Listen to this articleUPDATE OCT 18th 2023 – Council approved the amendments I made to the recommendations after Deputy Mayor Contin and I came to compromises with the local hotel operators on the October 17th. With the support of the hotel operators, the approved approach is as follows:
- That the implementation of the Municipal Accommodation Tax be phased in commencing with 2.5% in 2024, 3.5 % in 2025 and 4% in 2026; and that the Municipal Accommodation Tax By-law be amended accordingly.
- That the Terms of Reference for the Municipal Accommodation Tax Committee include more than one hotel representative and one Council representative; and
- That the Committee’s mandate include providing the Public with information via QR Codes, signage as well as documentation to explain the purpose of the MAT and the benefits to the Community.
In addition, since the MAT cannot be implemented with short term rentals (STR) without some regulatory framework in place, I committed to working towards that goal in 2024 so that STR will join in the MAT initiative and help fund the “destination Midland” tourism marketing that 100% of the MAT revenues will be spent on.
Background
In 2017, municipalities were given the authority by the province to levy a transient accommodation tax, named the Municipal Accommodation Tax (MAT). The MAT regulations provide municipalities with the flexibility to determine the tax rate, design, administration, and collection of the tax and specify that the MAT revenues must be shared with an eligible tourism entity whose mandate includes the promotion of tourism in Ontario or in a municipality.
With many municipalities across the province approving MAT By-laws, staff provided Council with CSR-2022-40 and CSR-2023-02 regarding the potential implementation of a Municipal Accommodation Tax in Midland.
Per CSR-2023-02, staff were to establish a Municipal Accommodation Tax Committee to work toward implementing the MAT in 2024, report back to Council with a By-law recommendation, and work with the County of Simcoe/Tourism Simcoe County on developing an agreement whereby the County would be appointed as the eligible tourism entity once the MAT is implemented.
Staff invited all hotel and motel operators to be members of the ad-hoc committee, as well as representatives from some of the attractions and staff from the County. Committee Terms of Reference were established and virtual monthly meetings were held through winter and spring 2023.
Staff have completed a draft By-law recommendation, attached, and are in the process of drafting an agreement for the County of Simcoe.
Analysis
Tourism is one of the Heart of Georgian Bay’s economic pillars and the region’s hotels and motels are located in Midland. Midland’s proximity to Georgian Bay, our award winning festivals and events, and the area’s premier attractions draw visitors and infuse millions of dollars into the local economy.
The tourism sector is recovering from the effects of the COVID-19 pandemic and increasing tourism marketing, promotion and product development supported by funds earned through the MAT will further assist in this recovery process.
The Town of Midland does not currently have a licencing program in place for Short Term Rentals or Bed and Breakfast establishments, however these operators can voluntarily collect and remit the MAT. The draft By-law includes a definition for both Short Term Rental Accommodation and Bed and Breakfast should the Town implement a registration and licencing program in the future.
Upon the implementation of the draft By-law, a MAT Committee will be created including Town of Midland staff, County of Simcoe/Tourism Simcoe County staff, and representatives from area accommodations and attractions. Meetings will be held twice a year to discuss MAT supported activities and projects. Meetings will be held in spring to discuss upcoming fall/winter initiatives and in the fall to discuss spring/summer initiatives.
The MAT Committee will work to promote partnerships and collaborative approaches in the creation of product development, four-season activities, and enhancements to tourism activities such as festivals and events.
The cities of Barrie and Orillia have implemented a Municipal Accommodation Tax and the Town of Collingwood is investigating implementing a tax and is at the stakeholder consultation stage. With communities within a 50 km radius of Midland having already implemented the tax or in the process of considering implementing the tax, a MAT should not be a deterrent to visitors looking to stay in Midland or direct them to overnight stays in other communities.
Considerations
Hotel and motel accommodations have been consulted during this process and were invited to participate in ad hoc committee monthly meetings in winter/spring 2023. Their participation increased awareness of the challenges they face and some of their concerns.
As the Town does not have a registration process for Short Term Rentals and for Bed and Breakfasts, staff have not consulted with these property owners. (see my notes about this at the end of this article)
The agreement with the County of Simcoe/Tourism Simcoe County will require that MAT funds collected are to be used exclusively for tourism marketing and promotions for the Town of Midland. Potential projects include enhanced event promotion, stay and play packages, shoulder season and winter product development and marketing, and visitor experiences.
