CBRM Council has agreed to increase the marketing levy on hotels and other “fixed-roof” accommodations from 2% to 3% and apply it to Airbnb and VRBO rentals.
Terry Smith (Source: DCB)
Destination Cape Breton (DCB) CEO Terry Smith made the request to council yesterday morning, explaining the changes will be governed by new legislation the province has recently passed allowing any municipality to impose a marketing levy of up to 3% of the cost of accommodations. (Previously, municipalities had had to apply to the government for the right to do so, which had resulted in separate marketing levy legislation for HRM, Cape Breton, Digby and Yarmouth.)
The levy, introduced in Cape Breton in 2011, is collected by tourism operators and remitted to the CBRM which gives it to DCB, the tourism marketing agency for five Cape Breton municipalities, to fund its operations.
Smith asked council to approve the increase to 3% on the grounds that it would make the island more “competitive” with other Atlantic Canadian cities. He also asked that council remove the “10 rooms or more” threshold governing which operations pay the levy and adopt the definition of fixed-roof accommodations found in the Nova Scotia Tourist Accommodation Registration Act, thus capturing the Airbnb and VRBO rentals.
Smith explained that the organization’s budget has taken some serious hits in recent years: COVID meant fewer visitors and they “got hammered on the marketing levy” in 2020 and 2021, Airbnb and VRBO rentals have been representing an increasing share of total rentals and owners weren’t required to pay the levy and ACOA has drastically cut its funding to the organization since the collapse of Enterprise Cape Breton Corporation (ECBC) in 2014.
Smith said ACOA told them they had “a deal nobody else gets in Atlantic Canada” before trimming its contribution from $640,000 to $440,000 with a further reduction to $300,000 on the way. (ECBC initially matched marketing levy funds. When it was folded into ACOA, the agency first capped funding at $640,000, then in 2019 decided to reduce it by $100,000 per year, bottoming out at $300,000.)
Smith told council they’d coped with these cuts by moving into the former Visitor Information Centre on Keltic Drive and reducing their full-time staff from 11 to 9.
Speaking to the Port Hawkesbury Reporter last month, Smith said increasing the marketing levy to 3% would add $450,000 to DCB’s annual budget, while extending the levy to Airbnb and VRBO rentals would add another $250,000 to $300,000. That’s a gain of up to $750,000 which would not just make up for the lost ACOA funding but add $410,000 to the organization’s coffers.
So, $750,000 from the levy plus $300,000 from ACOA plus whatever additional monies it receives from various levels of government means DCB will have an annual budget north of $1 million.
Which reminds me of something.
Transparency
As I have noted before in these pages, Destination Cape Breton Association (to give it its full name) is not in any way accountable to the public. I once tried FOIPOPing information from this “incorporated non-profit society” and discovered it is not subject to the province’s access to information laws.
Its 15-member board (which includes CBRM CAO Marie Walsh) meets “bi-monthly” in rotating locations around the Island’s five municipalities but does not meet in public and does not publish its minutes.
Its finances are not public, so we have no sense how much money is spent on marketing campaigns and how much on salaries.
Smith included the cover of a report DCB commissioned on its revenue streams (which—surprise, surprise—recommended the hike in the marketing levy) and a survey of 90 tourism operators, the “vast majority” of whom supported the increased marketing levy provided it was extended to Airbnb and VRBO, but I can’t find either of those documents on the DCB website.
There is a good case to be made for making bodies like DCB subject to access to information laws and, in fact, the Canadian Centre for Law and Democracy has made it:
The FOIPOP should also be extended to cover private bodies that perform public functions or receive public funding, to the extent of that funding or function.
Surely a good time to add some transparency requirements for DCB would be as you were agreeing to increase its annual budget by hundreds of thousands of dollars?
And yet, council didn’t.
Campaign mode
Everyone involved in yesterday’s discussion believes that DCB’s marketing campaigns work. It’s taken as a given that if room nights sold increased in Cape Breton from 2012 to 2019 (which Smith says they did) then it’s thanks to the work of DCB.
Cause?
Smith’s evidence for this is that visits to DCB’s website—the focus of its marketing efforts—have increased over this period, therefore, the website is responsible for the increase in room nights sold. I feel like the connection needs to be made more explicitly—how do they know it’s the website? Couldn’t you as easily say, “I wore a red tie every day between 2012 and 2019 and room nights sold increased so clearly, my red tie worked.”
Effect?
I’m exaggerating, but how do they know there’s a link between website visitation and actual visitation? Do they survey visitors? If so, why not provide that data?
Staff input
Discussion surrounding yesterday’s motion took a turn for the weird around the question of a staff issue paper on the possibility of directing some of DCB’s budget to attracting events to CBRM.
