Resort municipality status remains elusive 10 years on

By Paul Clarke, Rocky Mountain Outlook, 14/02/19.

The red line indicates the visitation for 2018, while the gray ribbon is the historical minimum and maximum visitation from 2014-18. Banff’s visitation was on average 2.7 percent lower than from 2017’s high.
Photo credit: Aryn Toombs RMO Illustration. Source: Alberta government


For more than 10 years the communities of Canmore, Banff, and Jasper have been lobbying the provincial government to be given special status to support their tourism-based economies, however, their efforts have so far fallen on deaf ears.

In 2016, a report commissioned by the three communities showed that collectively the towns make up less than one percent of Alberta’s population, but play host to 13 percent of the province’s visitors, attracting more than four million tourists annually.

The report found that visitor spending results in an annual economic impact of $2.46-billion and $756-million in tax revenue, however, 97 percent of the tax revenue goes to provincial and federal government coffers.

“From our perspective, the growth in the tourism industry cannot happen without the support of the mountain municipalities of Canmore, Banff, and Jasper, however, the current revenue model that is available to municipalities through the Municipal Government Act is pretty much reliant solely on property taxes, we have very few revenue tools,” said Lisa de Soto, Canmore’s chief administrative officer.

“We believe this revenue model disproportionately burdens the local taxpayer and actually benefits visitors and higher orders of government.”

She made her comments during a morning breakfast meeting organized by the Bow Valley Chamber of Commerce on Feb. 7.

The topic of resort municipality status has been an ongoing discussion spanning successive provincial governments and more than 20 different ministers, including ministers with municipal affairs, tourism and culture, and the treasury board.

Over that time, the towns have managed to get their message across, but have been unable to get any traction for more revenue tools to support their tourism-based economies.

“Rocky Mountain towns are the number one attraction for visitors coming to the province and it’s these vistas that really draw visitors to the mountains and studies have shown that a large majority of visitors that actually come to the mountains never leave the pavement,” said de Soto.

“So quite literally our towns are the tourism-product and so we think they’re deserving of funding to support that.”

In more recent years the three municipalities tried to amend the Municipal Government Act so they would be legally recognized as tourism-based communities, however, those efforts also proved unsuccessful.

“What we were looking for was a specific definition of what a tourism-based municipality would be and then revenue tools that would be applicable to that municipality if you met that definition,” said de Soto.

She suggested revenue tools could take the form of a tax on overnight stays, a share of the provincial consumption tax, or a real estate transfer tax.

She said they also tried to change how the province determines population size because many grants are based on a per capita funding formula and the towns of Canmore, Banff and Jasper do not get to count their non-permanent resident population, which swells in the summer months.

Currently the provincial government applies a four percent tourism tax on overnight accommodations such as hotel rooms and bed and breakfasts, however, none of that money is funneled back to the municipalities where it is derived from.

According to Ministry of Culture and Tourism, in 2017-18 the levy generated $85 million, which helped it invest nearly $110 million to support the tourism sector last year, including $44.1 million to support destination marketing through Travel Alberta.

MLA Cam Westhead said his government is well aware of the challenges facing tourism-based communities, however until there is a general consensus from stakeholders on how to move forward the issue isn’t likely to be resolved anytime soon.

“We all agree that this is the right way to move forward and this is something that will help diversify the economy and move things forward, but I get the sense that there is not necessarily a common vision about how exactly that happens,” said Westhead, during the breakfast meeting.

“If we are able to get that broad consensus and look at a way that people can agree and move forward on this, it’s something I broadly support.”

One of the most vocal groups opposed to increasing or adding an additional hotel tax is the hotel and accommodation sector.

Andrew Shepherd, chair of Tourism Canmore Kananaskis, acknowledged that something must be done to support tourism-based municipalities, however, a tax targeting the hotel and accommodation industry isn’t fair.

“It’s so easy for everybody just to say let the hotels tax it, let the hotels pay for it, and that’s not quite fair when 75 percent of the revenue coming into tourist towns isn’t hotels, but yet the hotels seem to be easy prey and an easy target,” said Shepherd.

“We want it to be fair and equitable because we all benefit from tourism in town.”

He said part of the problem is that there are also different opinions on how to spend the tourism levy already collected by the province.

Some would like to see the tax revenue funneled back to the municipality it is derived from to help pay for infrastructure, while others would like the money to be spent on promoting tourism in the province.

While opinions differ on how to spend the money, it appears that just about everyone agrees the tourism levy should be used for the tourism industry.

“It’s being collected for the purpose of tourism, so why shouldn’t it be spent on tourism?” said Shepherd.

Beyond Alberta’s borders, another study commission by Canmore, Banff, and Jasper found that comparable mountain towns like Whistler and Vail have revenue tools to help with their destination needs.

“The conclusion of that study was that the Alberta funding model for municipalities essentially is limiting the competitiveness and the ability to grow our tourism economies, so the property tax model fails to capture the visitor revenue that is coming into our economy and to recycle it back into our local area,” said de Soto.

Seven years before Whistler hosted the 2010 Winter Olympics the provincial government in British Columbia launched the resort municipality initiative that allowed Whistler to charge a two percent hotel tax so it could deliver the Games.

Since the Olympics were held 14 municipalities in British Columbia have been able to secure resort municipality status, including the nearby towns of Golden, Radium, Kimberley, Fernie, and Revelstoke.

The revenue is collected by the province and divvied out to each town through a funding formula based on the number of accommodation units each town has. The program is capped at $10.5 million annually with the lion’s share going to Whistler, which receives approximately $7 million every year.

Canmore for its part was trying to secure a similar opportunity during recent negotiations to host the 2026 Winter Olympics, however, that opportunity dissipated when Calgarians rejected hosting the Games in the fall.

“We were encouraged and excited about some of the traction we were getting with the province,” said de Soto. “I think the Olympics were seen as unique and different and it was clearly understood that a town like the size of Canmore would not be able to deliver on a Games promise with all of services and amenities we would have to provide on the backs of local resident and business taxpayers.”

While the Olympic dream is dead and with it negotiations to gain resort status, de Soto said the municipality will continue to advocate for additional revenue tools as visitor numbers continue to grow.

“Our communities are the product and we need additional revenue tools to help grow our competitiveness to compete with other mountain resort destinations to deliver on our visitor expectations and to grow the tourism economy and help diversify the provincial economy,” said de Soto.

Original article can be found here.