Hotel/motel tax increase: Covington to explore other uses

COVINGTON - The city of Covington is exploring other options for using revenues generated by a planned 3 percent increase in the hotel/motel tax, now that the civic center/hotel project is on hold.

The city and county agreed to pay off $23 million in revenue bonds in part by increasing the hotel/motel tax from 5 to 8 percent.

The tax increase must be approved by the Georgia General Assembly through local legislation and is expected to be taken up during the 2009 session.

However, Mayor Kim Carter recently announced that the hotel/civic center project is in limbo due to the economy, in particular the high interest rates that would be owed on the revenue bonds.

But even if the hotel/civic center does not get done, the city can use the tax increase for other capital improvement projects.

"Since it appears, for whatever reason, that project is not viable, at least at this time, in order for the city to levy the additional amount, it needs to identify specifically where the revenue would be applicable," City Attorney Ed Crudup said.

Once a list of projects is developed, it must be approved through local legislation by the General Assembly, as well.

Then, the city could use the money for any of the approved projects.

"You're in effect banking the money for future use," Carter said at a recent council meeting.

The city has seven hotels and one bed and breakfast, with construction on an eighth hotel under way, according to Clara Deemer, tourism director for the Chamber of Commerce. There are no hotels in the unincorporated county.

Five percent of the hotel/motel tax is split between the Chamber and Main Street Covington.

Crystal Tatum can be reached at crystal.tatum@newtoncitizen.com.