Should Traverse City’s tourism industry foot more of the bill for local expenses like road maintenance, emergency services, or water treatment plant upgrades? A pair of local residents thinks so, and they’re forming a new coalition – and lobbying lawmakers – with a goal no less ambitious than changing the way hotel taxes work in the state of Michigan.

Meet Brad Lystra and Andrea Stalf, the duo behind a recently-launched “City and County Visitor Tax Petition.” Implementing a new type of “visitor lodging tax” in Grand Traverse County, the two say, would create “a fair and equitable way to collect funds from visitors” and help address local challenges around deteriorating infrastructure, environmental conservation, and affordable housing.

“The revenue from this tax can be allocated to enhance the quality of life for residents, reduce their tax burden, and improve the visitor experience,” the petition states, adding that “such taxes are common in many other tourist destinations and have proven effective for funding public improvements without placing an additional burden on residents.”

Lystra is a local builder who has called northern Michigan home for 15 years. Stalf moved the area more recently and put down roots in Acme Township. The pair bonded over their shared skepticism about the region’s ever-growing tourism economy – and a mutual belief that local residents weren’t getting enough out of the deal.

Lystra says his breaking point came amidst a recent rash of new hotels being built around Grand Traverse County. Stalf, meanwhile, has been alarmed by Acme’s dearth of dedicated emergency services – a situation she describes as “rural services, but with city-like taxes.”

“I decided to take a deep dive into area tax flows and see who gets what, and how Grand Traverse County may be able to better service the outlying townships – which increasingly host summer visitors – as well as its own aging facilities in Traverse City,” Stalf says. “I found some of the largest and fastest growing tax flows in northern Michigan are to Traverse City Tourism (TCT), which captures room taxes at area hotels strictly for promotion of additional tourism.”

TCT collects a five percent assessment from local lodging providers that manage more than 10 units, including a mix of hotels, motels, B&Bs, and short-term rentals. Those assessment dollars then fund the majority of the organization’s budget, including employee salaries, TCT-hosted events, and tourism promotion.

According to TCT’s tax returns, the organization had a revenue of $10.75 million in 2023, and a cash reserve of $5.3 million.

In hopes of redistributing some of those dollars, Lystra and Stalf are angling to replace the 5 percent assessment with a 7.5 percent accommodation tax on all lodging units in Grand Traverse County. Those revenues would then follow an “equal 3.75/3.75 split between TCT and Grand Traverse County/the City of Traverse City” – an approach the pair claim would “boost county funds about 15 percent above the current budget, annually.”

But getting there isn’t as simple as passing a local resolution. According to TCT President and CEO Trevor Tkach, Michigan’s lodging tax structure is extremely convoluted and would require significant political will to revamp.

“When you think about our state, we've got 10 different public acts that allow for tax of hotel or lodging guests in our state,” Tkach explains. “So, even just trying to understand those pieces before you think about where you go next, that’s a big challenge.”

TCT currently operates under Public Act 59 of 1984, itself an update to Public Act 395 of 1980. Together, those laws established rules like the 10-unit threshold and the five percent assessment rate. They also stipulate that all assessment dollars be spent on “tourism or convention marketing programs.”

“I think one of the concerns I've heard from the hospitality/tourism industry is: How do we know that these dollars collected would go back to things that benefit the industry?” Tkach says. “Because that's the expectation – that, if there's a tax or assessment, those dollars are channeled in a way that helps provide some enhancement to the region that is beneficial to both the local and the visitor, even if it's for something other than just tourism marketing.”

Case-in-point, Tkach tells The Ticker, is House Bill 5048/Public Act 35, passed by the Michigan Legislature in 2023 to amend yet another state lodging tax law, Public Act 263. HB 5048 opened the door for counties with a population of 600,000 or higher to increase their hotel excise tax rates from five percent to eight percent, but it still earmarks those extra revenues for tourism-related expenses. In Kent County, for instance, where voters opted in on the new hotel tax rate last August, plans for the extra revenues include building a soccer stadium and an amphitheater.

“Those bills were extremely specific as to where that money was going,” Tkach notes. “It wasn’t a blanket bill, and I think sometimes people [in the tourism industry] get a little bit nervous when you just have an open-ended tax. From sustained strong property tax collection to sales tax remission, hospitality is already putting a lot of money back into state and local coffers. So, an additional burden seems like a lot to stomach, unless there's a plan and it points to an outcome that's going to be directly beneficial for that industry.”

Right now, Tkach says the feeling in the industry is that higher hotel tax rates would actually impede business; he cites Traverse City’s conference scene as an example.

“An extra one or two percent on tens of thousands of dollars of business, that’s a differentiator where all of the sudden we lose some huge pieces of business because we've priced ourselves out of the game,” he says.

Tkach says he’d be open to having a dialogue with local stakeholders about how to balance the demands of the tourism economy with the needs of people who live here. Formulating a proper “destination plan” with input from the hospitality sector, local municipalities, area residents, and other voices, he says, could do a lot to ease northern Michigan’s growing animus around tourism.

“To be continually vilified for work that is life-sustaining for a lot of us in this region, that’s a difficult position for me,” Tkach concludes. “I love this town. I want to see it do well. None of us in hospitality want to see bad things happen in Traverse City. But no one's asking us to the table to have a legitimate, fair conversation about things. I’d like to see someone come to our industry with an olive branch and say, ‘You’ve done a great job; you put Traverse City on the map and we’re a better place for it. But now, how do we work together to make it better for the next 50 to 100 years?’”

Lystra and Stalf say their aim isn’t to vilify tourism, but to make it more sustainable for people who call the Traverse City area home.

“We want to share our beautiful area with visitors from around the world, but with some reciprocity, so we can continue to afford to be great hosts,” Lystra says.