Tax dollars for new hotel unfair

In the last few months Whitefish City Council has approved a new hotel project on Highway 93 South and made a preliminary commitment to assist with infrastructure improvements for a new hotel downtown.

Those two projects could bring a total of 155 new rooms. At present there are just over 600 rooms available for nightly rentals, from 13 longtime Whitefish properties. With the addition of these extra rooms, that equates to roughly a 20 percent increase in the room inventory for greater Whitefish — substantial growth in a short period of time.

Now when these two groups say they are willing to risk their own money in the Whitefish hotel market — a market where most businesses make 50 percent of their annual income in June, July and August, a market that has room surplus nine months of the year — well, that’s their decision, and all the luck to them.

But when the downtown project requests $500,000 in tax relief, they say they’re not going to take away any business from existing hotels and are only planning to supply 45 parking spaces for a 75-room hotel, I have to question their logic at arriving at these conclusions. Not knowing what they plan to charge per room per night, it’s hard to analyze the revenue projections for their new business, but they seem optimistic.

The concern is that when you increase the room supply by 20 percent, you cannot assume that the tax income will increase by 20 percent. If the new downtown project does hit its revenue goals, I think there is a strong possibility the other hotels in Whitefish will have lost 15 percent in business.

A 15 percent decrease in tax revenue for the city of Whitefish, will mean that the pay back of the $500,000 will not happen by 2020.

The mayor spoke about having infrastructure in place to attract developers to build on this land. Another way to look at this — should not the purchase price of the land not reflect the need for the $500,000 required to move the sewer line. Also 45 parking spaces for a 75-room hotel is not adequate in downtown Whitefish, where parking is always an issue.

In any open market competition is a good thing as long as it’s a level playing field for all involved. But when the tax dollars generated by the existing 600 hotel rooms in Whitefish are used to subsidize the new competitors in the hotel market, it’s not fair and it is wrong.

If you want to spend tax dollars on development in Whitefish consider helping the Mountain Mall bring Shopko to town, so all our hospitality industry workers in Whitefish can have an affordable place to shop. Give the 93 South corridor some tax dollars, they have generated a considerable amount of tax revenue over the years with very little payback.

— Dan Cutforth is the owner of Downtowner Inn and Stumptown Inn