Merriam leaders consider hotel grants to increase tax revenue

MERRIAM, Kan. – City leaders in Merriam will soon consider a new plan to reinvest in the city’s aging hotel stock.

On Monday, Merriam City Council reviewed a proposed grant that could help revamp local hotels to bring more tax revenue for the city.

There are currently four hotels in Merriam, all built between 1982 and 1998.

Income is down

A transient guest tax (TGT) of 7% applies to all hotels and Airbnbs within the city. Income from TGT supports the Bureau of visitorsfarmers markets and special community events like the Turkey Creek Festival.

“The average daily room rate in 2017 is $75.24, which will only decrease by 5% in 2021 to $71.55. If you account for inflation, the room rate, if it is to consistently increase with inflation, should be around $96.50. If you think about it, that’s a 26% drop,” said Assistant City Administrator Jennifer Jones-Lacy.

TGT’s annual revenue has declined by about 24% from its peak in 2017 through 2021.

Hotel crime

By 2021, police calls for service to the Merriam hotel represented about 5% of all non-traffic calls. According to city documents, that’s a 57% increase from 2015.

Since 2015, 64% of all police calls from hotels have been from Extended Stays at 6451 E. Frontage Road.

“It (Extended Stay) operates more like an apartment complex that has a lot of resident issues in it, as opposed to a hotel. It doesn’t cause a different type of crime, it just causes it to be concentrated in that one location,” said Merriam Police Chief Darren McLaughlin.

The city staff suggested creating a grant to incentivize hotel owners to update their properties to attract more visitors to Merriam.

Under the Merriam Hotel Grant, the city will reimburse hotel owners between $5,000 and $250,000 for renovations made on their property. The grant will require a 50% match from property owners with a minimum contribution of $10,000.

To qualify, a hotel owner must be up to date on all taxes, have a valid business license and ensure that the property complies with all city codes.

The money can be used to make upgrades to existing hotel rooms, refresh common areas such as the lobby or pool, or make exterior renovations of the building.

The proposed grant program would provide up to $1 million for one-time resources. The money will be transferred from the General Fund to the Transient Guest Fund.

“We proposed that we do that by reducing a million dollars transferred to the Capital Improvement Fund (CIP), because we plan to use ARPA (American Rescue Plan Act) funds to pay for some of those capital improvements,” Jones- Lacy said.

Qualified property owners must provide excellent and detailed evidence of the company’s brand property improvement plans, including information on brand transition plans in the near future.

“We know that Lotus is looking forward to the transition to Fairfield by Marriott. It may not be the only one, so we want that information,” Jones-Lacy said.

If the owner sells the property, or the business downgrades within two years of receiving the money, the owner must return the grant funds to the city.

Hotel owners who receive grants are required to provide benchmark data such as average daily room rate and occupancy rate for one year before and two years after receiving the grant. The city will not make payments to property owners until renovations are complete. Staff recommended requiring the work to be completed within a year of the owner receiving the grant.

“A million dollars is a lot of money, but I see that there is a double benefit. This business improves its facilities, which will allow them to increase their rates. Which will ultimately be linked to the taxes received by the city,” said Council Member Jason Silvers.

If approved, the program would begin in 2023. Applications would be submitted online and reviewed by Jones-Lacy, Director of the Visitors Bureau and City Administrator.

The council took no official action Monday night. The city council is expected to review the hotel grant proposal in the coming weeks.

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