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Think a lodging tax will lower Hudson taxes? Think again.

Image Source: ABC News

The idea of a lodging tax for Hudson B&Bs and hotels is not, on its face, a terrible one. 

In theory, such a tax would raise funds for the City of Hudson via visitors from afar, rather than citizens locally. And (again, in theory) it would not be likely to keep people from coming to Hudson, since most tourists either expect such a charge, or else won’t realize that it’s going to be tacked onto their bill until they are here, and it is too late to back out.

But if you are hoping a lodging tax will actually lower your taxes, don’t get your hopes up.

Why? Simple: There’s zero reason to have an iota of confidence that any new City revenue—whether from lodging, or restaurants, or parking meters, or the discovery of a strongbox full of antique gold bullion unearthed from the muck of the South Bay—will be used to pass savings onto taxpayers.

On the contrary: New income for City government almost always results in new and greater spending, rather than lower taxes. The political temptation to spend invariably outweighs the fortitude to tighten the belt.

So at best, revenues from lodgers might be used to slow down the rate of property tax growth. And even that seems like wishful thinking, based on past experience.

Hudson’s past is prologue, and reason for cynicism. Over the past 15 years, Hudson’s tax base has significantly strengthened. As previously reported in depth here in 2010, both the number of taxable properties has increased, and overall assessments have increased as well. Normally, that ought to mean that taxes could be reduced over time, or at least held steady.

But instead, local property taxes have steadily risen. Local politicians have consistently viewed a greater ability to raise revenue as an opportunity to spend more lavishly.

According to the the New York State Comptroller’s office, between 1980 and 2010, the City of Hudson’s revenue per person living locally has gone up over 373%. Sounds good, right? Yes—until you realize that the City’s spending per capita has gone up at a higher rate, of 464%. In short, new spending has outpaced new revenue by some 91%.

And, absent any safeguards built into the lodging legislation, there is no cause to assume that this new source of cash would be any different.

Moreover, the actual amounts projected sound rather low: Reportedly, only $1 million would be collected over the first six years. If that sounds like a lot to anyone, bear in mind that’s only $166,666 per year. And the City’s total budget is nearly $10 million.

So the new lodging tax would contribute less than 1.7% of the annual budget over the next six years, even if it remains unchanged (which it won’t. It will almost surely keep going up).

On the other hand, it does not appear that a lodging tax will do any harm. The most likely opponents, B&B and hotel and guest house owners, appear to support it. So if it’s no skin off their back, probably no one else will consider it even a cosmetic problem. Just don’t hold your breath thinking less than $200,000 a year is going to make a visible difference on your tax bill—a good half of which derives from separate budgets for the County or Hudson School Budget, anyway.

Those seeking at least a little relief might explore ways to ensure that any new lodging revenues are applied after the budget is set, not before; but that would not likely do much good in encouraging fiscal discipline, as leaders would tacitly base their projections on lodging tax windfalls from previous years, anyway.

As written here five years ago on the general subject of local government spending:

A more likely scenario is that future budgets will continue to rise, as leaders use the increased assessments to increase spending... [T]he focus of those seeking tax reform and fairness should remain on (A) securing reasonable, balanced, justifiable assessments for all property owners, both small and large; and (B) encouraging City leaders to be disciplined in its annual budgeting process and spending habits.

Not such a fine idea: 7 reasons why that Guest House story blew up

This site will leave it to others to continue debating the Union Street Guest House’s $500 fine policy (with an intensity more usually reserved to debating Israel vs. Palestine). Was it a “joke,” a scare tactic, or a scam? We may never know, and probably shouldn’t care.

Far more interesting to this observer is the question: Why did this particular story go “viral”?

So far, the story has been covered in at least 200 online and print publications, many of them with a global reach, such as CNN. Reportedly, the inn has been beseiged with  requests to appear on national morning programs, as well as p.r. reps pitching their crisis management services to its staff—as if the USGH were Union Carbide.

The story likewise sparked an intense backlash against the Guest House, with over 1,000 fake negative reviews posted in the first twelve hours on Yelp. (Many of these have been removed by the site as violations of its terms of use, but more keep coming, knocking its rating down to one star.) Some of the articles and comments contain obvious errors, such as that the place was built by the Vanderbilts, and located in the Catskills. Traffic on SamPratt.com, where the owner’s explanation first appeared, spiked an extra 27,000 hits in less than 24 hours.

So why should a story about a small inn in a small Hudson Valley city provoke such visibility, and such vitriol?

