City of Kent cuts lodging tax grants

Funds to drop with hotel occupancy rates down 75% to 95%

With Kent hoteliers reporting anywhere from a 75% to 95% reduction in occupancy rates, Kent city officials cancelled and reduced previously awarded grants to groups for 2020 due to a dwindling lodging tax.

The City Council also plans to move $50,000 of returned lodging funds from a cancelled contract into the general fund to help pay for economic recovery activities, such as promotions of local restaurants.

“Hoteliers shared with us significant reductions in occupancy as overnight stays dropped by about 98 percent in some cases,” said Michelle Wilmot, city Economic Development program manager, in a May 12 report to the council about the COVID-19 impact. “Others are not as bad but still had a significant drop, so we determined there was a urgent need to revisit our grant process.”

The city’s Lodging Tax Advisory Committee met May 7 in an emergency meeting to cancel and reduce grants and recommend the reallocation of $50,000 to the general fund previously awarded to a outside consulting firm. The funds will be used to help support new recovery efforts for businesses in light of the COVID-19 economic crisis.

The city’s lodging tax is a 1 percent state tax on overnight hotel, motel, bed and breakfast and campground stays in Kent. State law dictates who is eligible to apply for grants, and mandates the funds be used for marketing and promotion of business and leisure tourism.

In November, the council approved $330,000 in grants for 2020 to nine groups, but with the expected drop in lodging tax revenue the city will be unable to fund all of those programs.

The city terminated its $100,000 contract with Barokas Communications and will move $50,000 of that contract to the general fund to help pay for city economic staff time to promote local restaurants and other businesses.

Seattle-based Barokas Communications, a public relations firm, received the largest award for 2020 as it planned to target national and regional business publications to tell the Kent Valley story, highlight industries already here and encourage clustering of high job yield/high income industries, according to city documents.

Other reductions include a savings of $45,000 by cutting in half the grant to Tacoma-based JayRay, a public relations agency that received the second largest award at $90,000 to continue to run the website, a tourism marketing program.

The city will save another $21,780 for the fund by reducing the grant to the Seattle Thunderbirds junior hockey team, which plays at the city-owned accesso ShoWare Center, from $66,780 to $45,000. The committee awarded the grant for marketing purposes for the 2020-2021 season.

“The ability to play sports and host spectators for the upcoming season is not a certainty during this unusual time; but if there is a season, reducing the grant award to the Thunderbirds will not impact their ability to play, but can help ensure our fund balance does not fall below the minimum Lodging Tax Fund administrators are required to maintain,” according to a statement in city documents.

The city reduced a grant to the Kent Chamber of Commerce to promote local businesses from $25,000 to $18,750 to save $6,250.

A few other events remain scheduled at this time, but may end up giving funds back to the city. That includes $35,000 to Women in Manufacturing, a two-day summit in October in Kent that targets local and out-of-area organizations and manufacturing companies and to support the groups at the corporate and individual level. Women in Manufacturing, based in Ohio with a chapter in Mukilteo, is a national trade association dedicated to providing year-round support to women who have chosen a career in the manufacturing industry, according to its website.

“They are well on the way with hotel reservations, and they want to move forward,” Wilmot said. “We will keep our eye on that.”

A planned Cajun Food and Music festival on Aug. 15 by the Kent Downtown Partnership,which received a $10,000 grant from the city, also remains a possibility.

Editor’s note: A correction has been made about the amount to be paid to the Seattle Thunderbirds.

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