LEWES, Del. — The Lewes City Council continued discussions on Monday night regarding two significant ordinances that could increase the cost of operating hotels and short-term rentals within the city. The council is considering implementing a lodging tax and raising the existing Gross Receipts Rental Tax (GRRT).
Mayor Andrew Williams recommended referring the two proposed tax increases to the city Finance Committee for further discussion and review. It was acknowledged during the meeting that the plan would be to have recommendations to the Mayor and City Council by the end of the year in time for tax season.
The first ordinance proposes an amendment to include a lodging tax of up to 3% on hotel stays. The measure has been under consideration for several months, with public comments already gathered and reviewed.Â
Additionally, the council will consider modifying the gross rental receipts tax for short-term rentals, increasing the rate from 5% to 6%. Like the lodging tax, this measure has been the subject of public comments, which were compiled as of August 2.
Lewes Rental Manager with Berkshire Hathaway Services Adriane Gallagher says 2024 has already been slow as people take overseas vacations that were postponed by the COVID-19 pandemic. She says if Lewes raises the Gross Receipts Rental Tax to 6%, short-term rental owners will end up paying a 10.5% tax when a new 4.5% state tax takes effect in January 2025, which could affect the local tourism industry.
"The economy hasn't been great over the last year, so an additional percent could mean people just don't come to the area, they go someplace else," Gallagher says. "10.5% total is pretty high for our area in general, so they could go to Ocean City, they could go to New Jersey, they could go overseas to Europe.
Others like Merle McCann see financial benefits.
"It doesn't seem like that much of an increase to me and I think that we should look at ways of getting extra money since the city is in need of it," McCann says.
Mayor Andrew Williams said in a previous city council meeting that this proposed tax increase is to level the playing field for short-term rentals.Â
Beyond the tax discussions, the council explored the regulation of marijuana-related businesses within Lewes. An ordinance was on the agenda that could either regulate or prohibit the operation of marijuana cultivation facilities, product manufacturing facilities, testing facilities, and retail stores. The agenda noted that the council may decide to schedule a public hearing to discuss this matter further. Instead, the council voted to prohibit marijuana retail stores in city limits and continue studying manufacturing, cultivation and testing.
Lewes has been one of the few beach towns to not outright ban the drug. The city heard a presentation from Delaware's Marijuana Commissioner this spring.Â
