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Upgrades to Central Park may mean new tax on hotel stays

Woodbury Central Park.

Woodbury is considering taxing hotel stays in order to pay for renovations at Central Park.

In a Jan. 18 letter to city council, Woodbury City Administrator Clint Gridley proposed the city tax a percentage of gross receipts from hotel stays to help fund a welcoming center at Central Park.

City leaders are planning major upgrades to the park this year after allocating more than $3 million in this year’s budget.

“As we consider an update to this facility, having Central Park serve as a visitor and resident welcoming center is moving to the forefront of our various considerations, Gridley wrote.

Other changes to the indoor park have yet to be determined.

State laws allow cities to use 95 percent of proceeds from lodging taxes to fund convention centers, tourism bureaus and other marketing purposes.

In Minnesota, 110 cities impose lodging taxes, including 26 in the metro area. Cities typically levy a 3 percent lodging tax, but cities like Bloomington tax upwards of 7 percent.

In a 2014 study, the city estimated it could generate between $320,000 and $422,000 in potential revenue through the city’s 627 hotel rooms.

The study, however, doesn't account for the several other hotels that have opened since then.  

The city projects the number of taxable hotel rooms could reach well over a thousand when Woodbury’s ninth hotel, the Courtyard by Marriott, opens next year.

While city officials will likely vote on implementing lodging taxes in the future, Council Member Christopher Burns said he feels the city could create a welcoming center at Central Park without levying a new tax.

“A tax is a tax,” he said. “I'd like to have less taxes and lower rates.”

Burns added that a tax on hotels would likely generate revenue for the city but it might also drive hotel goers to other cities, such as Oakdale.  

The proposed tax could also be used for funding the promotion special events in Woodbury, as well as promoting hotels, restaurants and spaces for large business conventions and regional events like the 2018 Super Bowl.

Still, questions remain whether levying such a tax would allow the city to use those funds for construction and other costs at Central Park.

In his letter, Gridley wrote that petitioning state lawmakers may be the city’s next step.

“Any special legislation is a long shot, but certainly it is worth considering as a legislative strategy,” he wrote.