REASON #1: It’s August. August is known among news people as the Silly Season. Many public figures, journalists and the public are on vacation, and either not making news, craving lighter news, or not paying attention to the news at all. Hard news drops off, in favor of either titillating tales about bears falling down wells and birthday party clowns punching children, or heartwarming fluff about hayrides for the family at your local county fair... So the USGH yarn hit at just the right time to fill that August news gap.

REASON #2: The Interwebs. The mainstream news media is both notoriously clueless about the internet and easily lured into writing stories about mundane online stuff not normally worthy of coverage without a web angle. (People are meeting their soulmates—ON THE INTERNET! People are gambling—ON THE INTERNET! People are having arguments—ON THE INTERNET!) Since the threatened fine by the Union Street Guest House involved punishing negative online reviews, the story was that much more irresistible.

REASON #3: Boarding Paranoia. Pretty much everyone stays at a hotel, inn or B&B at some point, and business travelers stay in hotels a lot. Most have felt that sneaking suspicion that our bill might be getting padded, even when it isn’t. It’s always a surprise to see a whopping hotel tax and an added telephone charge at checkout time, even though we had every reason to see these coming. Thus when a story arrives which appears (fairly or unfairly) to describe a nefarious lodging proprietor tacking $500 onto a bill, patrons and reporters alike assume the worst.

REASON #4: Hating on Hipsters. Dissing hipsters is to media today what mocking yuppies was in the ’80s. Though the term no longer means much more than “people younger than yourself,” every publication knows that it can lure both clicks and snide comments by including the word hipster. (This writer is guilty as self-charged.) And this hotel story had an apparent hipster angle.

The USGH site’s policy describing the hypothetical $500 fine included a long explanation of why some wedding guests more familiar with Holiday Inns than the Ace Hotel might not “get” its vibe—an explanation presumably based in actual experience with guests. Terms like “vintage” and “hip” were sprinkled liberally on its site, before getting to the policy’s punchline: “If your guests are looking for a Marriott type hotel they may not like it here.” A few might call that refreshing honesty. But most received it as archly snobbish. Now, here was a rare chance to punish the hipster hotelier; and punish they did.

REASON #5: Schadenfreude. Once it became clear how much attention and anger was unleashed by the initial coverage, the rest of the press and the public rushed to kick the establishment once it was down. For some internet trolls and parodists, leaving negative feedback on a business they have never visited and never planned to visit is just another way to pass the day. This led to a second lede about the online backlash, further extending the life of the story. The USGH having to take down its Facebook page, and Yelp having to remove countless comments, just further stoked the flames.

REASON #6: The Interwebs—Again! The media has always had something of a herd mentality. Most writers know that paradoxically, it is much easier to sell a version of a story which has already appeared elsewhere than to pitch a novel idea for a piece. Many editors are very cautious animals, fearing to look stupid by taking risks on an article which requires more than five seconds to explain. So if it’s been in the New York Times or New Yorker already, that’s actually a plus: The story topic has been validated. The internet compounds this problem with its culture of linking. Countless sites do little more than collect links to other sites’ reports, or shamelessly repurpose others' content. Once the $500 fine story hit a few well-trafficked sites, it was bound to get copied-and-pasted in exponentially more.

REASON #7: The Policy Itself. Whatever the owner’s motivation—and I say this knowing and liking the owner personally—the policy was counterproductive to say the least. Worse, it was written in a catty tone which set people’s teeth on edge far more than boring legalese.

One can question the policy’s legal enforceability, while also noteing that not a single visitor has brought forward evidence of actually being fined. It looks like some threats may have been made to enforce it... depending on how much one believes semi-anonymous online reviews, which can be edited after the fact to fit a new narrative. On the other hand, many Hudson lodging establishments consider wedding parties as much a curse as a blessing. (Think: Puke on hallway carpets, trashed rooms, noisy sex, lost keys). So fans of the place may be tempted to theorize that this policy was less a “joke” than a roundabout way of deterring all but the most docile wedding parties from staying at the Union Street Guest House.

Still, all that said: The $500 fine idea clearly wasn’t a fine idea. As much as for any other reason, the story gained traction because the policy generated righteous indignation.

Meanwhile, though the Guest House itself will no doubt take a hit for a while, the rest of the local B&Bs and hotels may see an uptick in curiosity-seekers, as millions heard about Hudson for the first time via this story. It’ll be a test of whether all publicity is truly good publicity, a saying repeated far more often than it merits.

