Lockport Union-Sun & Journal Online

August 1, 2013

NTCC suing Falls for owed bed tax money

By Joyce M. Miles joyce.miles@lockportjournal.com
Lockport Union-Sun & Journal

Lockport Union-Sun & Journal — The Niagara Tourism and Convention Corporation this week filed a lawsuit against the City of Niagara Falls, seeking to make it turn over bed-tax receipts that are owed to the tourism promotion agency.

The suit, filed Tuesday in state Supreme Court, asks a judge to order Niagara Falls to surrender bed tax money to the agency that it collected in the months of June and July.

A 10-year agreement between the city and the agency, pledging monthly surrender of 80 percent of city bed tax receipts toward Niagara County tourism promotion, expired May 31. The city reportedly is holding back bed tax collected after May, pending a new agreement with the agency. The city council is divided on whether to continue supporting NTCC and the majority voted last month to table Mayor Paul Dyster’s proposed one-year extension of the old contract.

The extender mirrors one OK’d in mid-June by the Niagara County Legislature, whose members also appear divided, along party lines, on the question of whether NTCC is living up to contract terms including performance benchmarks and reporting to funders.

The tourism promotion agency is funded mostly from bed tax, a surcharge on all hotel/motel room rentals that is collected by the cities of Niagara Falls, Lockport and, elsewhere around Niagara, by the county.

The county’s 10-year agreement with NTCC expired June 1 and Republican lawmakers refused to approve a new 10-year pact. The one-year extender is portrayed as “buying time” for the county, the cities and NTCC to work through differences and secure a mutually satisfactory long-term agreement. Without the extender, NTCC would not be authorized to receive bed tax money.

State tax law authorizes municipalities to charge and collect bed tax only for the purpose of promoting tourism/economic development. The law also says that 75 percent of collections within a county are supposed to go the tourism promotion agency or agencies that are under contract with the county.

NTCC asserts in its suit that, because it is still under contract with Niagara County, until June 2014, Niagara Falls must continue turning over bed tax receipts to it. The agency is owed more than $133,000 for the months of June and July, the suit said.

So far it appears NTCC is not pursuing legal action against the City of Lockport, which has held all of its 2013 bed tax collections in escrow. Lockport’s 10-year agreement, which committed it to quarterly payments to the tourism promotion agency, expired this past February. 

Agency CEO John Percy could not be reached to comment Wednesday on how much bed tax Lockport owes and whether the agency is considering legal action to recover it.

City Attorney John Ottaviano acknowledged agreement with NTCC’s stance in the Falls suit, however. Because the county has a contract with the agency, Lockport is “obligated” to turn over its bed tax receipts, he said — and it will, as soon as some sort of agreement is in place between it and the agency.

Seventy-five percent of Lockport bed tax equals roughly $85,000 a year income for NTCC.

Ottaviano said he recommended an escrow arrangement “not as a protest, but because a red flag is raised to auditors if the city pays out money to a vendor with whom we don’t have a contract.”

Further, he said, he urged the Common Council last month to approve a one-year extender agreement with NTCC just as the county did.

A proposal has yet to be put up to a vote, although Mayor Michael Tucker — who’s ended up being one of NTCC’s most vocal critics — said Wednesday that he would support it.