PRESIDENT’S REPORT

South Dakota currently has over a dozen hotel occupancy tax Business Improvement Districts (BIDs). In our state these types of BIDs are established by local ordinance and require hoteliers who are members of the BID to charge a tax per room per night. Those dollars can then be utilized for a number of things, including - but not limited to - physical improvements within the district itself and to fund projects and programs that support tourism and economic development.

In Yankton for example, our BID Board has helped to fund a number of projects that put more “heads in beds,” such as the Mount Marty University Field House, expansion of the National Field Archery indoor facility, and development of the Yankton Youth Soccer Association complex. They have also elected to support events such as a National Association of Intercollegiate Athletics track meet and programming such as tourism grants for conferences and tournaments to come to the community. In Yankton, our BID has chosen to form and focus on the shoulder and winter season since that is a time when we see occupancy in our hotels dip.

The BID can borrow funds or commit future revenues for large ventures and projects as long as the Bid stays in place until all commitments are completed. Just as a BID can form, a BID can also dissolve itself and essentially exist on paper only until all debt is retired. Whether or not it forms and what it spends the dollars on (within the confines of state law) is all decided among the members of the board and approved by the local City Council or City Commission. (Can I get an Amen to local control?)

This year House Bill 1109 passed out of the legislature and was vetoed by Governor Noem. This was the bill that would have increased the maximum occupation tax on hotel rooms in BIDs. This bill would have raised the maximum occupation tax from two dollars per room per night to four dollars per room per night or 4% of the rented room charge. The SDML supported this bill and lobbied aggressively for it.

As with many bills this session, there are a lot of opinions out there about the merits of HB 1109. Regardless of my opinion on the legislation, I want to recognize something about this type of bill. It is getting difficult to fund things in our communities. We have so many needs. Not to mention the wants. We are limited, however, in our state to a very few tools to fund anything outside of normal operations. A BID is one of them.

To me, this bill presented an attempt to get a little more creative with the tools we currently have without having to take it from somewhere else. A wise finance officer once told me: no matter how you carve up the slices, the pie is still the same size. (Thanks, Al.) This could have been a way to increase the preverbal pie for those communities who enjoy the benefits of a BID. Unless we are going to find ourselves in a position where all of the things we do and are asked to do as communities cost less, we have to find ways to fund the basics and the visions we have in our cities.

Maybe this bill will come back and maybe it won’t. Regardless, I challenge all of us in the years ahead to think creatively with our legislators. I think there are ways we can come to a consensus on modifying the tools we currently have in our toolbox to get us in an even stronger position when it comes to economic development. Let’s have these conversations. Hey, I’d even settle for a little ice cream or a slice of cheese on the pie. ■