Request By:
Mr. Christopher A. Clifton
Planning Director
Hopkinsville-Christian County
Planning Commission
P.O. Box 1125
Hopkinsville, Kentucky 42240
Opinion
Opinion By: Steven L. Beshear, Attorney General; Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter raising several questions about the formation of a Tourist and Convention Commission (now KRS 91A.350 to 91A.390 but formerly compiled as KRS 83.340 to 83.350), and the imposition of a transient room tax to finance the commission's activities.
At the present time a Tourist and Convention Commission has not been established and the tax has not been imposed. Furthermore, there is neither a hotel and motel association nor a restaurant association in existence in the area.
Your first question asks about the appointment of persons to the Tourist and Convention Commission pursuant to KRS 91A.360 where there is neither a hotel and motel association nor a restaurant association.
KRS 91A.360(1) provides in part that a Tourist and Convention Commission established pursuant to KRS 91A.350(2), that is a commission to be located in a county containing cities other than cities of the first class, shall be composed of seven members to be appointed jointly by the mayor of the largest city in the county and the county judge/executive. Of those seven members two are to be selected from a list submitted by the local city hotel and motel association; one is to be selected from a list submitted by the local county hotel and motel association, provided that if only one local hotel and motel association exists which covers both the city and county, then three persons shall be appointed from a list submitted by it; one member of the commission is to be selected from a list submitted by the local restaurant association or associations.
In OAG 74-482, copy enclosed, we dealt with the establishment of a Tourist and Convention Commission in an area where neither a hotel and motel association nor a restaurant association existed. At page two we said as follows:
"Even though there are no hotel and motel associations or restaurant associations within the city of Georgetown or Scott County, the law requires a functional commission as we pointed out in OAG 74-236, a copy of which we are enclosing. Since there must be a functional commission and in the absence of any of the referred to associations, we believe that the mayor and the county judge should first contact all of the hotel and motel owners, or their representatives, in the city and request that they submit a list of names from which two (2) commission members shall be selected to represent the local city motels and hotels. Secondly, a similar request for a list should be made to the hotels and motels located in the county from which one (1) commissioner shall be selected. As an alternative, we believe that a request could be made to all of the city and county hotels and motels for a single list from which three (3) commissioners could be appointed to comply with both subsections (a) and (b) of KRS 83.345. A similar request should be made to the local restaurants from which one (1) commissioner would be selected. Such procedure as outlined would, we believe, be in substantial compliance with the terms of the statute where no associations exist representing the city and county hotels, motels and restaurants. "
It was further stated at page three of OAG 74-482 that if no lists were submitted by the operators of hotels, motels and restaurants upon a proper request and which a reasonable time, the mayor and the county judge/executive could make temporary appointments, to fill the positions in question, from residents of the city and county until such time as the positions could be filled pursuant to the statutory provisions or until at least substantial compliance could be secured by submission of the lists previously mentioned. The Tourist and Convention Commission should not be prevented from functioning merely because of the failure or refusal of the hotel and motel operators and restaurant owners to cooperate. See OAG 74-236, copy enclosed, and OAG 83-148, copy enclosed, dealing with the appointment of members of such a commission.
Your second question is as follows:
"Once membership is established and the room tax (KRS 91A.390) is suggested for financing the objectives of the Commission, what mechanism should be employed by the city to impose the tax, i.e., local ordinance, referendum, etc?"
KRS 91A.390 states in part that the local governing body or bodies shall include the commission in the annual budget and shall provide funds for the operation of the commission by imposing a transient room tax, not to exceed three percent. Thus, the tax is to be imposed directly by the local governing body and not pursuant to a referendum proceeding.
KRS 83A.120 provides in part that any public question authorized by statute may be submitted to the voters of a city by either a resolution of the city legislative body or a petition. There is, however, no statutory provision authorizing a referendum in connection with the establishment of a Tourist and Convention Commission and the levying of a tax to support the activities of such a commission.
It is our opinion that both a Tourist and Convention Commission and the tax to support the activities of such a commission should be established pursuant to an ordinance enacted by the local governing body. Note the definition of "ordinance" in KRS 83A.010(10) as an official action of a city legislative body, which is a regulation of a general and permanent nature and enforceable as a local law or is an appropriation of money.
Your third question is as follows:
"Once the room tax is imposed, can the local governing body or Commission grant a waiver of the tax to government contracts for room convention fcilities? This is critical since the government contracts for lodging services in our city do not pay any tax imposed locally; therefore, if not waived, the hotel/ motel owner would be in a non-competitive position with surrounding communities."
A transient room tax imposed by a city and county or by either one individually pursuant to KRS 91A.390 to fund the operations of a Tourist and Convention Commission is a license or occupational tax. See Section 181 of the Kentucky Constitution;
City of Lexington v. Motel Developers, Inc., Ky., 465 S.W.2d 253 (1971) and OAG 82-26, copy enclosed. The statutory provisions relative to the establishment of a Tourist and Convention Commission were declared to be valid and constitutional in
Second Street Properties v. Fiscal Court of Jefferson County, Ky., 445 S.W.2d 709 (1969).
KRS 91A.390(1) provides that the tax to be levied to support the activities of a Tourist and Convention Commission is a transient room tax, not to exceed three percent of the rent for every occupancy of a suite, room or rooms, charged by all persons, companies, corporations or other like or similar persons, groups or organizations doing business as motor courts, motels, hotels, inns or like or similar accommodations businesses. In
City of Lexington v. Motel Developers, Inc., Ky., 465 S.W.2d 253, 255 (1971), the court said the tax in question was not an excise tax of the kind a city may not levy. It is a tax upon the hotel and motel owner and is simply measured by a percentage of room-rental receipts. In
Second Street Properties v. Fiscal Court of Jefferson County, Ky., 445 S.W.2d 709, 716 (1969), the court said the tax is imposed on hotels and motels and not levied on the occupants of rooms. It is true that the tax may be, and probably will be, collected from guests, but the statute does not impose the tax on them as a legal incident.
KRS 91A.390(1) requires in part that the transient room tax when enacted be imposed "for every occupancy of a suite, room or rooms". The city legislative body does not have the authority to grant waivers in connection with payment of the tax. Since the tax is levied upon the hotels and motels, and not on the persons or organizations occupying the rooms, those hotels and motels will have to pay the tax and hope that the funds collected and expended result in additional room reservations in their area.