Agreement reached to give NOTL Tourism accommodation tax revenue

Christmas has arrived a bit early for Niagara-on-the-Lake Tourism as its share of funding generated through the Municipal Accommodation Tax is on its way.

Council has approved a transfer agreement between the town and its Destination Marketing Organization, the body entitled to half of what the program generates.  

Last month, NOTL Tourism chief executive officer and president Minerva Ward came to council asking for a loan of $226,000 to cover their share from MAT for 2022, so she could cover expenses underwritten by the NOTL Chamber of Commerce, which she also heads.

Council turned down the loan, but on Tuesday, during a committee-of-the-whole planning meeting, approved the agreement that would allow her to have the money she was looking for. Ward told The Local Thursday she is delighted the funds will be transferred soon, adding the tourism board should have its money bt the end of the year.  

“It’s a major relief because this has been a year-and-a-half delay,” said Ward. The chamber has for many years formerly worked in tandem with Tourism NOTL, but has recently been divided as a separate entity, an essential part of the agreement to become the recipient of the accommodation tax.

Tourism NOTL has been the town’s Destination Marketing Organization since 2013, and has been eligible to receive half the funds generated by MAT since mid 2022, according to Ward, but the town and chamber had not yet signed an agreement to make that happen.

Ward has previously told council that both organizations, the chamber and Tourism Niagara, would now need to operate with separate board of directors.  

An amendment to the agreement made by Coun. Maria Mavridis was supported by council, specifying that no individual can sit on both boards.  

Ward said this will be an open process and that she expects a new tourism board will be in place by the end of the first quarter in 2024.  

“We’re going to go out and try to recruit a whole new board,” she said, also adding it will be an “open process.”  

Ward said she is relieved the agreement has been approved because it means the chamber no longer has to underwrite expenses for the tourism organization, and also because it signals an ability to move ahead with tourism-related efforts – something that could not be done in full force recently because the money was not available. 

The accommodation tax program was launched in July 2022 and started generating funds in the third and fourth quarters, resulting in the town collecting $453,148 in revenue that year. 

Half that amount, $226,574, represents Tourism NOTL's share before administrative expenses.  

For the first two quarters of 2023, the town has collected $719,860, equating to a 50 per cent share of nearly $360,000 for Tourism NOTL.  

Ward said she expects the 2023 funds will also start coming in early next year.  

At the start of Tuesday’s committee-of-the-whole meeting, council went into closed session to discuss three matters – one of them regarding Tourism NOTL and the chamber, according to the meeting agenda.  

No discussion about what took place behind closed doors followed when council returned to open session.  

Later in the meeting, when the agreement was up for approval, only a brief conversation ensued.  

Mavridis’s motion to amend the agreement so that no individual can sit on both the tourism and chamber boards brought a question from Coun. Wendy Cheropita, asking if Mavridis’ intention was to hold off on the agreement being finalized until both boards are formed.  

“I’m not hoping to hold up the MAT agreement,” Mavridis responded, adding that her amendment is an attempt to create “more comfort” when it comes to accountability.  

Lord Mayor Gary Zalepa and Coun. Erwin Wiens were not in attendance Tuesday. The remainder of council all voted in favour of the agreement.  

One provision of the agreement are that it will operate on a five-year term, which shall automatically renew for another five years unless either party gives a one-year written notice that the agreement will not continue.  

It also comes with a one-year notice period in the event the town wishes to terminate the agreement for any reason.  

All MAT revenue will be placed in a separate fund controlled by Tourism NOTL and disbursements by the town will occur quarterly, a staff report about the agreement says.

An annual review of Tourism NOTL’s work plan and alignment with the town's tourism strategy will occur, the report also says.  

In 2017, the Ontario government issued the Transient Accommodation Regulation, which provides provisions for municipalities across Ontario to implement an accommodation tax if they choose to do so.     

Last June, town council approved a MAT bylaw, resulting in this new tax of two per cent applying only to accommodation establishments with five or more rooms and for bookings made on or after July 1, 2022.     

Starting in January, short-term rentals with less than five rooms will also have to pay the tax.   

Accommodation providers will see the tax rise to three per cent in 2024, and four per cent in 2025.   

In August 2021, council passed a motion to implement the tax within the 2022 budget for tourism projects, and to place any revenue generated into a special reserve for tourism promotion, town capital infrastructure and tourism initiatives.