Hilliard officials are starting to think about how to allocate the additional bed-tax revenue generated by the three hotels approved for construction in the Cemetery Road corridor just west of Interstate 270.

Discussion is in the early stages but Hilliard City Council member Tom Baker said council members likely would alter the allocation in the future.

The city's 6 percent bed tax is applied to each hotel room rented per night, and the tax revenue for this year is estimated at $450,000. Half of the revenue collected is allocated to Destination Hilliard, and the other half is allocated to the Hilliard Development Corp.

The Hilliard Development Corp. establishes support and programs for small businesses and acquires real estate for development projects, according to David Meadows, Hilliard's economic-development director.

It is an autonomous nonprofit organization with its own board of directors, Baker said. The four-member board includes Kirk Herath, Jim Holowicki, Aristotle Hutras and John Marschhausen, said Meadows, who serves in an advisory role as executive director.

Meadows said the site being developed by the Crooked Can Brewing Co. is an example of the Hilliard Development Corp.'s recent work. Based in Winter Garden, Florida, the brewery will anchor a 16,000-square-foot open-air market on Center Street at the site of the former NAPA Auto Parts store.

Ohio law requires that municipalities direct at least 25 percent of any bed-tax revenue to its visitors and convention bureau or an equivalent organization that serves to promote tourism within that municipality. In Hilliard's case, that is Destination Hilliard.

No changes are in store for next year but City Council is expected to begin discussing a new funding model for 2020, Baker said.

"We are not even close to an ordinance (amending how bed tax is allocated) but I'd rather see a funding formula than a cap," he said.

The funding formula would be a new percentage for Destination Hilliard, the Hilliard Development Corp. and any other entity City Council wants to include, Baker said.

Establishing a new funding formula would incentivize Destination Hilliard to increase the city's bed-tax revenue, he said.

Baker said that even if City Council reduces the funding to Destination Hilliard to less than 50 percent, it would still receive more money because the total amount of bed-tax revenue will increase when the new hotels are built: InterContinental Hotel Groups, whose brands include Holiday Inn Express, plans to build a 4-story, 92-room Avid Hotel at the former McDonald's site, 3900 Lyman Drive; Tru by Hilton plans to build a 4-story, 97-room hotel at 3950 Lyman Drive, west of the Hampton Inn & Suites at the same address; and Innsight Hospitality LLC plans to build a $12.6 million, 94-room TownPlace Suites, a Marriott brand, on a portion of the former site of JD Equipment, 4079 Lyman Drive.

The Hilliard Planning and Zoning Commission approved plans for InterContinental Hotel Groups and Tru by Hilton in June and Innsight Hospitality in September.

The city has approved a building permit for Innsight Hospitality, according to city planner John Talentino.

Meadows said he expects construction would take 12 to 18 months on the hotels, but he does not know when construction would start on each one.

Hilliard is expected to generate as much as $900,000 in total bed-tax revenue when the three hotels are built, and it can be questioned whether Destination Hilliard needs $450,000 per year, which would be half of that total, Baker said.

Tim Kauffman, the executive director of Destination Hilliard who was hired in August, said he was made aware of the possible change to the funding formula and looks forward to the opportunity to show the organization's value.

"I have the opportunity to show the value of Destination Hilliard before any decisions are made. There is a return on investment in Destination Hilliard and I can make that case," Kauffman said.

The 2019 budget for Destination Hilliard is $240,000, Baker said. City Council members Dec. 10 are expected to approve a final budget for 2019, including Destination Hilliard and the Hilliard Development Corp.

Meanwhile, Baker said, discussions will continue next year with Kauffman and the board of directors for Destination Hilliard, as well as Meadows, concerning plans for the Hilliard Development Corp.

Meadows said additional funding for the Hilliard Development Corp. would allow for the expansion of services.

"The Hilliard Development Corp. is another tool in our toolbox," Meadows said.

kcorvo@thisweeknews.com

@ThisWeekCorvo