At a town hall presentation in April, Susan Amey, CEO of Discover Durham, the city’s tourism agency, asked the audience to consider Durham’s future.
“If we grew by the same amount in the next 25 years as we did in the last, Durham is going to be pushing 500,000 residents in our lifetimes,” she said. “… So much of the vibrancy that Durham has has grown up over the last 20 years. So what do we need in the next 20 years? What’s the vision for what comes next?”
Part of that vision, according to Amey and city officials, includes an indoor-outdoor sports complex, a new convention center, more family-friendly attractions, and expanded greenways and parks.
These amenities could be on the horizon following the state legislature’s approval of a new bill this summer that changes how Durham allocates funds it collects through its hotel/motel occupancy tax. The bill also changes how much money goes to Discover Durham. But not everyone agrees that Discover Durham should be the entity that gets such a large portion of those funds in addition to getting to decide how to allocate them.
Unlike property and sales tax, which residents pay, visitors who stay in Durham’s hotels and short-term rental properties pay an occupancy tax of 6 percent, the maximum allowed under state law. Municipalities that collect occupancy taxes can reinvest those revenues to attract more visitors, helping to build the local economy without straining the tax burden on residents.
The state established uniform occupancy tax guidelines in 1997. Now, two-thirds of the occupancy tax collected—in most cities and counties, that’s 4 percent—has to be used for tourism promotion, and the other third can be used for tourism-related expenditures, things that attract visitors to a community like capital improvement projects.
But Discover Durham, which was formed in the 1980s as Durham Convention and Visitors Bureau, was created before those guidelines were put in place.
“Over time, Durham has made some updates and changes to the occupancy tax, but we’ve never gone through the process of just looking at the occupancy tax overall and aligning it with those state guidelines,” Amey tells the INDY.
Until recently, Discover Durham could only use its funds for marketing and promotion, not tourism-related expenditures like a new convention center or a sports complex. This, some leaders felt, put the agency and the community at a disadvantage when attracting visitors compared with other municipalities across the state.
“As we look around, we see other communities are using hospitality-generated taxes to build all kinds of things, and that’s a part of developing attractions or infrastructure and programming,” Amey says. “And those things attract more visitors, but they’re also things that create quality of life for people who live here. It’s adding to the appeal of the community for our residents. And we wanted to be able to do that too.”
Discover Durham collaborated with the city and county to develop a plan for rolling out the tax adjustments, which needed legislative action at the state level to become law. The agency found a champion in state senator Mike Woodard, Amey says, who sponsored the bill and advocated for its passing in early July.
“We’ve all had these conversations,” Woodard says. “Susan, on behalf of Discover Durham, city and county officials, administrative officials, the county managers and their budget directors—we all sat down and went through what this is. We worked on it for well over a year.”
Currently, Durham allocates its occupancy tax funds in three ways.
One-third, or two percentage points, goes to Discover Durham for tourism marketing and promotion. Half of the occupancy tax, or three percentage points, is split between the city and the county for their general funds. The last percentage point first goes to pay off debt for the Durham Performing Arts Center (DPAC). After that, a portion is used to support the Museum of Life and Science. Anything left over goes back to Discover Durham.
Under the new bill, Discover Durham will receive a greater portion of those revenues, beginning in the next fiscal year: 3 percent compared to 2 percent to the city/county, and 1 percent to DPAC and the museum. Then, in the 2026-2027 fiscal year, Discover Durham will receive 4 percent of tax revenues, while the city/county and DPAC will receive 1 percent each. Finally, in the 2027-2028 fiscal year, Discover Durham will receive 5 percent of the tax revenues. The city and county will no longer receive any of the funds and DPAC, the museum, and Discover Durham will continue to receive 1 percent. This final rate remains in place until April 2034.
Discover Durham recently published its 20-year Destination Master Plan, a vision for developing the city as a nationally-recognized destination.
“We need a Durham for the future that reflects our community’s values and character,” Amey said at the town hall event in April when she presented the plan. “An individual might start a restaurant or a bar or a retail shop but doesn’t decide they’re going to build a convention hotel or a major sports facility. So as a community, we have to create that idea together and figure out how to move forward. We need to have a plan for how that’s going to be sustainable: economically, socially, and environmentally.”
Many of the same items were featured in mayor Leo Williams’s State of the City address, suggesting that there is alignment between Discover Durham’s plan and city initiatives already set forth.
But not everyone is in agreement. City councilmember Nate Baker says the city, not outside organizations, should be spearheading these efforts.
“The Discover Durham plan was inspiring,” Baker says. “But it’s long-range planning.”
Baker says doing that kind of planning is the role of city governments and their planning departments.
“Where I feel conflicted is I am frustrated that the city, through our planning department, is not being more innovative, and that we are not the ones who are coming out with plans with those kinds of projects and inspiring people with our own long-range planning,” he continues. “Instead, we are effectively privatizing that by having an organization that is quasi-governmental.”
Amey says that communication and transparency are top-of-mind for Discover Durham through this process. The agency is launching a new nonprofit to house the work proposed in its Master Plan this fall. Similar to Discover Durham, the new nonprofit will have oversight from city and county officials and include representation from other community partners.
New projects, Amey notes, take 10 to 12 years to plan and build, during which time mayors and elected officials turn over and cycle on and off their governing boards.
”Elected officials, when they come into office, often come in with some of their own priorities, and you have to have continuity of vision when you’re going to do big projects that span multiple administrations,” Amey says. “Having this as a separate organization will help the community keep their eye on the prize, so to speak, and have this continuity built in for getting some of these projects done.”
While these long-term projects take form over the next decade, the city and county must continue to prioritize pressing issues like homelessness and education where funding from municipalities is a key ingredient. Baker says that even the smallest amount of funding adds up, and city leaders will have to find new sources to maintain their financial commitments to replace the loss of revenues to the city’s general fund.
“We debate endlessly, you know, sums of money like $100,000, $50,000, $10,000—and then all of a sudden, snap of a finger and millions of dollars are suddenly going to be reallocated from the general fund,” Baker says. “We have to make that up.”
Editor’s note: The headline and sub-head were updated following publication for greater accuracy.
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