Overview

Most major cities generate significant revenue through hotel/motel taxes from tourism and convention business. Hotels and motels also generate a significant amount of lower-paying jobs, and many cities lack sufficient housing that is affordable for these workers. The use of hotel tax revenue for affordable housing can mitigate these negative impacts. Additionally, transient occupancy taxes on short-term vacation rentals may also offset the negative impact such rentals may have on the local rental housing supply.

Case Studies

Hotel/Motel Tax (Columbus, Ohio)

In 2001, the city of Columbus, Ohio, created an Affordable Housing Trust Fund with dedicated revenue from its hotel/motel tax. An 8.37 percent hotel tax (a portion of the city’s 10 percent hotel tax) is committed to affordable housing and programming and usually generates between $1 and $1.5 million a year. Soon after the creation of the trust, Franklin County, Ohio, joined the city as a funding partner and currently contributes half of its own two percent real estate tax to the fund. This tax adds another $3 to $3.5 million to the fund each year. The fund acts as an independent, not-for-profit lender that provides loans for affordable rental, supportive and homeownership projects in the city. As of 2014, the fund had committed $39.3 million in loans to affordable housing developers, contributing to the creation or preservation of over 8,000 affordable units, according to the Trust’s 2015 annual report.

For More Info:

Steven Gladman, Affordable Housing Trust for Columbus and Franklin County
Email: [email protected]