Alexander City weighs lodging/campsite levy to help close $2 million sewer shortfall

Alexander City Council members discussed a proposal to raise dedicated revenue for the city sewer system by adding a lodging (hotel) and campsite fee or an infrastructure tax, during a work session.

City finance staff said the city did not increase resident sewer fees this year and next, which created an estimated revenue gap staff said would require roughly $267,000 to $279,000 to offset the rescinded 7% sewer fee increase. Staff member Romy recommended a phased approach if the council adopted a lodging-style tax: a 10% charge in year one (to begin March if approved) yielding about $271,000, then a reduction to 6% thereafter to approximate the needed revenue. Romy also suggested that including campsites would allow an alternative schedule — 8% in year one and 5% thereafter — to reach the same target.

The finance presentation included larger context for sewer finances: staff said the sewer enterprise currently has about a $2,000,000 annual deficit, and that the city's five-year plan would still leave the system roughly $600,000 short by the end of 2026 even with the previously proposed rate increases. Staff cautioned that short-term tax measures would not by themselves eliminate the long-term gap without additional customers or other funding sources.

Hoteliers who spoke during public comment said adding a lodging fee would push costs onto operators and their guests and risk driving business to neighboring towns. One hotelier said, "The discounts come out of our pockets and out of our money we have to pay our bills with," arguing that higher hotel charges would reduce occupancy and local lodging-tax receipts.

Council members pressed staff for more detail on legal limits, earmarking, and timing. One council member said, "I'd rather take a little more time to get it right than to make a rushed decision," urging further analysis and additional public outreach. Council discussion covered several alternative approaches raised on the record: (1) a lodging/room fee earmarked for sewer; (2) an "infrastructure" re-labeling of an existing sales-tax-derived fund to permit broader use for sewer and roads; and (3) temporary measures for two to three years while seeking longer-term financing such as bonds.

Staff said an infrastructure re-labeling would require ordinance revisions and raised questions about whether such revenue could legally be used for enterprise (sewer) purposes rather than general-fund priorities. Several council members said they wanted more time to examine options, including hybrid approaches that combine a smaller lodging fee with other revenue sources and detailed modeling of customer growth assumptions that would affect sewer revenues.

No formal motion or vote on a lodging or infrastructure tax was recorded at the work session; council members agreed to continue the discussion and requested additional detail from staff before placing any ordinance on a future meeting agenda.