Union Street Guest House owner responds

NOTE: A follow-up on why this story went viral has been posted at this link.

A Hudson lodging establishment has been slammed with a tidal wave of bad publicity after The New York Post’s Page Six described a policy of fining wedding parties $500 per negative reviews on Yelp.

The Post’s story about the Union Street Guest House was quickly and gleefully picked up by Fox & Friends, TIME online, Business Insider, and others, leading to a raft of negative feedback on Yelp and Twitter. (This begs the question: Is all press really good press?)

The USGH’s longtime owner, former 3rd Ward Alderman Chris Wagoner, responded around noon to the outrage, noting that the proposed fine was for weddings only, had never been levied, and in any case was “tongue in cheek”:

The policy regarding wedding fines was put on our site as a tongue-in-cheek response to a wedding many years ago. It was meant to be taken down long ago and certainly was never enforced.

If the fine were never levied, that might appear either to verify Wagoner’s claim that the policy was not meant seriously, or possibly that there were no Yelp complaints which triggered the fine—or else that the threat of a $500 penalty indeed deterred any from being lodged.

There certainly are many complaints now, though almost all of them from people who never stayed there and are simply visiting to pile on. Going back through the reviews, here is the distribution of stars prior to today’s episode:

• 7 four- and five-star reviews;
• 1 three-star review;
• 0 two-star reviews;
• 5 one-star reviews.

So, prior to today’s news, USGH guests seemed to be polarized in a love it-or-hate it pattern. Now there are dozens and dozens of one-star reviews from people who have never been there. A lesson perhaps both to the inn, and about the perils of publicity.

You gotta serve nobody

 

Does the firm hired to reëvaluate Hudson property tax assessments, or even the local Assessor himself, answer to anyone?

And, was there a tacit understanding among the Aldermen that Sole Assessor Garth Slocum would be resigning or removed soon after they approved GAR’s $170,000 contract?

The answer to the first question would appear to be “no,” and to the second “well, maybe.”

The abrupt and unheralded switch of all the City’s bed and breakfasts from residential to commercial classification became publicly known earlier this week via citizen complaints to their Aldermen, rather than via discussion or disclosure by GAR or the City itself. A storm of protest immediately (and not at all surprisingly) followed, with City officials and politicos expressing concern or even outrage of their own:

“We are behind all of the B&Bs. This won’t stand,” wrote Hudson City Democratic Chair Victor Mendolia.

“I am equally concerned about this potential change or designation/declassification,” said Mayor Bill Hallenbeck, adding that “I am in constant communication with the Council President on this matter.”

“[A]s an alderman whose ward includes many of the City’s B&Bs, I’m trying to get to the bottom of this,” said one of the 3rd Ward’s two Council representatives, John Friedman.

But it is unclear that the above have many (if any) legal or legislative cudgels with which to compel GAR or the Assessor’s office to change or moderate their stance, besides asking nicely (or meanly). There is no immediately obvious way for the Mayor, Council President, Aldermen, or the Hudson Democrats who hold every seat on the Council to compel a reversal, because they appear to have forfeited that power when they turned the negotiations over to former Mayor Scalera, resulting in a $170,000 GAR contract.

To help answer these questions, this site submitted a Freedom of Information Law (FOIL) request on Wednesday to the City requesting a copy of the contract with that firm, GAR Associates, and any other records pertaining to its contractual obligations. Tracy Delaney, the consistently helpful City Clerk, quickly provided access to the contract to the City’s website by uploading it to their site, at this link.

The contract refers generally to “the City” as its client, but mentions no one but the Sole Assessor with whom they would be actively working. The Council members appear to have retained no ability to steer GAR’s work when approving the funding, only to receive “monthly progress reports.” Thus far, no such reports have been forwarded at this point by the City in response to the FOIL request, but a specific request has been made, if they exist.

There is one interesting passage in the contract which may suggest why the Council may have agreed to take a passive role in this highly-charged, high-stakes process:

The CITY and the CONTRACTOR acknowledge that changes in the City’s assessment staff, specifically the City Assessor during the term of the Project could impact the timing of meeting Project milestones and providing Project deliverables. In the event that the City Assessor as of the date of this Agreement is no longer actively working on the Project during the term hereof, the parties acknowledge that there may be additional costs for the time spent on transition to substitute personnel for the City. In such event, the parties hereby agree to reasonably negotiate [to] adjust the price… [emphases added]

In other words, the GAR contract specifically signalled that the firm had been warned that the City might be changing assessors. GAR clearly was mindful enough of this likelihood to make sure that they would not be held responsible for any delays which resulted, and compensated for any additional costs.

