Lynchburg council denies proposal to raise lodging tax after hours of testimony

Lynchburg City Council on June 10 voted 6–1 to deny an ordinance that would have increased the city's transient lodging tax from 6.5% to 8.5% of room charges and raised the per-room surcharge from $1 to $3.

The measure prompted more than an hour of public testimony, much of it from people tied to the local hospitality industry who warned higher lodging fees would make Lynchburg less competitive with nearby Campbell County and other regional markets. Deputy City Manager Greg Patrick opened the public hearing by summarizing the proposal: "the item before you today, this public hearing, is to consider increasing, the lodging tax ... from 6 and a half percent up to 8 and a half percent and to consider increasing the bed tax ... from $1 up to a maximum of $3." (Greg Patrick, deputy city manager).

The importance of tourism and hospitality to the local economy was a recurring theme. A Cornerstone Hospitality representative told the council that about "3,000 of those constituents depend on hospitality and tourism in Lynchburg alone" and that "7.9% of the workforce is directly related to hospitality and tourism." Multiple hotel owners and managers, including representatives of the Virginian Hotel, the Craddock Terry Hotel and Perry Restaurant Group, said higher taxes would drive guests to cheaper properties just over the city line in Campbell County, which currently imposes a 2% lodging tax and no room fee.

Short-term-rental owners and managers also strongly opposed the proposal. Adam Hall, a Ward 4 resident and short-term rental manager who said he oversees more than 30 local properties, told council: "Please vote no on this proposal and work with us on a real sustainable solution for Lynchburg's future." Several callers whose voice mails were read into the record echoed those concerns.

Speakers offered differing estimates of fiscal impact and leakage. Cam Colquitt, who said his cautious projection showed the proposal might generate about $700,000 in additional revenue but could cause "$4,000,000 less" to be spent locally through lodging leakage, recommended a more moderate alternative. The Virginian Hotel projected the change would remove about $100,000 from that hotel's bottom line and urged a smaller increase, if any.

Council members discussed alternatives during the public hearing, including a compromise that had been circulated to industry representatives: raise the lodging tax to 7.5% and the nightly fee to $2, and consider earmarking some revenue for tourism promotion or the Office of Economic Development. Staff noted legal and structural limits on ear‑marking and said that in Lynchburg "this is just new money for new projects," not a simple transfer of existing budget lines.

Council considered multiple motions. A motion to adopt a compromise (7.5% and $2 per night) was offered and later a substitute motion to deny the ordinance entirely was made and adopted. The transcript records the final outcome as: "The motion passes 6 1." The council did not adopt any increase; rates remain at 6.5% lodging tax and $1 per-room surcharge.

Council members who opposed the increase raised a mix of economic and process concerns: potential displacement of development outside city limits, the effect on hotel group and event business, impacts on short-term rental owners and individual hosts, and the timing of the proposal so soon after a prior, postponed discussion. Supporters of some increase emphasized the city's need for additional revenue to fund public safety, schools and capital projects and described a package of changes that would combine tax adjustments with spending cuts; that package did not pass.

The denial leaves the city's lodging tax and per-room surcharge unchanged for now. Council and staff discussed further steps, including a narrower revenue plan to be drafted and presented at a later meeting and continued outreach to hospitality stakeholders.

The public hearing and the subsequent vote followed an earlier meeting on the matter less than two weeks prior, when council postponed similar action. The lodging-tax discussion accounted for one of the longest public-comment segments of the June 10 meeting.

Quotes used in this article were taken from speakers during the June 10 City Council meeting transcript and are attributed to the speakers listed below.