Allowing municipalities to attract more events, I should note, is one of the province’s stated goals for its marketing levy legislation:
The Province is giving municipalities a greater ability to generate revenue to attract events, people and tourists to their communities.
I listened to the discussion twice (for my sins) and I think things started to go astray when District 1 Councilor Gordon MacDonald moved a motion that was worded differently from the request in Smith’s presentation. Then District 12 Councilor Lorne Green changed the start date from 1 January 2024, as it was written in Smith’s presentation, to 1 November 2023 which Smith said would be in line with the provincial legislation taking effect.
Blurry screenshot purporting to show Deputy Mayor Edwards chairing 22 November 22 meeting of CBRM Councill (Source: CBRM Video)
Then District 7 Councilor Steve Parsons specified that the CBRM should adopt the definition of fixed-roof accommodations found in the Tourist Registration Act. Then District 10 Councilor Darren Bruckschweiger asked if DCB could be called upon to help CBRM attract more events (Smith said they were already working closely with CBRM staff, like Centre 200 manager Paul MacDonald). Then Deputy Mayor James Edwards, in his role as chair (Mayor Amanda McDougall was away on personal leave) read the motion as it appeared in Smith’s presentation (although he changed the date) and asked the Municipal Clerk if a staff issue paper was necessary to go ahead with this. (She didn’t seem to reply.)
Instead, Councilor Gordon MacDonald offered to re-read his motion for clarity and this is what he read:
So, motion would be, to…approve in principle the following amendments to the CBRM Marketing Levy By-Law contingent on the changes being made to the Cape Breton Island Marketing Levy Act: increase the rate to 3%, remove 10 rooms or more threshold and adopt Tourist Accommodations Registration Act definition of fixed-roof accommodations and start date of January 1, 2024 and ask staff to produce an issue paper on the use of incremental funds.
He immediately corrected the start date to 1 November 2023, but the sudden appearance of the staff issue paper caused some consternation, given it wasn’t in Smith’s presentation nor had it been in the Councilor Gordon MacDonald’s initial motion.
District 2 Councilor Earlene MacMullin announced she could not accept a motion “in principle” and did not understand why the CBRM would be looking for an issue paper “to get involved in business we have never been involved in” meaning, the spending of DCB’s budget.
CAO Walsh explained that the “in principle” had been included because the CBRM couldn’t amend its by-law until the government’s marketing levy legislation passed, but it then emerged that the legislation had in fact received Royal Assent on November 9, so the “in principle” was scrapped.
Walsh then explained that Smith had been in discussions with CBRM staff about event funding, and whether they could be sure there was “dedicated funding” for events in the amended by-law which staff will eventually present to council.
At which point, Councilor MacMullin asked “whose motion” this was and Walsh said it was Smith’s motion, but that the agenda-setting committee had added the bit about the staff issue paper on events funding.
MacMullin said she wasn’t comfortable with this, nor was District 3 Councilor Steve Gillespie, who said:
From my understanding, issue papers come from this chamber, they do not come from agenda setting and/or senior staff.
Gillespie argued they should pass the amendments requested by Smith and then, if they wanted an issue paper, request an issue paper, at which point, Councilor Gordon MacDonald removed the issue paper recommendation from his motion.
District 6 Councilor Glenn Paruch asked Walsh about the motion and she said:
Well, the concern was, how are we going to fund these events? So, we’re going to market these events but we certainly don’t have funds to fund these events, so, the discussion with staff was, could we have some of this additional levy dedicated to attracting events and putting money into the events, so that was going to come later, after, when we’re doing the by-law. So we certainly don’t need that now.
Walsh said this would be discussed at budget time and at this point, all I could think was, “Is she talking about the World Women’s Curling Championship and if so, why weren’t these funding issues discussed, in public, before the CBRM made its bid?” and “How much is this thing going to cost us?”
Councilor MacMullin wondered again why CBRM was looking to “dip into” DCB’s budget, which she said it had never done before and Walsh said they were going to discuss “event funding” during budget talks.
Council then agreed to vote on the “original motion” (as found in Smith’s agenda) which they passed although I can’t tell you what the vote was, because the chamber’s audio visual system still isn’t working and Deputy Mayor Edwards just said it had passed without saying by how much.
By the end of my second viewing, I had started wondering what would happen if CBRM council had suddenly taken a wild notion to devote some of the marketing levy money to a fund for affordable housing, given Airbnb and VRBO rentals are actively contributing to our housing crisis, at which point I realized I must be suffering from some sort of council-induced delirium and so went to lie down.
Featured image: the first page of Smith’s presentation, your guess is as good as mine about the product placement.
