Community Investment Needed to Transform Tucson

By Brent DeRaad

Those who attended Mayor Jonathan Rothschild’s State of the City address heard how he and several community leaders recently visited Oklahoma City to learn about its downtown renaissance.

After being shunned by a company that couldn’t see its employees living in Oklahoma City, the city and private sector invested hundreds of millions of dollars to transform its downtown. The primary goal was to attract new companies, residents and visitors to a thriving urban core. At worst, they would create a better place in which existing residents and businesses could take pride.

The investment in Oklahoma City accomplished all of the above. It serves as a wonderful example for what could happen in Tucson.
Government and business need to work together closely in metro Tucson and Pima County. Government’s primary role is to provide quality infrastructure and services at the lowest possible costs to constituents. However, effective government leaders invest strategically to stimulate private investment that far outweighs their outlay.

In Tucson, millions have been spent creating the modern streetcar route, which will begin serving passengers later this year. That will spur transit-oriented development along the route with businesses locating near stops.

Pima County and its bond advisory committee are considering numerous projects for inclusion on a November 2015 bond election ballot. They are working with the private sector and nonprofit organizations to determine which projects have the greatest opportunity to improve residents’ quality of life, while – in some cases – attracting visitors. Projects deemed most worthy will be included on the ballot.

While promising, work remains. We at Visit Tucson are eager to continue partnering with Pima County, Tucson and Oro Valley, and collaborating with regional economic development organizations and our 500 member businesses to build a stronger Tucson.

Where does tourism fit? Pima County visitors spend $2 billion annually, according to Arizona Office of Tourism research. The tourism industry employs 22,000 people throughout the county. In surveying visitors, we learned that only 29 percent of their expenditures are on lodging, while the remainder is spent throughout the region on food and beverage, entertainment, attractions, shopping, local transportation and more.

More importantly to you, visitors generate millions in bed- and sales-tax revenue, with the great bulk going to government general funds.

Tucson collected approximately $9 million in base bed-tax revenue last year, along with $3.5 million in revenue from a surcharge of $2 per occupied room per night paid by hotel and resort guests. The city invested $3 million – 33 percent of the base – in Visit Tucson, with the remaining $9.5 million going to the city’s general fund.

Oro Valley collects approximately $875,000 annually in bed tax. The town invested $120,000 of it in Visit Tucson, with approximately $750,000 going to its general fund.

A Scottsdale study found that visitors pay $2 in sales tax for every dollar paid in bed tax. All local sales-tax revenue goes to municipalities’ general funds. In applying that here, municipalities retain more than 90 percent of tourism-related sales and bed-tax revenue. Tax dollars from visitors lessen what you pay for police, fire, water, libraries and other municipal services.

We at Visit Tucson believe we can generate additional visitor tax dollars – but it will take investment of more municipal bed-tax revenue in our sales and marketing programs to make that happen.

Of the $2 billion in direct travel spending that occurred in Pima County last year, Visit Tucson tracked $214 million in leisure, meetings, sports and film-related business we booked directly. Based on our $7 million annual budget, we generated $30 for every $1 allocated to us.

Visit Tucson’s budget exceeded $11 million in 2006-07. While Pima County has invested 50 percent of its bed-tax collections annually in our organization for many years, investments from other government partners fell substantially during the recession.

We are outspent considerably by Phoenix, Scottsdale, Palm Springs, San Antonio and other cities against which we compete for leisure and meetings travel. We increased our private-sector revenue this year, and are working with our municipal partners to increase their investment of visitor paid bed-tax revenue in our travel marketing programs.

Based on the return we are already generating, that strategic investment by municipalities would yield a strong return via more visitors and the money they spend here.

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