The Aldermen may have viewed this as a sign that they were getting rid of the controversial Assessor* in exchange for funding GAR’s work. In speaking with people who attended or participated in the deliberations, there are some indications that the Council was led to believe this was the deal. However, others might view the contractual language above as insurance against Slocum’s resignation or removal—since it could incur more delay and cost involved with the reassessements. 

The contract also specifies that GAR is an “independent contractor,” firmly stating that “no principal-agent or employee-employer relationship is created by this agreement.” In other words, we deliver the results, you pay for them, and that’s it. It does mention at several points that the firm would “work with” or provide information at the request of the Assessor, though these seem to refer to straightforward information exchanges, rather than policy decisions like changing all the B&Bs’ tax classification. A letter was issued by Slocum in April 2011 largely mirroring information also issued by GAR.

Moreover, if the contract’s payment schedule has been adhered to, by this point GAR has been paid all but $23,000 of the $170,000 they were promised. That’s not chickenfeed, but it further reduces the City’s leverage if they wanted to try to bring GAR to heel.

Attached in the contract is a letter from GAR Vice President F. Cindy Bare to Council President Moore dated October 11, 2010, which indicates that they had met face-to-face, and further lays out GAR’s case for being hired for $170,000. There is no further indication that Moore retained a role for himself in overseeing their work once it was funded. The letter offers to provide the City Attorney a “contract template” to work from.

In short, even if City officials were genuinely surprised and concerned about this sudden threat to a vital component of its economic engine, it is not at all certain that they can do anything except plead with GAR to change its position. As this site reported earlier in the week, the practice the firm has adopted in Hudson is not common to the rest of the County: five out of six B&Bs outside Hudson that were spot-checked are classified as residences, not commercial property. The simplest solution, and maybe the only one still available to City officials, is to persuade GAR or Garth to change the classifications back to avoid having an unhappy client. Problem is they don’t have to, and it’s debatable how unhappy some officials really are about it.

One other interesting tidbit gleaned from the contract: GAR and the City (represented by Rick Scalera) agreed to leave one part of Hudson out of the revaluation process: “Hudson Deep Water Port.”** Deeming that area “Unique or Highly Complex,” they agreed to leave it alone unless the City agreed later to additional fees—without specifying which parcels would be exempted. One assumes however, that the major property holder there—Holcim—was left out of the reval process.

At least one other question remains: What power does the Mayor’s office have over the Assessor? That has been a longstanding local debate, one which will have to wait for a separate post...

 

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* Anecdotally, various taxpayers claim that Slocum has made his personal distaste for new property owners in general, and at least one B&B owner in particular, quite plain to them.

** Note: Legally, Hudson has no “Deep Water Port,” as it does not qualify for that classification under Federal law. But Holcim and its backers prefer this terminology, and continue to use it even after citizen protest caused it to bestruck from the Waterfront Plan.

The $170,000 Question

$170,000: That’s the value of the contract awarded by the Hudson Common Council last year to GAR Associates to reassess properties Citywide. (Evidently Sole Assessor Garth Slocum either wasn’t up to, or could not be trusted with, that task.)

Underwritten by local taxpayers, that six-figure pricetag is payment for the privilege of having the City’s own consultant launch a surprise offensive against one of its most dynamic and essential industries—its constantly-booked bed and breakfasts. City leaders profess to have been blindsided by GAR’s decision, which may have far-reaching consequences.

The $170,000 question then is: How could GAR’s move catch the City unawares—if indeed that move was a surprise? Put another way: Who is minding the Hudson store?

When GAR was originally hired, Council President Don Moore painted a Panglossian picture of how well that $170,000 might be spent. The March 15th, 2011 Council minutes report Moore as saying:

President Moore [...] stated after an extensive process they had settled on GAR Associates Inc. which were highly recommended and impressive in terms of the programs they had presented. President Moore said “in so far as property taxation is an issue of both financial revenue but also of fairness and concern throughout the city that we need to do everything we can as a city government to make sure that we have this objective and fair professional job of appraising and assessing property of the city as possible”.

But as first reported by Carole Osterink at Gossips of Rivertown, this unilateral and sweeping change of all local B&Bs from residential to commercial classification may cause each of those home-based businesses a sudden financial and legal hardship. It would likely incur new mortgage costs (or even invalidation of existing mortgages).

