Asheville Leaders Advocate for Tourism Fund Reform and Local Investment

Asheville leaders push for change on how tourism funds are used. Will locals get a bigger cut?

After a 2022 bill altered the way Asheville and Buncombe County’s more than $35 million occupancy tax revenues are divided, local leaders continue to push for even greater change. They have called for more of the Tourism Development Authority’s millions to be dedicated to addressing the needs of residents rather than going into marketing. Sen. Julie Mayfield, a former City Council member and former city representative on the Tourism Development Authority board, said she’s been advocating for reform for eight years.

“The Buncombe County TDA is a unicorn in the state among tourism development authorities,” Mayfield said. “There is no other tourism and development authority that collects as much occupancy tax as we do, there is no city that has a higher cost of living than we do and, from my perspective, those two factors alone should lead us to treat the Buncombe County TDA differently.”

Mayfield was among the sponsors of the 2022 legislation. Now, she looks toward the N.C. General Assembly’s upcoming short session in late April where she is preparing a bill to change the language of the Legacy Investment From Tourism Fund, or LIFT, the TDA’s newest fund created by the recent legislative changes.

The LIFT Fund broadened the scope of potential projects and while many have interpreted it to encompass affordable housing, it’s uncharted territory.

“We have a real inequity here that needs addressing and I think putting more of that money to use for the benefit of the residents of Asheville, including and most specifically people who work in the tourism industry, is critical,” Mayfield said. “And to me it’s an easy call.”

City and county weigh in

Further reforms to the local occupancy tax — derived from the lodging tax paid by visitors who stay overnight in Buncombe County’s hotels, vacation rentals, and bed-and-breakfasts — were supported in both the city and county’s recently adopted legislative agendas. The city advocated for “a more equitable distribution of funds,” requesting consideration be given to amending the committee guidelines for a 50%-50% split between marketing and projects. Currently, one-third can be used for community capital projects and the remainder toward marketing.

Before the local bill ‘s 2022 passage, the occupancy tax dollars, which go to the Buncombe County TDA, were split 75%-25%, favoring tourism promotion. Mayor Esther Manheimer said the city has “been maintaining pressure” for more reform over the last several years. They’d wanted more in 2022, but the 66%-33% split is where the line was drawn.

“We just continue to try to manage that challenge,” she said. “I think even for folks who have had skepticism in the past, they are looking at (revenues) saying, ‘OK, where is the balance between marketing and investment in a community that is managing this number of tourists and is this now lopsided completely?’”

Of potential investments locally that could benefit from more funding, “the list is endless,” she said. Even within the confines of capital projects related to tourism, she pointed to several high-cost projects, including the $11.3 million needed to repair downtown’s parking garages or greenway expansion.

The county’s legislative agenda prioritized “(continuing) to evaluate methods to modernize N.C. House Occupancy Tax guidelines to meet the evolving visitation and infrastructure needs of Buncombe County.” County lobbyists Whitney Campbell Christensen and Trafton Dinwiddie, from the law firm Ward and Smith, said Buncombe County stands to be the “poster child” for the issue.

What about the LIFT Fund?

Since 2001, occupancy tax revenue for local projects was doled out only through the Tourism Product Development Fund, focused on major tourism investments that bring visitors to the city. Now it’s divided between both the Tourism Product Development Fund and the Legacy Investment From Tourism Fund.

In its more than two decades, the TPDF has invested $86 million in 41 projects. The LIFT Fund, while intended to “increase patronage” of lodging, meeting, and convention facilities by attracting tourists and other travelers, also includes projects that “benefit the community at large” in Buncombe County. This includes restoration or rehab of existing locations, maintenance and design of tourism-related capital projects, enhancement of natural resources, expansion of necessary infrastructure, and construction of a new location, entirely, according to a TDA guide.

The TDA board will make its first grant awards from LIFT at its April 24 meeting, with about $9.5 million available this cycle, said spokesperson Ashley Greenstein. The LIFT committee is reviewing 15 “phase II” applications, for a combined ask of $14.25 million. Applications include three housing projects: Project Aspire; Mountain Housing Opportunities’ Star Point Affordable Apartments; and Ferry Road, a Buncombe County development that contains affordable housing.

“The LIFT Fund was just established by the Buncombe County occupancy tax legislation changes made in 2022 to increase the amount of occupancy tax funds invested in community capital projects to the maximum one-third allowable by state guidelines,” Greenstein said in an emailed statement. “The team at Explore Asheville and the authority is prepared to put these important changes into action on behalf of Asheville and Buncombe County for years to come.” She did not directly respond to questions about the TDA’s stance on additional reform.

Mayfield said if the affordable housing projects are funded, she likely wouldn’t feel the need to introduce her new legislation. But if they aren’t, “No way. No. I’m not interested in that,” she said. “I think the LIFT Fund should explicitly fund affordable housing and if they don’t feel like the language allows them to do that, I would like to change the language to make it clear that it can be.”

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