H Tax Update

In September, 2015 the Lexington Town Council approved a 2% tax on prepared foods as a means to fund much needed traffic improvement projects.  The “Hospitality Tax” went into effect on 1 October of that year and will terminate in September, 2023.  Forty months later, what has happened?

The passage generated quite a bit of controversy.  As expected, no one wanted to pay more taxes.   There was also confusion about why it was being imposed and why the funds for which it is intended (intersection improvements within town limits) could not come from somewhere else.  There was also vociferous opposition from an anti-progress group funded by out-of-state interests that used lies and fear tactics to try to defeat the measure.  One of the primary arguments this group (and others, including restaurant owners) was that the 2% increase in customer dining bills would diminish business and drive eateries out of Lexington.

It was, of course, a bogus argument that defied both common sense and basic economics.

According to Town Administrator Britt Poole, since the Hospitality Tax went into effect, there has been a 9% net increase in licensed restaurants in the town limits (111 in 2015 – 122 in 2018).  That’s impressive growth that appears to still be on the upswing. 

As for revenues to the town, at the time it was enacted, the tax was projected to net more than $2.1 million annually or about $175,000 per month.  In reality, total H-tax collections through January 10, 2019 is $8,449,028.14 or over $211,225 per month – almost 21% above projections.  If this rate of return is maintained, the Hospitality Tax will generate over $20 million for Lexington in it’s eight year life span.  However, the monies can be spent only for the specific projects designated at the time the tax was approved.

So, what of the intersection improvements for which these funds are intended?

one wayOne-Way Pair

The “One-Way Pair” project in downtown Lexington has been completed.  After a period of adjustment, traffic flow has improved with lower wait and transit times at lights and through the intersections.

North Lake Widening

crossroads 1

Phase I of the Crossroad Improvements will include Harmon Street Extension and focus on improving safety and operation with the relocation of Dreher Street at North Lake Drive to connect at the existing Azalea Drive. This new road will be Harmon Street. 

Additionally, the project includes widening of North Lake Drive from South Church Street to Dreher Street. Plans have been submitted and are awaiting DOT approval. Anticipated Construction Summer 2019

Corley Mill at Sunset Blvd Gateway Improvements

The focus of the project is to improve current traffic flow through the Corley Mill Road and U.S. 378 intersection which serves as the primary Gateway to the Town. Currently, the average daily traffic on Sunset Boulevard is approximately 45,000 vehicles per day and on Corley Mill Road 9,100 vehicles per day.

corley 1The I-20 Westbound Ramp Improvements include proposed modifications to the traffic patterns in order to reduce or eliminate travelers exiting the ramp and crossing multiple lanes of traffic in attempt to make a left turn at Ginny Lane.   The improvements call for allowing motorists to make a right turn at the Westbound ramp signal and proceed into the left turn lane for Ginny Lane.

Two right hand turn lanes from Ginny Lane on to Sunset Blvd. are anticipated to be complete and operational by April 1st. 

The first phase of the this project will be funded by Hospitality Tax revenues, but in order to accomplish the larger scope of the venture, the Town of Lexington has requested participation from Lexington County, Lexington School District One and other related taxing authorities to implement a Tax Increment Financing District for the Corley Mill/Sunset Boulevard Gateway Corridor. Through the funding, the Town will improve capacity by utilizing existing parallel roadways at Dedrick Drive and Sunset Boulevard.

Finally, future development includes the construction of an overpass joining Corley Mill Road to Davega Road, allowing motorists to bypass the gateway intersections and merge onto I-20, thus alleviating congestion.

Lexington’s decision to implement the 2% Hospitality Tax was as smart as it was visionary.  It’s a brilliant way to acquire monies to work on crushing traffic issues when no help is coming from the county or state.  The Town has almost no authority to address the gridlock on our roads.  The Council found and exploited a loop-hole that will ultimately provide some relief at a minimal cost to taxpayers.

Next:  H Tax Future

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Lake and Main is grateful to Lexington Town Administrator Britt Poole for providing figures and updates.

 

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4 thoughts on “H Tax Update

  1. After reading the state’s description of the use of hospitality tax to improve roads to tourist destinations, it doesn’t seem that is what our town is using it for fits that description. But since Lake Murray is nearby may that qualifys. What else would quantify this, the ballfields? We do have the museum but it does it draw that many tourist? These are only questions and observations nothing more.

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    1. Lake Murray is the loop-hole the Town was able to use. Since the three intersections are critical passages to/from the lake, the implementation of a hospitality tax applied. It was, in my opinion, a brilliant solution.

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