And, more alarmingly, it might turn B&Bs in residential districts into non-conforming uses, potentially forcing them to close while they try to obtain a variance from the Zoning Board of Appeals. Lastly, it appears that GAR based its revaluation of these properties based on B&Bs outside the City, claiming no such sales occurred locally to use as comparables (“comps”). That claim ignores the fact that at least one residence within the City Limits was sold in the past year to an existing B&B to expand its operations.

A spot check of five B&Bs around the County at the Real Property Department indicated that all of them are classified as residential properties, not commercial. Bed-and-breakfasts in Chatham, Copake, Hillsdale, Kinderhook and Taghkanic were found to be classified on the tax rolls as residential dwellings, either single or multi-family.

As it happens, GAR did the resassment in Taghkanic. And a spot check of a sixth B&B there reveals an inconsistency in their approach, as this one is classified as commercial. Moreover, GAR’s work in Taghkanic was brought to the attention of Moore and other Aldermen around the time their contract was approved because problems had arisen there.

Several months before the Hudson contract was authorized, The Register-Star reported in December 2010 that GAR “paid the town [Taghkanic] a hefty refund” only after local Democrats noticed that only $4,000 worth of work was performed despite their having received a $20,000 retainer:

Councilman Larry Kadish said any remaining money should be returned to the cash-strapped town’s coffers.

“It’s our money and it should be sitting in our account,” Kadish said. “I don’t accept this as a reasonable way to do business.”

Kadish also said he was troubled by the fact that the town’s taxpayers appeared to have paid considerably more for assessing services than residents of neighboring towns.

But learning from others’ experience and heeding advice is not much in fashion in Hudson politics, so Moore and the Council raced ahead with approving the $170,000 to GAR.

Further inspection of the Council minutes from March 2011 [PDF] does not indicate that the Aldermen retained for themselves any formal oversight of GAR’s activities once the $170K was approved. The terse resolution passed that night without opposition delegated the authority to then-Mayor Rick Scalera “to enter into a contract with GAR Associates Inc. for professional service for a citywide reassessment of the City to be completed for the 2012 assessment roll.”

The answer to the $170,000 Question thus may lie in the contract negotiated by Scalera with GAR. Would GAR report to the Mayor’s office, or to the Council, or to the Sole Assessor? Would any elected officials retain the ability to monitor and correct GAR’s work, or did the City abrogate its own power to undo such abrupt, unilateral moves like the assault on the B&Bs?

A copy of the GAR contract and any related correspondence or amendments has been requested from the City, and its contents will be reported here assuming it is responsive.

Coming up Aces?

Image source: Architizer.com

Nearly five years ago, I sent out an email to friends who were lamented the lack of a proper hotel (as opposed to the many excellent local B&Bs) in Hudson:

> From: Sam Pratt <[email protected]>
> Date: October 1, 2008 6:20:33 PM EDT
> 
>
> This hotel chain in Seattle/Portland is
> the kind of thing I could see [here
> in Hudson] -- clean, stylish, not too
> expensive. Their website indicates that
> they are looking to expand their brand
> to other parts of the country... wish
> we had development agencies picking up
> the phone to call them:
>
> http://www.acehotel.com/seattle
>
> (I notice that since my last visit to
> their site, they've planning new branches
> in NYC and Palm Springs.)
>
> I know that there are other hotel proj-
> ects in the works around town, but I'll
> believe 'em when I see 'em.
>
> --S.
>

It was actually the second time I’d made that suggestion. Now via Scott Baldinger’s Word on the Street blog comes a strong rumor that the Pocketbook Factory—stabilized but then mothballed a dozen years ago by Eleanor Ambos—may be acquired by... none other than the folks from Ace Hotel. (Own back, accept pat.)

Naturally at this point it’s just a rumor. But that would be stupendous news not just for Hudson's visitors, and all the people who would help build and work in the place, but also for other businesses which would thrive off the foot traffic and spin-off spending it would bring... For the moment, keep that ace up your sleeve, because as noted above: In Hudson, monster hotel rumors do have a tendency to get cracked.

For a better sense of the growing Ace empire's style, hitch seems a perfect fit for Hudson, click this link to a Google Images search.

 

‘Dirtiest’ is an ambiguous word

TripAdvisor.com has released its 2010 list of the dirtiest hotels in the U.S., including one in New York City. ... Apparently they never read Dick May’s hilariously revolting round-up last June of complaints about Greene County lodging over at his Seeing Greene blog.