Representatives from some of Secaucus’s more prominent hotels gathered at the offices of Assemblyman Anthony Impreveduto (D-32nd Dist.) on March 23 to discuss the proposed hotel tax up before the state legislature.
The hotel managers aired their concerns over potential impacts of legislation that could place a 2 percent tax on hotel rooms in towns like Secaucus.
Impreveduto told the managers that he had proposed some sort of legislation since 1988, legislation that would give to smaller towns, through the state, power to impose a tax on hotel rooms within their community.
Current law allows larger cities in the state to impose a 6 percent tax on hotel rooms, but restricts smaller towns from imposing such taxes, except when the small town is host to an international airport.
Under legislation introduced by Impreveduto, small towns would be able to impose a 2 percent tax on hotels with 100 rooms or more to cover the costs of police and fire services.
Roger Davis, manager of the Crowne Plaza, asked what hotel management would get in return, saying that the proposed tax would give the town an estimated $1.5 million in taxes.
Impreveduto, however, said this wasn’t a giveaway to the rest of the town, but a tax dedicated specifically to fire, police and public safety support. This tax, he said, benefits everyone, including the hotels.
“Whatever tax dollars come to the town from this tax would have to go to police and fire only, and couldn’t be used for any other purpose,” Impreveduto said.
Mayor Dennis Elwell, also present for the discussion, said Secaucus is unlike other small towns with similar residential populations. While the latest census shows Secaucus has just under 16,000 people, during the day the population of Secaucus swells to 60,000 as people come into town for jobs and to shop, and this requires additional services.
Hotels and other businesses in Secaucus use those services, the mayor said. Hotels may need police to handle unruly guests, or need ambulance services for those who may get ill while staying at the hotel and need police to protect them while they stay in or shop in Secaucus.
Elwell also noted that unlike other small towns, Secaucus provides a professional ambulance service, not a volunteer squad. This means response time to an emergency might be one to two minutes as opposed to 20 minutes in towns nearby. This service also provides a backup unit if the first ambulance is occupied at the time of the call.
While the town’s fire department is volunteer and may cost less than professional fire departments, the town has to provide the firefighters with additional equipment and training to handle the kinds of calls big cities face, such as high rise fires and other emergencies not typically faced by towns with Secaucus’ low residential population.
Deputy Mayor John Reilly said the town is not “out to milk the cow,” and that the tax is designed to allow the town to keep providing services that make Secaucus attractive to guests in the hotels as well as businesses who want to develop in Secaucus. He said the expansion of other aspects of business in Secaucus is one factor that makes Secaucus a good location for hotels.
“This is the gateway to New York City, and people can rest assured they can get accommodations here that are reasonable and adequate,” Reilly said. “Times Square is only eight minutes away.”
Reilly said the town encourages hotel development, but that hotel management must realize that hotels and other businesses put a strain on local services that other small towns do not have to face.
Police calls to hotels, fire false alarms, and medical emergencies all require additional resources.
Elwell said other towns of similar size to Secaucus have a police force of about 22 officers. Secaucus will have 65 officers by the end of the year, and will need more to properly protect the various areas of the town.
“That’s three times what other towns require,” he said.
Al Hamdi, of Radisson Suites, asked if the town could dedicate the money to specific uses, such as the number police cars purchased or number of police officers assigned to protect the malls.
Impreveduto said this was not practical, but suggested that he could include a trigger mechanism in the bill that would stop the tax if the hotel’s business declined below a certain percentage, such as 50 percent.
“If the room occupancy rate falls below 50 percent, then there would be a freeze on the tax,” Impreveduto said.
Marketing Secaucus to tourists
Davis said the hotels spend millions of dollars in advertising to get people to come into the region, and would like the town to prosper as a result.
But he said that not all the hotels are created equal; some are full service, some are not.
And believes that the if Secaucus adopts a hotel tax and other municipalities don’t, business could keep on moving to hotels in East Rutherford, Fairfield, Clifton or Lyndhurst.
While town officials were skeptical about people making such decisions based on $2 per night on a $100 hotel room, hotel officials said they had had experiences of similar kinds, noting that tour groups fight tooth and nail to get the cheapest rate, and would dispute a charge as little as $2.
Hotel owners also noted that many of these groups come in large numbers and for sometimes for a long time, and that the small percentage adds up to real money.
Elwell said that as the owner of a trucking company, he is familiar with hotel taxes in other states, noting that one town in Indiana charged 12 percent, while in one town in Ohio, hotel guests are saddled with hotel taxes from county, state as well as the city.
The proposal Impreveduto has submitted to state legislature would only be 2 percent, yet would be consistent with other communities around the country.
“I can understand if this was 30 years ago and hotels had to hire a bookkeeper to keep track of the taxes guests paid, but with computers today, this should not be a problem,” Elwell said.
Alberto Santana, president of the Gateway Tourism Council, asked why the hotels are being singled out, why the tax can’t be dispersed among other business and outlets.
“You’re asking the hotel to pick up the cost, and we either have to absorb it or pass it on,” Santana said. “Our fear is that guests will continue over the river and head a little further west.”
Impreveduto, however, argued that the law would allow all municipalities to impose a hotel tax, and that most municipalities would do so to help cover the costs of fire and police in their communities.
Elwell said other mayors can’t wait for this law to pass in order to set up taxes in their own towns. He noted that while Secaucus has done a good job in stabilizing its taxes, other communities have been less fortunate, and would love to have the additional revenue.
Councilman John Bueckner said a tax of this kind benefits everyone in the community and that hotels would benefit as much from the lower overall tax as the residents would.
But Bueckner said that while he never took hotel tax into consideration when selecting a hotel when traveling, hotel owners said tourist groups often nitpicked over many small items, and would be willing to move on to another hotel over even minor differences.
Tax stabilization
Elwell said the town isn’t seeking to give residents a tax break, but to continue stabilization of taxes that would help benefit everyone, including the hotels, and help make Secaucus that much more attractive to other businesses to set up shop here. Elwell said municipal taxes have stayed the same for three years in row.
While Elwell could not predict a hotel tax would reduce taxes, he said the budget predictions for next year looked good to maintain the same level again.
But Elwell said in order to keep taxes down, he and other town officials had to be proactive and do things before there is a problem.
He said Secaucus faces tremendous growth over the next couple of years, with Allied Junction rail transfer ready to open and the proposed Meadowlands Expo Hub.
“With growth comes strain on services, and we’re going to have to build up our police department to handle the additional work,” he said.
Hamdi asked if it possible to set a specific dollar amount on hotel rooms rather than a percentage. Impreveduto said he would look into that option.
Davis asked if the town would be willing to share in the burden of attracting new people into the area.
Elwell said this was what public officials did constantly, trying to draw industry into town.
“We are constantly telling business people about the benefits,” he said. “Every time we meet someone, we try to show them why it would be to their benefit to set up in our town.”
Davis also asked if the town could set up a visitor’s bureau that would advertise all the benefits Secaucus has over neighboring communities.
Impreveduto and Elwell said this is very possible.
Alberto Santana of the Gateway Tourism Council, which represents the six northernmost counties of New Jersey, said that the Council doesn’t have funds for an office.
Impreveduto said the hotel tax bill had originally included a provision to give the tourism council half a percent of the tax, but that the Gateway council had opposed the bill.