point: It’s not fair for short-term rentals to benefit from the tax, which supports tourism across the region, if they don’t contribute by assessing the room fee to guests. He added that if the tax is passed by voters, the CVB will begin to promote short-term rentals.
Kimberlin said short-term rentals are legitimate and necessary accommodations when the city hosts large events.
“If they were all licensed and they were all paying the tax, it would probably be somewhere in the neighborhood of a half a million dollars,” he said of the potential annual city revenue.
The measure would provide needed funds to the Sports Commission and the Springfield Regional Arts Council, each with annual budgets of about $200,000, partially funded by the tax. Ballot language approved by council states 4.5% of tax proceeds would be used “to attract and host sporting events” and the same percentage would be used “to support the arts and cultural tourism.”
Kimberlin said the city has $80 million in sports facilities that are just opened or under construction, and the marketing budget to fill them is $200,000.
“If you’re in business, that doesn’t make sense,” he said. “We’ve got to increase that. We’ve got to fill up these facilities once they’re open, and that’s what this bill will do.”
SRAC Executive Director Leslie Forrester said the arts group would use additional funds for a grantmaking program and a broad collaborative marketing campaign.
Councilperson Matthew Simpson called the tax a slam dunk, as taxes being paid by people from outside the community are invested locally.
The new tax would replace three existing lodging taxes that combine for the 5% rate that currently generates $6.5 million a year. Half of that figure comes from a 2.5% tax that will roll off when debt on Jordan Valley Park projects from the city’s last comprehensive plan is fully repaid in June 2028. Without voter approval, that portion of the tax will end. With voter approval, after the debt is paid off, this portion will continue and be freed up for new uses, according to David Holtmann, the city’s finance director.
The other 2.5%, passed in 1998 and 2004, is permanent.
Council also considered three other separate ballot measures for April, approving two and postponing a decision on one.
In one item, council also will ask voters to allow it to accept bids and enter into contracts after one bill reading instead of two.
Another measure will ask voters to change language in human resource-related city charter sections, including an area that would strengthen preferential hiring for veterans.
A final ballot item, related to conflict of interest provisions in city contracts, was tabled and will be discussed at a special meeting Jan. 17.
7 Brew gets go-ahead
City Council approved a conditional use permit for a proposed 7 Brew Coffee drive-thru at the southeast corner of Sunshine Street and Jefferson Avenue.
By a 5-3 vote, council approved the rezoning of the property to limited business from residential last summer but did not agree to a drive-thru, which is key to 7 Brew’s business model.
In an email to Springfield Business Journal, developer Royce Reding, owner of Reding Management LLC and Redec LLC, thanked Mayor Ken McClure and council for support of the project.
“This project provides a better quality of place for our community along the Sunshine corridor,” Reding said.
There were no changes to the plan after being sent to city staff at council’s last meeting on Dec. 12. At that time, City Manager Jason Gage explained postponing a vote on the bill would allow further review while bypassing the Planning & Zoning Commission, which had thrice recommended denial of the permit.
The matter also had been tabled by council Nov. 28. Staff then suggested a concrete median be installed along Jefferson Avenue if traffic backups are determined to be a problem. At that time, Susan Istenes, director of planning and development, said the developer would pay for that improvement, but at the Jan. 9 meeting, she reversed course and said the city would foot the bill if the median were deemed necessary. The cost is about $5,000, according to city spokesperson Cora Scott.
Istenes said staff do not believe backups will occur.
Voting against the permit were Monica Horton, Mike Schilling and Craig Hosmer, with Heather Hardinger absent. On council’s first vote on the permit, held July 25, only Councilperson Richard Ollis voted in favor.
At the Jan. 9 meeting, Hosmer quoted a staff report saying a limited business district is for the benefit of people residing in the adjacent residential area.
“People aren’t going to be able to go into this place and have coffee. This is a three-lane drive-thru that is not for the convenience of the adjacent property owners,” he said. “That doesn’t complement the neighborhood at all.”
Four council members switched their vote from their July 25 stance without significant changes to the plan. Among changes that were included were adding picnic tables, repositioning music speakers away from the neighborhood, building a sidewalk on Roanoke Avenue and planting 14 buffer trees.
Before voting in favor of the measure, Simpson asked Istenes to repeat the assessment that traffic would not be backed up, and she did.
In a possible reference to the votes of his colleagues, Hosmer raised the specter of outside influence later in the meeting when responding to a member of the public who was concerned about prices of rentals and homes. Hosmer asked the resident if he had talked to officials with the Springfield Area Chamber of Commerce.
“They have a lot of influence on this body,” he said.
Other action items
Heirloom Candle Bar moved; art supply thrift store Arrow Creative Reuse opened; and Rockford, Illinois-based Beef-A-Roo debuted in Springfield.