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Chesterfield On Point

Posted on: May 3, 2023

With backing from local hoteliers, Chesterfield establishes dedicated funding source for tourism

Kayaking on the James River

Girls lacrosse tournament at River City SportsplexRiver City Sportsplex brings thousands of athletes, coaches and families to Chesterfield annually for tournaments.

Imagine, for a moment, a day in the life of a visitor to Chesterfield. Perhaps they start the day with a hike at Pocahontas State Park, have lunch at one of the county’s growing restaurant options, then spend a relaxing afternoon sampling the local brewery and winery scene before taking in a show at Perkinson Center for the Arts or Swift Creek Mill Theatre.

Those are just a few of the many attractions that helped Chesterfield generate $535.9 million in total visitor spending in 2021, creating $26.1 million in direct local tax revenue – equivalent to 5 cents on the county’s real estate tax rate -- and supporting $148.8 million in wages.

As the county works to build on that success by bringing in even more people from out of town, continuing to diversify its tax base, reducing its reliance on residential property assessments and enhancing quality of life for residents, there’s a new tool available to localities across the Richmond region: the Tourism Improvement District (TID).

The General Assembly passed a state law in 2021 authorizing Virginia localities to create TIDs within their boundaries for the purpose of generating revenue to bolster local tourism efforts.

Following two public hearings, and with widespread support from Chesterfield hoteliers, the Board of Supervisors last week approved a proposed ordinance establishing a TID in the county. 

“We’re blessed with great hotel operators who are committed to the county’s growth,” said J.C. Poma, Chesterfield’s new executive director of sports, visitation and entertainment. “Creation of the TID aligns very nicely with strategic investments by county administration and the Board of Supervisors to make this economic engine even stronger.” 

Effective July 1, hotels and motels with more than 41 rooms will pay an assessment equivalent to 2% of their gross short-term rental revenue for the next 10 years. The fee will be paid and collected in a manner similar to the county’s transient occupancy tax. 

The TID’s finances and key performance indicators will be overseen by a panel of hotel owners and operators, acting as a subcommittee of Richmond Region Tourism’s board of directors.

TIDs in Chesterfield, Henrico and Hanover counties, the cities of Richmond and Colonial Heights, and the town of Ashland are projected to generate a total of $8.2 million in new revenue over the first year. Ninety cents of every dollar collected will be allocated either to marketing and advertising or creation of a strategic reserve, from which the region can provide financial incentives to attract larger, higher-profile events.

Chesterfield’s Board of Supervisors held an initial public hearing in March to receive input on the potential establishment of a TID. Lodging business owners had an additional 30 days to submit written objections to the plan, but the board received none.

“The key element here is that the money generated by the TID will be administered by hoteliers, who will direct how it is used to promote tourism,” said Neil Amin, CEO of Shamin Hotels, the largest hotel owner in Chesterfield. “Our hope is the fund will grow over time and help attract even larger events, then it starts to build on itself.”

Under state code, at least 51% of a locality’s hoteliers must sign a petition in support before its governing body can establish a TID.

Along with a nine-member steering committee that included Amin and Nick Patel from Kalyan Hospitality, Richmond Region Tourism played a vital role in engaging the region’s hotel owners over the past year and generating buy-in for the TID plan.   

“We know when our ads run and people come here and book hotel rooms, so we’re able to track the return on investment from our marketing. It drives visitors to our region and that’s exactly what we want to do,” said Katherine O’Donnell, executive vice president of Richmond Region Tourism.

Robert Reed, vice president of SMI Hotel Group, also served on the TID steering committee. He noted that revenue from the 2% assessment will “provide some additional muscle” behind the Richmond region’s marketing efforts and help it compete more effectively on the tourism front.

“This opportunity was driven by us, the hotel community,” he said during the Board of Supervisors’ March 22 public hearing. “The structure and purpose of the TID, as well as the allowable expenditures, were all designed by us in such a way to benefit the entire tourism ecosystem. A large majority of the hotel community agrees with our strategy and believes in the TID.”

According to Amin, the combination of improved regional cooperation and local investment in assets such as Chesterfield’s River City Sportsplex have hoteliers feeling optimistic about the future of tourism in the Richmond region.

“All of these jurisdictions recognize the value of tourism. Leadership understands it brings in tax revenue to improve quality of life for their residents,” he said. “They also know if you stay with the status quo, you’re moving backwards.” 

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