Focus Area: Legal
Staff Contact: Ron Shaver
Subject: Proposed Charter Ordinance No. 83 regarding transient guest tax and an agreement with the Olathe Chamber of Commerce.
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Consideration of Charter Ordinance No. 83 regarding transient guest tax and an agreement with the Olathe Chamber of Commerce.
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Summary:
This item was presented as a report on the June 17, 2025 City Council agenda.
The current transient guest tax charter ordinance is Charter Ordinance No. 70, adopted by the governing body on August 19, 2008. That charter ordinance exempts the City from a non-uniform provision of Kansas law and allows the City to levy a 6% transient guest tax at hotels, motels and tourist courts in Olathe for economic development promotion purposes. These funds are deposited into the City’s Tourism & Development Fund. The revenue from the tax goes to the Olathe Chamber of Commerce for economic development (50%) and the Convention and Visitors Bureau (50%).
Staff has prepared a new Charter Ordinance (proposed Charter Ordinance No. 83 (Attachment A) that would repeal Charter Ordinance No. 70 and would raise the transient guest tax rate to 9%, the same rate as in the cities of Overland Park and Mission. The proposed Charter Ordinance No. 83 also makes technical changes to the definition of Economic Development Promotion and how funds are disbursed to the Olathe Chamber of Commerce.
Staff has also prepared an updated agreement with the Olathe Chamber of Commerce (Attachment B) regarding the Chamber’s use of transient guest tax funds. The current agreement dates to 2011. The new agreement makes several technical revisions, updates performance metric requirements based on current reporting performed by the Chamber, refers to the Economic Development Strategic Plan, and requires compliance with the 2022 office lease agreement in the Downtown Library.
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Financial Impact:
The current transient guest tax is forecasted in the 2025 adopted City budget at $1,820,851. Based on this forecast, the 3% additional transient guest tax (above the current 6%) would be expected to generate approximately $910,426 per year (totaling approximately $2,731,277 per year), though some of this increase will be captured by hotels in existing TIF districts and not deposited into the Tourism & Development Fund. The additional funds may be used for more Economic Development Promotion activities as they become available.
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Action Needed:
Approve Charter Ordinance No. 83 and the Agreement with the Olathe Chamber of Commerce.
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Attachment(s):
A. Charter Ordinance No. 83
B. Olathe Chamber of Commerce Agreement