A review by the author of the Frederick County hotel development incentive program published by the Maryland Public Policy Institute:
IN AN EFFORT TO OPEN COUNTY COFFERS TO HELP FUND THE HAPLESS Frederick City–sponsored Downtown Hotel & Conference Center project, Fred- erick County has embraced a “hotel development incentive program.” The program—adopted as part of a bill that raises the County’s hotel room tax from 3 percent to 5 percent—would deliver a large tax break to approved new full- service hotels/conference centers, slashing the hotel room tax to as little as 0.75 percent, ostensibly to help the new facilities service their debt. Of course, existing county hotels would get nothing except tax break–subsidized competition.
The immediate beneficiary of the scheme is likely to be the proposed Downtown Hotel & Conference Center in Frederick City. Offering the same breaks to other facilities built in the county’s other municipalities is a way to rally support outside the city for the unpopular project. At the county council meeting that endorsed the scheme by a 4–3 vote, officials from a number of the smaller towns spoke in favor of it.
Amazingly, there was little discussion of the public revenue cost of the proposal. The staff report on it claims that it would have no “financial Implication.” That is obviously misleading. The tax breaks under the program would have a hefty price tag even if only one hotel takes advantage of it. Consider a 200-room hotel…
Continue at the MPPI site: