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City attorney outlines decades-long history of Lake Havasu's bed tax and the Go Lake Havasu contract
Summary
City attorney presented a timeline of the transient-occupancy and restaurant/food taxes used for tourism funding, noted multiple funding-mechanism changes since the 1980s and said the current fixed-payment contract runs through June 30, 2029.
At the start of the March 10 Lake Havasu City work session, city attorney Miss Gary gave a historical overview of the local transient-occupancy ("bed") tax and related restaurant/food taxes and how the city's tourism funding agreements evolved.
Miss Gary traced the funding model from a 1981 ordinance that created a 3% transient-occupancy tax to support tourism promotion and community projects, through a series of contracts with the chamber of commerce and a visitor-and-convention bureau. In the mid-1990s the council adopted two ordinances that shaped long-standing uses of the lodging and restaurant taxes: one increased the restaurant and bar tax and dedicated an additional 1 percentage point to tourism and economic development; a second designated the 3% transit-occupancy tax for tourism and economic development.
Funding mechanics changed again in the early 2000s when the city shifted to a formula splitting collections (noted in the presentation as a 75/25 allocation) and later, in 2021, moved to a performance-based fixed agreement. Miss Gary said the current funding arrangement moved to fixed monthly payments (cited in the presentation as $133,333.33 per month in an earlier funding agreement) and that the present contract term extends through June 30, 2029.
The attorney cautioned that ordinance and section numbers changed over the decades and that researchers may find name and section differences in historical documents. She also noted the 2009 ballot measure attempt to raise the bed tax from 3% to 4% failed.
Why it matters: the contract language and funding mechanism determine how much of the local tax pool is administered via a private nonprofit DMO and how much remains subject to direct city control. Several residents at the work session later said they could not find certain financial documentation tied to the $1.6 million annual contract payments, and the council agreed to pursue a follow-up review.
What's next: the council asked staff to schedule a follow-up contract review on a future agenda and to provide the financial and governance records citizens requested.
