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Marlborough Hotel Tax Hike Could Raise $450K

October 15, 2010 – An increase in the city’s lodging tax could bring in hundreds of thousands of dollars in new annual revenue for economic development, according to a proposal councilors discussed Tuesday night.

But councilors said they need more details about the idea, and some are already opposed to an additional tax.

With an ultimate goal of stabilizing the residential tax rate, Council President Arthur Vigeant is calling for the additional 2 percent lodging tax. The state last year gave communities the ability to increase their hotel and motel occupancy tax from 4 to 6 percent. Marlborough’s rate stands at 4 percent.

“I’ve established myself as someone who does not like to see new taxes,” Vigeant told the City Council’s Legislative & Legal Affairs Committee on Tuesday.

But in reaching out to businesses for the recent Marlborough Economic Development Corp. summit, he said he realized how important it is to do that type of outreach and make sure that growing companies will expand in the city.

Last year, city councilors unanimously shot down the possibility of raising the lodging tax. They also rejected raising the 6.25 percent tax on restaurant meals to 7 percent – another new option under the law.

Vigeant said he didn’t think the city needed to raise those taxes last year, but Marlborough Economic Development Corp. board members asked him to revisit the vote. He is proposing that the additional annual revenue, currently estimated at about $450,000, could go to the Marlborough Economic Development Corp. to expand its outreach to businesses and help fill up the city’s industrial park.

“Here’s an opportunity where we can get funds from outside city residents to hold the residential tax rate down,” Vigeant said.

The revenue could be a tool for expanding business in Marlborough and taking pressure off taxpayers, Councilor Joseph Delano said.

The city needs more staff to go out and attract businesses, councilors said.

As he did at a recent council meeting, Councilor Paul Ferro spoke strongly against the additional tax.

“I think it’s a frightening road we go down when we say we’re just going to tax other people,” Ferro said. “Hotels are paying more than their fair share.”

Councilor Matt Elder has also said he will not support the additional tax.

Mary Simone, general manager of the Courtyard by Marriott, wrote a letter in opposition to the tax increase. Ferro said he also spoke to another hotel general manager who is against the idea.

Vigeant said he thinks most hotels support the proposal, as generating additional business would put more people in hotel rooms.

Marlborough is in competition not only with nearby communities but also with other states and countries, said Michael Hogan, a member of the Marlborough Economic Development Corp.’s board of directors.

Hogan pointed to the decision by BJ’s to move its corporate headquarters to Westborough, where the company will pay between $250,000 and $300,000 less in property taxes than if it relocated to Marlborough. Westborough’s non-residential tax rate is $16.98 per $1,000 of assessed value, compared to Marlborough’s rate of $25.42.

“Economic development isn’t a flash in the pan. This is a long, ongoing, consistent commitment,” said Hogan, an advocate of the proposal. “This is a huge opportunity for the city.”

The city needs a plan, said Arthur Bergeron, chairman of the Marlborough Economic Development Corp.’s board of directors. In preparing for the corporation’s business innovation summit, Bergeron found a lot of vacant space in his tour of the city’s industrial property.

The corporation could use some of the additional revenue for a plan, according to the proposal Bergeron discussed Tuesday.

The city could use a home-rule petition and set up a specific stabilization fund to designate the revenue, Vigeant said. Councilors could also choose to dedicate the money to other purposes.

Ferro said other departments have as much of a right to the extra revenue as the Marlborough Economic Development Corp.

Councilors requested more detail on the budget breakdown, which Vigeant said the committee will receive for the next meeting.

Following a request from Councilor Patricia Pope, Vigeant said he will also provide statistics on increasing the lodging tax by 1 percent.

The Legislative & Legal Affairs Committee tabled the discussion. The committee did not set a new meeting date Tuesday night.

This story originally appeared here