University Heights voters to weigh in on first ever hotel tax

Levy would go hand-in-hand with development of city's first hotel

Homes line Koser Avene at George Street in University Heights in 2010. (Gazette file photo)
Homes line Koser Avene at George Street in University Heights in 2010. (Gazette file photo)

UNIVERSITY HEIGHTS — Voters in University Heights will decide this fall if they want to implement an additional tax on visitors to a proposed hotel — that would be the community’s first.

On the Nov. 7 ballot, University Heights voters will weigh in on a 7 percent hotel/motel tax. The tax would be the first of its kind for the community and is tied to plans for a 5-story hotel near Kinnick Stadium and University of Iowa Hospitals and Clinics.

The University Heights City Council is expected to discuss and decide this October on planned unit development zoning that would allow for construction of the project at 901 Melrose Ave.

If approved by the council, the 140-room Courtyard by Marriott hotel could generate between $300,000 and $320,000 in annual lodging taxes, said Josh Schamberger, president of the Iowa City/Coralville Area Convention and Visitors Bureau.

Per Iowa Code, half those funds would be used to bolster tourism in the area though investments in properties, recreation sites, civic or cultural centers and entertainment facilities. “It’s a revenue source that is reinvested into a lot of the events and activities that generate visitors and tourist spending,” said Schamberger.

The University Heights ballot states the remaining 50 percent of revenue would be split — 90 percent to neighborhood housing and infrastructure revitalization and 10 percent to any lawful purpose.

But in order to collect those funds, more than 50 percent of voters need to approve the hotel/motel tax measure this November, Schamberger said.

Iowa hotels are subject to a 5 percent state excise tax on room rentals.


Those funds go back to the state, however local governments can implement an up to 7 percent tax on hotel rooms — with voter approval.

If University Heights’ measure passes in November, the community can implement the levy, which Schamberger noted is a means of collecting visitor tax dollars.

And with the hotel proposed for land across the street from Kinnick Stadium and the University of Iowa Hospitals and Clinics, the hotel shouldn’t have much trouble filling rooms, Schamberger said.

Iowa City and Coralville have had a hotel/motel tax since the early 1980s, while North Liberty’s tax was approved by voters about 10 years ago, Schamberger added.

Collectively, those three communities generate nearly $4 million annually in hotel/motel tax dollars, according to city documents.

That revenue goes toward a number of different resources including public safety, parks and recreation and the Iowa City/Coralville Area Convention and Visitors Bureau.

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