(The Center Square) – Voters in Kent County and the Grand Rapids area will vote Aug. 6 during the primary to decide whether the county can increase its hotel tax from 5% to 8%.
The funds can be used for acquisition, construction, improvement, enlargement, repair or maintenance of stadiums, arenas, sports complexes and aquariums.
A proposed $175 million downtown soccer stadium is a key component of the proposal, along with the $185 million 12,000-seat Acrisure Ampitheater at 201 Market Avenue in downtown that is already being built.
Groups pushing the project commissioned a report from marketing firm Convention, Sports and Leisure – owned by Dallas Cowboys and New York Yankees venture Legends Hospitality Management – to justify public spending on the projects.
But those numbers are not backed by the work of economists, who consistently show that CSL’s numbers are “fantasy reports” used to woo local politicians and voters into approving larger amounts of taxpayer funding on sports venues.
“Employing CSL to do your economic impact study is like hiring someone who doesn’t know about gravity to launch a space probe,” economist J.C. Bradbury of Georgia’s Kennesaw State University wrote on Wednesday. “Serious question: How do these economic forecasting consultancies stay in business? I understand parties seeking support for something they already believe don’t care about accuracy, but why do news organizations continue to be fooled by them?”
The CSL reports are not peer reviewed for accuracy, like economic papers, and often don’t include the overall costs of a project or the impact of displaced spending, or people choosing to spend the same money at a new project that they would have spent at other area entertainment options if the project did not exist.
The 8,500-seat soccer project has been pitched to include $115 million in taxpayer funding and $60 million from private funding, according to Grand Action 2.0, which is pushing the project. Grand Action 2.0 is co-chaired by Tom Welch, Carol Van Andel and Dick DeVos.
Those pushing the tax increase call it a tax mainly paid by visitors but Bradbury has explained to The Center Square that hotel taxes have a larger economic impact.
“Assume there is a hotel fee or tax rate (doesn’t matter if flat or %) on hotel night stays,” Bradbury said. “This requires hotel owners to remit that amount of tax revenue for each hotel night. Even though that amount may be listed on the bill, the total cost isn’t just passed along to the guest.
“The tax effectively raises the price to the guest. Some guests will simply just pay it, but the higher price deters marginal guests. Some guests may stay fewer nights (arrive early in the morning or leave in the evening), decide to stay with friends, or double-up on rooms, etc.”
Hotel taxes also do not have a direct correlation with sports venues, Bradbury explained, because they are collected 365 days a year while the venue only hosts events on a small number of days. That makes the taxes similar to any taxpayer fund collected and then spent on work in the city or municipality.
The Kent County hotel tax only applies to less than 30-day stays. The Kent County board will have the right to approve where the money is spent on qualified projects.
“Stadiums don’t host that many events, and most people in attendance are locals who don’t stay in hotels,” Bradbury explained. “Most of the visitor revenue is being paid by guests who aren’t there for the event.”
