Tourism Industry Working Group holds 1st meeting

The Kenai Peninsula Borough’s Tourism Industry Working Group met Wednesday for the first time, organizing and opening a discussion about the benefits and impacts of tourism on borough revenue and services.

The group, which is set to meet through winter, was created by a resolution of the Kenai Peninsula Borough in September. The group’s membership includes seven voting members, four of whom are members of the public and three representatives of the tourism industry. The group’s creation follows assembly consideration in June of a resolution that would have added a question to the October ballot asking borough voters whether the borough should levy a tax on short-term rentals — often called a bed tax.

Representing the tourism industry are Carol Fraser of Aspen Hotels; Duane Bannock of Uptown Motel; and Tom Tougas of Major Marine Tours. Jon Faulkner, who owns Land’s End Resort, serves as an alternate.

Denis Hippert of Sterling; Donna Hall of Homer; Larry Opperman of Soldotna; and Sargeant Truesdell of Soldotna sit in the public seats. Donald St. John, of Kenai, is an alternate.

The group also includes ex-officio members who do not have voting power. These include Kenai Peninsula Borough Mayor Peter Micciche and Kenai Peninsula Borough Assembly members Kelly Cooper and Cindy Ecklund.

The group also reached out to local city governments for their participation, and was joined Wednesday by Kenai City Manager Terry Eubank; Soldotna Economic Development and Planning Director Linda Mitchell; Seldovia City Manager Heidi Geagel; Homer City Manager Melissa Jacobsen; and Kachemak City Clerk Laurie Wallace.

At their first meeting, the group started slowly, making introductions, electing leadership and beginning to unpack the discussions and questions central to their assigned task.

Each member of the group described decades spent in the local areas, with community members expressing a desire to contribute to local development and tourism industry representatives describing an interest to collaborate with the borough in developing the future of tourism in the area.

Micciche was elected chair of the group and Cooper was elected vice chair without opposition.

Bannock, speaking in support of both nominations, said the working group — especially with the two distinct backgrounds represented by voting members — represents different ideas that may at times conflict. Having Micciche and Cooper, non-voting members, in leadership roles “removes any perceived advantage or disadvantage of a chairperson with a vested interest on this group.”

Micciche presented borough information on tourism that was generated by the finance department in response to the first questions of the working group members. Of a sales tax revenue of roughly $47.5 million last year, around 12% to 20% is estimated to be attributed to “tourism-related businesses.” Those could include hotels, restaurants and “attractions.” That’s revenue of $5.6 million to $10.3 million.

The borough, Micciche said, has “a high confidence level” that they are capturing tax revenue from all the short-term rentals in the area. He credited new compliance software purchased in 2021 for helping to more accurately collect data and identify ownership.

A major question, Micciche said, is what sort of impact tourism has on borough services, for example, how much waste is generated by tourists. He said that the solid waste department created a “preliminary answer” to that question, but that their understanding “needs more work.”

“We do know that solid waste management demands go up dramatically,” he said. “We also know that Kenai Peninsula Borough residents are more active in the summer … It’s when we do our additions on our homes, it’s when we clear brush, it’s when we do other things that contribute.”

Similarly, he said, the borough needs more time to be confident that it has identified all property tax revenue generated by tourism-related businesses.

The borough does not need additional revenue to meet and fulfill the budget philosophy of the current administration, Micciche said, but the finance department identifies diversification of revenue as beneficial.

Fraser said that the group needs to identify “what a tourist is.” If the peak tourism season were to be defined as June 1 through Aug. 31, it would include the annual reservation of the Soldotna Aspen by the Colony High School cross-country team for a meet in August.

“Is the high school track team a tourist?” she asked. “I come down for a wedding, am I a tourist?”

Sports teams, Fraser said, create “a lot more garbage” than a tourist does.

Tougas, echoing that point, said that his business sees most of its traffic generated by “VFR, which is visiting friends and relatives.” He pointed to people who live in Anchorage who might take the train down to Seward, board one of his boats for a trip and then return home — they use little borough services, but they do contribute in sales tax.

He asked whether he, living in Seward, might be classified as a tourist while visiting Soldotna.

Micciche pointed to the Kenai River dipnet fishery, entirely composed of Alaska residents but also “no doubt” creating a significant impact on the borough.

“The challenge is going to be what the balance looks like at the end of the day,” he said. “Is there a different way to balance revenue that’s currently coming in, in a way that has a benefit to local residents that are here when it’s cold but doesn’t negatively impact an industry that’s very important to us?”

Other discussion included the needs to define the demographics of Kenai Peninsula visitors, to recognize the impacts of rising prices, and to consider new opportunities for promoting the Kenai Peninsula as a destination.

The group isn’t set to meet again until Jan. 29, which Micciche said will give the group time to continue thinking on the big questions they’d like answered and the borough time to compile detailed and accurate responses. He also said he’d like to see presentations by borough staff on topics like tax collection, solid waste management and others brought before the board to inform their discussion.

The resolution creating the group says that their last meeting must occur before April 15, and a final written report must be provided to the borough assembly by April 30. The group decided to set meetings, tentatively, every two weeks on Wednesdays at 2 p.m. in the Betty J. Glick Assembly Chambers. Their next three meetings were set for Jan. 29, Feb. 12 and Feb. 26.

If the work of the group cannot be completed by the deadline, the group’s timeline can be extended by the borough assembly.

A full recording of the meeting can be found at kpb.us, at the “Tourism Industry Working Group” page under “Quick Links.”

Reach reporter Jake Dye at jacob.dye@peninsulaclarion.com.