Municipal Accommodation Tax (MAT) February 5, 2019

Today’s Presentation Tourism Timmins Vision Tourism Timmins Mission Municipal Accommodations Tax Revenue Sharing Tax Rate Financial Implications Next Steps

Tourism Vision A vibrant city with sustainable tourism products and experiences that provides a lasting legacy for tourists and a quality of life for residents; recognizing that tourism is an engine of growth for Timmins’ overall economy.

Tourism Mission To increase overnight tourist visits and spending in Timmins, by enhancing the total year-round tourism experience through product development, marketing, investment and partnerships.

Municipal Accommodation Tax (MAT) Background Destination Management Fees (DMF) or a Destination Marketing Tax (DMT) has been a common revenue tool used globally to support tourism marketing and product development strategies. These funds are often collected through either a percentage or flat monetary fee on transient accommodations (hotels). Typically, and prior to December 1 2017, the collection models were industry led and participation was voluntary. On May 17, 2017, in response to municipalities’ request, the Province enacted Bill 127, Stronger, Healthier Ontario Act, 2017, providing single and lower-tier municipalities the authority to levy a transient accommodations tax (hotel tax). The Transient Accommodation Regulation 435/17 came into force on December 1, 2017, and provides the necessary provisions for municipalities across Ontario to implement a Municipal Accommodation Tax (MAT).

Municipal Accommodation Tax (MAT) Background Administrative report received by Mayor & Council Sept 25, 2018 with direction to continue working toward the implementation of a Municipal Accommodation Tax at the recommended rate of 4% could potentially generate $1million + - annually in the City of Timmins. The net revenues are to be used to: 1. promote tourism development and marketing. 2. provide a new source of revenue for the municipality.

Revenue Sharing The Regulation prescribes how revenues are to be shared between the respective municipalities and designated eligible tourism organization(s). A minimum of fifty per cent of the revenues collected are to be remitted annually to one or more eligible not for profit tourism entities whose mandate includes the promotion of tourism in Ontario or in a municipality. The Regulation defines Tourism promotion to include product development. For example, for Tourism Timmins and subject to Council’s approval to proceed, this new revenue tool could generate significant funding annually for tourism product development support that could include: - Sport and corporate event bid support and hosting - Cultural event development and ongoing support - Financial support program to incubate new product development (concerts, Monster Truck Shows, Fall Fair Enhancements, Snowcross, etc)

Revenue Sharing Continued While the City’s use of its share of the revenues, consisting of the other 50 per cent maximum of taxes to be generated is unrestricted, in keeping with the spirit of the tax, the City of Timmins could support a number of Council-approved plans that would contribute to tourism infrastructure or bricks and mortar developments that have no source of funding such as: Facilities that support tourism Parks and green space infrastructure to support tourism festivals & events Wayfinding Signage Conference Centre

Tax Rate Under the regulation, the municipality has the authority to set the tax rate and the effective date of implementation. The municipality also determines the overall methodology, including remittance, reports, late fees, etc The vast majority of all participating municipalities are implementing a 4% levee + HST It is estimated that there are 16 accommodation providers in Timmins offering approximately 1001 guest rooms in hotels, motels and cottages. In addition, there are an undisclosed number of Airbnb properties

Tax Rate Based on the PKF report, in the year 2013 and following the introduction of new room inventory (Holiday Inn, Microtel Inn, Hampton Inn) our occupancy went from 66% to 52% a decrease of 14%. The average room cost was $104. Using this info and calculating potential MAT revenues @ 4%, the City of Timmins could potentially raise $760,000 from Hotels and $149,000 from motels annually. This totals $909,000 / annum. According to CBRE Hotel Trend reports we are averaging 60% occupancy first 11 months of 2018 with an average room rate of $127.00/ night

Financial Implications A Municipal Accommodation Tax at the rate proposed of 4% is estimated to potentially generate approximately $1 million + - annually. The revenues would be shared between the municipality and tourism not-for-profit(s) for tourism promotion, which is defined to include product development. The revenue could be a catalyst to attract business travelers for more meetings and conventions and participant visitors for additional sports and cultural events. For example, monies from the fund could be used for new or the enhancement of sports or cultural infrastructure that will provide the opportunity to host regional, provincial, national and international events. The monies from the Municipal Accommodation Tax could be used as private sector investment to leverage provincial and federal funds for infrastructure development with tourism implications.

Next Steps Meet with Accommodation Providers Meet with Finance to discuss methodology / logistics for collection, and include recommendations in a MAT bylaw for Council’s review & approval Provide Council with recommendations for governance and the distribution of funds including principles for decision making and committee structure to determine the allocation or investment of funds

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