Scottsdale to use more hotel-tax funds for WestWorld
Edward Gately, The Republic | azcentral.com 2:40 p.m. MST October 8, 2014
Scottsdale will spend another $1.1 million in revenue from a tax on hotel rooms to cover the remaining cost of an expansion project at the WestWorld event center.
The City Council on Tuesday voted unanimously to use those funds, known as the “bed tax,” as opposed to issuing bond debt. The decision came over objections from the former city treasurer, who argued the council is going too far in allocating so much of the tax to one project.
Unused funds in the tourism development fund, which is funded by the bed-tax revenue, are available to cover $1.11 million for the project, saving the city an estimated $610,000 in debt costs if bonds were issued, City Treasurer Jeff Nichols said.
The issue pitted Nichols, who backed the measure, against David Smith, former city treasurer and current council candidate. Smith said Nichols is using a “loophole” in the city’s financial policy to transfer the funds.
“When you find a loophole (in city financial policy), it’s not an occasion for celebration, it’s an occasion to fix the loophole,” said Smith, who addressed the council and also explained his position in an interview with the Republic.
Revenue from Scottsdale’s hotel-bed tax already is covering most of the $47 million cost to expand, enclose and climate-control the Tony Nelssen Equestrian Center at WestWorld.Three groups that put on major events at WestWorld have said they will contribute a portion: the Barrett-Jackson Collector Car Event, Scottsdale Arabian Horse Show and Arizona Quarterhorse Association.
“We built the center, we’ve had events there and we need to fund it,” Nichols said.
The city’s financial policy regarding use of bed-tax revenue allows this use to pay off the remainder of the project, he said.
“This is an excellent example of where this money should be spent,” he said.
The city’s Tourism Development Commission, in a unanimous vote, previously recommended against the move.
Smith said commission members spoke clearly that they “don’t think there is an additional benefit from this additional spending.”
“You save money in the general fund from interest, but we lose money that we would make in interest in the tourism fund,” he said. “The voters spoke explicitly. They want that money to be used for tourism events and tourism projects, and they allocated an extraordinary amount of that money to WestWorld, and now we’re told, ‘Let’s allocate another $1 million.’ It seems to never stop.”
Mayor Jim Lane said bed-tax revenue can be “legitimately” applied to this project and it “doesn’t make economic sense” not to do it.
“I understand the Tourism Development Commission’s concerns, but the council has to look out for the public, the taxpayers at large,” Vice Mayor Guy Phillips said.
An initial project presentation from 2010 estimated the cost at $33 million. As details emerged, the price tag grew to $42.8 million in early 2012. By December 2012, the council agreed to raise the budget an additional $4.2 million, making the cost $47 million.