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Ottertail says 'yes' to 3 percent lodging tax

With the full support of the city's two lodging facilities, a 3 percent lodging tax is on the horizon for the city of Ottertail.

"We're looking at $30,000 to $35,000 a year in gross collections," reported Brad Stevens, Thumper Pond. Stevens' estimation includes funds to be gathered from the tax at both The Otter and Thumper Pond Resort.

The tax will be applied to income generated at area lodging facilities, with the proceeds used to directly promote those same establishments. The plan is to implement the tax this summer.

How the tax will work is that local lodging facilities will turn over 3 percent of their proceeds to the city of Ottertail. The city then retains 5 percent of those dollars for its share in the administrative work in making the collections.

"For the city's part in it, basically you are the collector of the tax," Stevens reported at the Ottertail City Council's June 3 meeting.

The money gathered from the tax will be appropriated to a Lodging Board, which will be set up as a separate non-profit. Ultimately, it will be this body that determines the best way to administer the funds generated from the lodging tax. All of the funds will be used to promote the immediate Ottertail area.

At the June 3 meeting, the Ottertail City Council approved a motion to accept the 3 percent lodging tax rate, along with the 5 percent amount retained for the city's administrative work.

"If both establishments want it, we're certainly in favor of it," councilmember Heather Pollard said of the tax.

Stevens mentioned that they likely will not be using any of the tax funds in fiscal year 2010. This will provide the Lodging Board with a six-month reserve fund.

A finalized lodging tax proposal will be brought before the city council in the near future.