MAT fees retained by the Town of Midland would be directed to tourism and cultural programs and activities as well as tourism and cultural infrastructure. This could include event enhancements, marketing and promotion, as well as tourism and cultural infrastructure and capital expenses. The funds could also be used to leverage tourism and cultural grants.
Financial Impact
The Town of Midland has approximately 487 hotel/motel rooms. Below is a calculation that indicates the approximate impact of this tax for the Town. Numbers are based on an annual 40% occupancy, nominal average daily rate of $100 and a tax rate of 4%.
487 rooms at 40% occupancy = 194.80
194.80 x $100/night x 365 nights = $7,110,200
$7,110,200 x 4% MAT = $284,408
(Less collection agency administration fee of 1.8% for hotels/motels = $5,119.34)
$279,288.66 divided equally between the Town of Midland and the County of Simcoe/Tourism Simcoe County allocates $139,644.33 to each.
This calculation does not include Short Term Rentals or Bed and Breakfast accommodations.(see my notes about this at the end of this article)
Staff are recommending a third-party collection agent to effectively manage this additional responsibility. One such organization is the Ontario Restaurant Hotel and Motel Association (ORHMA). ORHMA is a not-for-profit organization that has existed since 1925 and is the largest provincial hospitality association in Canada. They currently assist more than 20 municipalities with the collection of the MAT through their online system.
ORHMA charges the municipality a minimal one-time set-up fee which includes an information session for all stakeholders, training for their secure and confidential online remittance platform, as well as messaging for stakeholders’ staff and for visitors.
Once the program is implemented, they remit the MAT collected to the Town and invoice the Town for their administration services. With the estimated annual administration fee of approximately $5,100, outsourcing the administration of this program will prevent the Town from investing in a new software for the MAT program, limit Finance resources and IT resources to manage and upkeep the privacy/security of
the data and the software itself.
Conclusion
One of Midland’s strategic goals is to boost year-round tourism, and to attract tourism’s return to our community post-pandemic. This 4% tax only applies to non-residents and short stays, and the funds go directly into promotion of our community, both at the County and by our own committee comprised of stakeholders including the local hospitality industry. The promotional campaigns should focus primarily on packages that include accommodations (since the hotels are the only ones collecting the tax in 2024) and attending events and activities in our community. Without this new funding source, we would have to pass the costs of these marketing activities entirely along to the Midland taxpayers.
The concept of non-resident fees will be a recurring theme in our 2024 budget as we no longer find ourselves in a position to continue subsidizing our neighbours that use our tax-supported facilities and services. A non-resident fee will be asking visitors (even our neighbours) to pay a nominal fee to help offset some of the costs borne by our local taxpayers. MAT is simply a non-resident fee collected at hotels (and at some point BnB) where the funds collected go directly back into the very resources that attract people to our community in the first place.
But What About STRs?
While at the AMO this past August, I researched how we can include our (STR) short term rentals (AirBnB, VRBO etc) into this program and have found that until we are prepared to implement a full regulatory framework to govern, track and tax these STR in Midland, they won’t be compelled to participate in the MAT program. AirBnB is no longer collecting for municipalities since their competitors never did, and they cannot afford to lose market share to those competitors. They tell me that until the Province enacts regulations that compel all STR platforms to collect MAT for municipalities, that they simply won’t do it anymore. I will be working with our MPP Jill Dunlop to help move this forward as I believe that the Province needs to regulate procedural fairness into their MAT construct.
In the meantime, I have promised our hotel operators that I will work towards a way to make it more fair and have our STR operators included in MAT in the future, but that we can’t afford to miss this opportunity to help fund a “Destination Midland” campaign in 2024. STR owners, please start thinking about voluntarily participating. You WILL benefit from our marketing efforts and it’s only fair that you implement MAT along with the hotel operators… and I’d rather do this “with you” than “to you”.
In short, I believe this is worth a try. We will commit to a 3 year term and review before our term ends in 2026. If this program is not doing what it is designed to do, I will be the first one to move that we repeal it. If it is working, then we should be making a significant positive tourism impact to our community and helping to fund those efforts through the MAT.
Bill Gordon – Mayor
Click here to read the entire staff report and draft bylaw and please reach out to your councillors in advance of Wednesday Oct 18th’s council meeting.