Tuesday, October 31, 2006

Riverside's Tax to Nowhere

The last time the residents of Riverside went into the voting booth a gambling casino started taking over the town.

This time they will be voting on a hotel/motel tax.

This is one of those stories that is so delicious one has to assume that one simply doesn't understand the facts. But that's never prevented my writing before, and it's not about to now.

There are 107 Iowa towns, and 12 counties that have hotel/motel taxes. They range from 1% to 7%.

So what's so unusual about a hotel/motel tax in Riverside?

Riverside has one hotel. It's owned by the gambling casino. And, get this, as a part of the "negotiations" with the city, the casino was able to have included in its sweet deal the provision that it would never have to pay a hotel/motel tax.

There are no other hotels.

So why are they even voting? Because Mayor Bill Poch says, "I feel there is a very substantial possibility that we will have another hotel in the future."

The gambling casino initially agreed to pay the city $1.7 million a year.

So now what happens? Apparently the ballot proposition is written to provide that the casino will collect the hotel/motel tax. But watch very carefully what then happens to the money. It is collected by the casino, paid to the city, which forwards it on to the state, which returns it to the city -- which then credits it to the casino.

Why would anyone want to do this? From the sketchy reports I've heard the gambling casino's hotel is not doing all that well. Why would you think you could improve occupancy rates by increasing the room charges by 7 percent?

So, seven percent out from the casino, and seven percent in. I guess it's the only sure bet you can make in Riverside, Iowa.

Read more at: Rachel Gallegos, "Riverside voters to decide on hotel/motel tax," Iowa City Press-Citizen, October 30, 2006.

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Anonymous said...

The casino hotels never "do well" because most of the rooms are comped to gamblers who lose a sufficient amount of money. This is how the hotels in other cities avoid most of the taxes they should be paying.

Anonymous said...

"The hotels in other cities" refers to casino affiliated hotels, of course.