New hotel/motel tax in Rock Valley

Guests at Heartland Hotel & Suites and the Grandstay Hotel & Suites that is under construction will pay an additional 7 percent tax, effective July 1, after Rock Valley voters approved a hotel/motel tax Tuesday, March 5.

ROCK VALLEY—Voters in Rock Valley approved a proposed hotel/motel tax by a landslide on Tuesday.

According to the unofficial results of the special election, the tax was approved with 118 voting in favor and 15 voting against. No absentee ballots were cast. A simple majority was needed to pass.

“It’s a special election and with the weather being cold we were kind of surprised by the number of turnout,” said city administrator Tom Van Maanen. “A special election is something we’ve rarely used. It’s the first time I’ve done it in the 18 years. It actually topped some of our most recent council elections.”

The tax will impact guests of Heartland Hotel & Suites and the GrandStay Hotel & Suites, which is slated to open early this summer. Guests will pay a 7 percent tax on their stay on top of the 5 percent state excise tax for room rental that is already in place. The rate of 7 percent is the highest allowable under state law.

The tax will go into affect on July 1, and will remain for a minimum of one year. It is expected to generate an estimated $60,000-$90,000 per year in revenue.

"I'm mildly concerned about pushing the threshold for what people are willing to pay. It's not an overwhelmingly dramatic issue to overcome," said Nathan Sieve, president of Blue Sky Hospitality, the company that manages GrandStay hotels. 

State law dictates that 50 percent of the tax must go toward construction and maintenance of recreation and entertainment facilities. The other 50 percent may be used to provide grant money to downtown businesses for updates and other economic development projects, and help fund the city’s ambulance, fire and police departments, according to Van Maanen.

“I know some of the concern that was expressed was ‘How are we going to know that the money is used to enhance the community,’” Van Maanen said. “My intention is to produce an annual report to show how much we received and spent. People deserve to know what we’re doing with that money and to hold the city accountable.”

He said the first funds from the tax will likely be received in October.

“Once we get an idea what revenue it might generate, one thing the staff is going to have to do is produce a list of projects they’d like to see the money used for. It will be brought to the council to prioritize what they want to see happen,” he said.

Before Rock Valley, there were 163 towns and 19 counties in Iowa with a hotel/motel tax.