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Penticton council upset with province's plan to use hotel tax revenue on affordable housing

A provincial government proposal that would allow municipalities to use hotel tax funding to spend on affordable housing projects has upset Travel Penticton and City of Penticton council.

For the past decade, participating hotels and motels have charged a two percent Municipal and Regional District Tax (MRDT), commonly known as “the hotel tax”, which is used for tourism marketing initiatives in Penticton.

<who>Photo Credit: Facebook Lakeside Resort </who>Penticton council heard Tuesday from Travel Penticton staff about a provincial proposal that would allow municipalities to use the MRDT, or hotel tax, an affordable housing projects.

More than 85 percent of local hotels and motels that participate in the program approved continuing to charge the two percent MRDT in the first of a five-year deal with the city, said Travel Penticton staff member Barb Haynes.

A couple of months ago, the NDP government announced, without any consultation whatsoever from destination marketing organizations, that municipalities could use MRDT funding to fund affordable housing initiatives said Haynes

“We haven’t heard how that will work or what that will look like,” she said.

There wasn’t any consultation with organizations like Travel Penticton, no details about what constitutes affordable housing or any paramaters on how municipalities can use MRDT funding towards affordable housing projects, she said.

<who>Photo Credit: City of Penticton </who>City of Penticton council voted to send a letter to the provincial government to support Travel Penticton's objections to a provincial proposal to allow municipalities to use hotel tax funding on affordable housing projects.

The provincial government sent a letter advising Travel Penticton that it was going to allow municipalities to use MRDT funding for affordable housing projects, she said.

“It was that letter that caused the uproar of destination marketing organizations,” she said.

Destination marketing organizations across the province have since written more than 1,300 letters to Finance Minister Carole James stating their objections to the proposal, she said.

Travel Penticton executive director Thom Tischik confirmed the provincial government made this move without consulting anyone in the tourism marketing industry.

“There was no plan put toward us and absolutely zero consultation,” he said.

Destination British Columbia is hosting its annual general meeting in June and this issue is going to be front and center, said Haynes.

The provincial government is also going to allow online vacation rental companies like AirBnb and VRBO to collect the MRDT, but once again, has not provided any information on where revenues will go, she said.

“Where does the money go … we don’t know,” she said. “They haven’t told us.”

Coun. Mike Picton said it’s imperative that MRDT revenue continue to be used for tourism marketing, stating that allowing municipalities to use the funding on affordable housing projects would sound the death knell for organizations like Travel Penticton.

Coun. Judy Sentes agreed saying any funding used on affordable housing projects “would be a drop in the bucket” on multi-million housing projects, but would cause serious harm to tourism organizations like Travel Penticton that operate on strict budgets.

Sentes said she was offended the province would take such strong action without consulting tourism industry leaders.

At the end of the discussion, council voted unanimously to send a strongly worded letter to the provincial government to detail proposed changes to the MRDT program.

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