City Council Agenda and Packet 2013 12 16

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City��, Louisville COLORADO•SINCE 187s SUBJECT: SUPERIOR TOWN CENTER HOTEL EFFECT ON LOUISVILLE LODGING AND SALES TAX DATE: NOVEMBER 27, 2013 PRESENTED BY: AARON M. DEJONG, ECONOMIC DEVELOPMENT SUMMARY: The Superior Town Center development envisions a new hotel and conference center upon the 80 acre parcel Louisville transferred to Superior in the 1997 Intergovernmental Agreement between the two communities. This memo outlines an analysis of potential effect of a new hotel in the Superior Town Center on the existing hotels in Louisville and the tax revenue the hotels generate. BACKGROUND: Superior is planning for a new hotel within the Superior Town Center development. It is unknown how many rooms or the amenities the hotel will have. DISCUSSION: The following are the assumptions made in analyzing the lodging market in Louisville and the size of the hotel in Superior: • 2012 Lodging revenue of$12,500,000 extracted from Lodging tax revenues • 587 rooms in Louisville • Superior Hotel 200 rooms with average sales per room of$23,000 • Louisville Sales Tax of 3.5% • Louisville Lodging Excise Tax of 3% • Share back of 50% of 2.7% Superior Sales Tax I created the following table to analyze different percentage reductions of Louisville hotel receipts due to increased competition. Table 1: Net Louisville Hotel Revenue Given Various Reductions in Receipts reduction of Louisville Loss of 3.5% Gain of 1.35% Loss of Lodging Net Louisville Receipts Sales Tax Sales Tax Difference Tax Revenue 5% (21,886) 62,100 40,214 (18,294) 21,920 10% (43,772) 62,100 18,328 (36,588) (18,260) 15% (65,658) 62,100 (3,558) (54,883) (58,441) 20% (87,544) 62,100 (25,444) (73,177) (98,621) 25% (109,430) 62,100 (47,330) (91,471) (138,801) 30% (131,316) 62,100 (69,216) (109,765) (178,981) 35% (153,202) 62,100 (91,102) (128,059) (219,161) 40% (175,088) 62,100 (112,988) (146,354) (259,342)